As the new Governor of the Central Bank of Nigeria (CBN) Mr. Olayemi Michael Cardos assumes office at a critical time in Nigeria’s economic history, there is no doubt that he is going to face daunting challenges.
It is however believed that his job will be much easier if he works in harmony with the fiscal authorities and avoid the error of the last regime where the then Governor, Godwin Emefiele combined both the monetary and fiscal policy functions.
Professor Uche Uwaleke, a professor of capital market at the Nasarawa State University, Keffi, said the CBN governor should work closely with the fiscal authorities, especially the relevant government agencies, in carrying out the bank’s development finance functions whether in the Agric sector, small and medium enterprises (SMEs) sector.
Professor Uwaleke who spoke with The Guardian in an interview said, “I also expect the new CBN Governor to pursue the mandate of monetary and price stability in the context of inclusive economic growth. This entails deliberately engendering a low interest environment which promotes increased access to capital by firms.”
He said this is against the backdrop of the fact that monetary policy tightening has not been effective in taming inflation given supply-side non-monetary factors driving inflation in Nigeria.
He also advised the CBN boss to keep a close watch on the banking sector which he said is still struggling with weak corporate governance issues.
According to him, “It goes without saying that the banking sector still has traces of weak corporate governance. I expect Yemi Cardoso to step up CBN’s enforcement as well as overall banking supervision to ensure that the banks are playing by the rules including those designed to maintain the stability in the exchange rate of the naira.
“The new CBN Governor should move fast to sanitize the Bureau De Change (BDC) segment of the forex market by compelling mergers and acquisitions through an increased capital base requirements and setting new minimum operating standards.”
On his part, Lead Director of the Centre for Social Justice (CSJ), Eze Onyekpere, who is also an economist, said that there is no magic wand in monetary policy that would on its own revamp the economy without collaboration and contributions by fiscal, trade, labour, education, security etc., policies.
He said, for instance, tackling food inflation will be impossible until the security apparatus restores security to farms in many parts of the federation as a basic step to increase food supply and production.
“The first challenge will therefore be to seek harmony with other policy frameworks; seek to retain existing forex in the Nigerian banking system while attracting new ones,” he said.
“It should nudge fiscal policy to invest in the key drivers of employment creation and growth while recovering all the due multiple intervention funds issued out by the last CBN regime.”
He also advised that the new regime should promote the de-dollarisation idea through deliberate frameworks that reduce the nation’s dependence on the dollar as a means of exchange.
In a related development , renowned economist, Bismark Rewane, says for the Nigerian economy to bounce back with a strong currency, the government must free it from the interest of a few rich people.
He said the naira would appreciate again but that this might not happen until the early parts of 2024.
Rewane, who was a guest on Channels Television’s Politics Today on Monday, said that the government must allow the market to determine pricing.
He noted that the palliatives introduced by the Federal Government in the wake of the removal of fuel subsidy won’t address the fundamental issues affecting the economy but only a temporary measure.
According to him, “You have to believe in the reform economics, if you don’t believe in it then you can’t do anything about it. Secondly, you have to stop state capture, you can’t have oligarchs and barriers to entry. So, this economy must be freed from the oligarch’s interest. An oligarch interest means state capture, shifting state resources to private pockets and leading to inefficiencies.
“You must allow the market to determine pricing. By reducing subsidy on petroleum products, and reducing subsidy in exchange rates, those monies shift to the government. So, how is the government spending the money coming their way?
“In all fairness, the word subsidy means temporary relief, it doesn’t address the fundamental issue, the fundamental issue is that there must be growth and there must be increase in productivity.”
Rewane said Nigeria needs to spend big on projects that increase productivity, block leakages, encourage people to invest, and ensure that the interest rate is close to the rate of inflation so that there will be equilibrium.
He said there are signs of the economy bouncing back but maintains that the government also needs to come clean and be straightforward with the true position of things at the moment.