The Central Bank of Nigeria (CBN) governor, Olayemi Cardoso, yesterday lamented that the country is currently suffering the consequences of the N27 trillion Ways and Means as well as N10 trillion intervention programmes.
This is just as the apex bank boss insisted that the recent increase in Monetary Policy Rate has helped in stabilising the economy.
He spoke in Lagos at the CEO Forum hosted by BusinessDay Media with the theme, “Revitalising Nigeria’s Economy: Strategic Monetary Policies for Economic Growth.”
Cardoso’s defence of monetary policy rate hikes came against the backdrop of recent criticism of the decision.
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The MPC had in May raised the MPR by 150 basis points to 26.25 per cent from 24.75 per cent.
President of Dangote Industries Limited, Alhaji Aliko Danagote, had said the persistent rate hike is a disincentive to manufacturing, adding that no manufacturer can create jobs with the current interest rate.
“Nobody can create jobs with an interest rate of 30 per cent. No growth will happen,” he said.
But at the CEO forum yesterday, Cardoso defended the rate hikes, saying the MPC is concerned with taming inflation and stabilising the naira.
“The MPC is not oblivious to the fact that the country does need growth. If these hikes hadn’t been done at the time, the naira would have almost tipped over, so it helped to stabilise the naira.
“Interest rates are not set by the CBN governor but by the MPC committee composed of independent-minded people. These are people not given to emotion but to data. The MPC clarified that the major issue is taming inflation, and they would do what is necessary to tame it,” he explained.
Cardoso however lamented that Nigeria was suffering the consequences of the past following the abuse of Ways and Means.
Ways and Means is the money that the CBN lends directly to the federal government which according to the CBN Act must not exceed five per cent of previous year’s actual revenue of the federal government.
But the Ways and Means grew from less than N1trillion to N27trillion.
Cardoso said, “Sadly, we have a situation where ways and means soared to N27 trillion and interventions went to N10.5 trillion. Those have consequences.
“In a large respect, that’s what we’re paying for now. It is also a timely issue. It’s not something that I expect will remain with us forever. The ability to soak up the excess liquidity over time is also important to the MPC.”
He stated that the apex bank had recorded significant progress in boosting liquidity in the foreign exchange market and introduced reforms that removed the “dysfunctions” in the system and deepened transparency in the market.
“Sometimes, there is pushback from those who want to continue doing things a certain way.
“There is no more front-loading of FX requests. Even the portfolio investors who left came back again. They were comfortable that there was a plan and that the plan was headed in a certain direction. These dysfunctions are beginning to smooth out due to the confidence and transparency seen in the markets,” he added.
Meanwhile, the Board of Nigerian Security Printing and Minting Company (NSPM) has sacked the executive management team led by the Managing Director, Halilu Ahmed.
Daily Trust reports that the NSPM board is chaired by the CBN governor.
Sources confirmed to our correspondent that Cardoso directed Ahmed and other members to hand over all activities of NSPM immediately.
The board however appointed Abubakar Minjibir as the Acting Managing Director to take charge of the affairs of the company.
Also appointed by the board were Muhammed Mustapha who serves as General Manager for Finance and Strategy, and Adesoji Ogungbesan who will assume office as the General Manager for Corporate Services.
In the memo with no. 2083, the board assured staff that the new management team would ensure better welfare, and embrace strategic initiatives as well as transform the agency to achieve its goals.
The board, however, urged the staff to cooperate with the Minjibir-led team to achieve the board’s strategic vision for the company.
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