The governor of the Central Bank of Nigeria (CBN), Olayemi Michael Cardoso, has said the apex bank under his watch will swiftly implement measures to address the country’s foreign exchange crisis.
Cardoso, along with four deputy CBN governors, was confirmed by the Senate after a rigorous two-hour session.
Those confirmed alongside Cardoso are Mrs Emem Nnana Usoro, Mr. Muhammad Abdullahi Dattijo, Mr Philip Ikeazor and Dr Bala M. Bello.
Top among agenda in front of the new CBN bosses, is the issue of Nigerian Naira, which has been in a steep decline, with a single US dollar now exchanging for approximately N1,000 in the parallel market.
Good Evening Nigeria reports that despite the unification of all foreign exchange market segments in June, this trend has continued.
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Cardoso, while speaking before his confirmation, said the foreign exchange crisis was worrisome, and that there must be a stable exchange rate for the country to achieve economic prosperity.
In addressing the forex crisis, Cardoso said the new management of the apex bank will immediately look at short term measures, which he said were operational and system related.
He said the CBN would come up with rules that are open and transparent and that any of the players in that business would understand.
Cardoso said, “On the issue of foreign exchange, which everybody has been talking about, (it) is very worrisome. We need to have an exchange rate that is very stable to have a country that we all dream of.
“There are two very important issues that we will have to address if we are confirmed. It is what I will term operational and system related issues.
“We are aware that there are unsettled obligations by the CBN. Whether it is $4bn, $5bn or $7bn, I don’t know but definitely the immediate priority is to ascertain the extent.
“We need to find a way to take care of that. It will be naive for us to be expecting to succeed if we are not able to handle that side of the foreign exchange market.
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“Secondly, we have to come up with rules that are transparent, that any of the players in that business understands.
“We cannot reasonably expect that serious foreign investors, portfolio investors, who generally have an impact on your market, will do so if you do not have an open, transparent system that everybody understands and can rely on.
“In setting up those guidelines, one will also have to carry stakeholders along. We should be ready to engage people, get stakeholders together and share views and promptly come up with strategies.
“The two things, which appear simple, are far more important than they appear.
“These two measures, which are the immediate steps that we will take, will go a long way to ease off the situation we are having right now in terms of wanting investors to come in.
“Those that want to do business in Nigeria, they want to see this is clear, and if they don’t, they will hold on to their money.
“These are the short term measures. Once we get in, it is what we will address. I know that the impact will engender greater liquidity coming into the market. Those seeming withholding confidence will come back here. They will see that the coast is clear.”
On the issue of inflation and costs of goods, Cardoso said that the new management would adopt evidence-based monetary policies.
“There is the need to significantly revamp the infrastructure in the central bank with respect to data and to ensure that our data gathering capacity is significantly enhanced so that we can make decisions based on proper data. This is a key in measuring inflation,” he said.
He further said reliable studies have shown that in the past 10 to 15 years, at least 50 per cent of inflation has been as a result of money supply and deficit financing.
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“This is a big problem and it’s something we have to face frontally.”
He pledged that the CBN would work in collaboration with the fiscal authorities to address deficit financing.
Cardoso also said the economic policy proposal of the administration identified a set of physical reforms and growth patterns that is targeted to achieve $1trn GDP within 8 years.
He said the apex bank had, for the past few years, deviated from its core mandates and not complied with the CBN Act.
“We have seen the effect of not doing things rightly. The new management of CBN will have zero tolerance for non-compliance to guidelines,” he said.
In his remarks, Senate President Godswill Akpabio urged the Senate Committees on Banking, Insurance and other Financial Institutions to carry out a thorough oversight of the apex bank to ensure that things are done properly.