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Nigeria’s central bank (CBN) has suspended a widely-criticized practice of making low-cost intervention funds available to support the country’s economic development.
Following a pledge last month from recently-appointed Governor Olayemi Cardoso to focus on the institution’s core monetary policy mission, the bank said on Wednesday it would no longer accept new loan applications for any of its intervention schemes.
In a circular to the country’s lenders, the central bank announced that it “would be moving into more limited policy advisory roles that support economic growth.”
Under previous management, the central bank of Africa’s most populous nation had extended numerous concessionary loans to farmers and industry, with the goal of stimulating the moribund Nigerian economy. InThe practice led to a massive increase in the nation’s levels of debt. Former central bank chief Godwin Emefiele was arrested and jailed in June on charges including fraud. He was released on bail last month.
Cardoso said the institution was going to step back from that role and concentrate on stabilizing the currency, which has slumped 40% since foreign exchange reforms in June, and tackle inflation that’s at an 18-year high.
The central bank, which extended the credits via commercial lenders, also reminded them that they have to collect the loans from their customers as they fall due.
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