The Governor of the Central Bank of Nigeria, CBN, Olayemi Cardoso has identified a set of monetary policy doctrines that will help achieve $1.0 trillion GDP economy within eight years.
Cardoso, the new Governor of the CBN, revealed this in a statement of the findings from the preliminary assessment of the challenges facing the apex bank.
He explained that in reviewing selected BRICS and MINT countries with large populations and similar developmental characteristics as Nigeria, it is interesting to identify macro-economic indices that point to Nigeria’s economic trajectory, given the faithful implementation of the proposed economic reforms.
In economies bigger than $1.0 trillion, these indicators include moderate inflation, sizable foreign reserves and the capacity to quickly rebound from a cyclical economic downturn.
The CBN has from the preliminary assessment of challenges facing it attributed the failure in corporate governance, diminished institutional autonomy, current financial system stability, unorthodox use of Ways and Means spending as some of its challenges that need urgent attention.
Other challenges that need urgent attention include; Backlog of FX demand, Lack of clarity in fiscal and monetary relationships – where are the delineations, and what should be the limits in CBN’s fiscal side interventions, Inflation and price stability, Access to FX market and FX price discovery, need for interest rate realignment to money supply, inflation and market realities, Current Financial System Stability among others.
Cardoso, however, noted that these problem statements need in-depth review by the new central bank leadership team to determine what mechanisms are currently working, what can be tweaked or dispensed with and what new tools need to be introduced as only a refocused CBN can support economic growth.
The CBN governor explained that in assessing these currently challenges facing the Central Bank of Nigeria, to flesh out its policy doctrine, preliminary questions are being raised, some of which include:
How will issues of governance be addressed?
How can public and financial systems’ stakeholder confidence be restored in the autonomy and integrity of CBN?
What needs to be in place to revert to evidence-based monetary policies?
Discontinuation of unorthodox monetary policies and Foreign Currency management?
What controls can CBN develop to enforce statutory limits in the use of Ways and Means of financing public sector deficit?
How much of the backlog is real versus speculative/hoarding?
Are there creative financing options for clearing the short to medium term backlog?
What are the causes and what is CBN’s proposed response to address inflation and price stability issues?
What mechanisms exist to address FX rate unification under a willing buyer and willing seller arrangement?
What should be the role of the Central Bank in the FX market?
Is there a need for interest rate realignment to money supply, inflation, and market realities?
What is the current state of the financial system?
Are CBN surveillance frameworks being updated proactively to track the expanding use of electronic payment systems by Fintech and Telcos? Among others.
He added that CBN does not have a magic wand that can be waved at the current economic challenges because the problems facing the bank are large and complex.
“However, with focused leadership and sustained reforms, it is expected that over time, the country will see gains open economic spaces, attract new investments, create employment and give our hardworking and talented compatriots opportunity for a more prosperous future,” he said.