The new governor of the Central Bank of Nigeria, Mr Yemi Cardoso has said that the prevailing exchange rate “is very worrisome to everybody” and pledged to take steps to address the challenges in the country’s foreign exchange market and stabilise it.
Cardoso stated during his confirmation by the senate as the substantive CBN governor.
Also confirmed were the appointment of Mrs Emem Usoro (Akwa Ibom), Mr Muhammad Dattijo (Kaduna State), Mr Philip Ikeazor (Anambra State) and Dr Bala Bello (Taraba State) as deputy governors.
The CBN governor said Nigeria deserves a “very stable exchange rate” and said it would require short, medium and long term strategies to address forex market crisis.
“There are short and medium term measures. The major short term measure has to do with balance of payments over a period of time like the sort of things that are being done already with respect to ensuring that we are getting more petroleum resources and diversifying in the economic base of the country.
“That, I believe, will continue by the present administration and of course it will take time I think we should take that as a medium term approach.
“There are two very important issues that we will have to address if we are confirmed.
“It is what I will term un-correlational issues. We are aware that there are unsettled obligations by the CBN. Whether it is $4 billion, $5 billion or $7 billion, 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,” he said.
Secondly, he said there should be transparency “so that any of the players in that market will understand,” stressing that “we have to come up with rules that are transparent also.
“You cannot reasonably expect serious foreign investors, portfolio investors full direct investment, without addressing the short term measures.
“Those players who will have direct impact on our market will not do so if we do not have an open transparent system that everybody understands, that can be relied upon, and which is not subject to review at will without the involvement of critical stakeholders.
“In setting up those guidelines, one will also have to carry stakeholders along. We should be ready to engage people and share views. That I think should be a major objective to get stakeholders together and share views.
“The two things appear simple but are far more important than they appear. Those two are the immediate steps that we will take, that will go a long way to ease off the situation that 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 that will be very important to us 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 and if not they hold onto their money.
“We cannot reasonably expect that serious foreign investors, portfolio investors who generally have an impact on our market will do so if you do not have an open, transparent system that everybody understands and can rely on,” he said.
On the issue of inflation and rising cost of goods, Cardoso said the new management team of the CBN 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 key in measuring inflation.”
He noted that relatively, reliable studies had shown that in the past 10 to 15 years, at least 50 per cent of inflation had been as a result of money supply and deficit financing.
“This is a big problem, at least it certainly has been over a period of time and it’s something we have to face frontally.”
Cardoso also emphasised the need to restore the apex bank’s independence and credibility by refocusing on its core mandate and ensuring a culture of compliance.
“Much has been made of past CBN forays into development financing such that the lines between monetary policy and fiscal intervention have become blurred. In refocusing CBN to its core mandate, there is a need to pull the CBN back from direct development finance interventions into more limited advisory roles that support economic growth.”
On internal control of the bank, he said the apex bank will embrace a culture of compliance even with the 2007 Act as well as a cultural shift of zero tolerance for abuse of compliance.
With ThisDay and The Guardian reports
