The Governor of Central Bank of Nigeria (CBN), Olayemi
Cardoso, has called on Nigerians to moderate the demand for dollars,
consumption, and usage of foreign goods, just as he warned that as a country,
we must address the supply side of forex as it has kept the nation’s economy in
a narrow bucket.
Cardoso, who noted that without moderation of demands on
USD, the CBN has no magic wand to hurriedly get the Naira stabilised, however,
said that a series of measures put in place by the apex bank recently is
yielding results with a flow of about $1 billion into the economy, adding that
the apex does not have the capacity to do intervention but will partner rather
than get involved in it directly and run the risk associated with the
intervention. We must address the supply side of forex. It has kept us in a
Speaking on Friday, when he appeared before the Senate Joint
Committees on Finance, Banking, and Other Financial Institutions and National
Planning, Cardoso, who noted that the CBN’s target on inflation is to moderate
it to 21.4%, said that the adoption of the inflation-targeting framework
involves clear communication and collaboration with fiscal authorities to
achieve price stability, potentially leading to lowered policy rates,
stimulating investment, and creating job opportunities.
According to the CBN Governor, the Monetary Policy Committee
(MPC) meeting that is scheduled for the 26th and 27th of February is also
expected to review the situation and take further decisions on these important
Cardoso, who explained that the shift to a single rate was
to stabilise the market and address exchange rate volatility and claimed over
$1b has come to the market, said that the market has been responding to the
policy that we have put in place, adding that “for these measures to be
sustainable, we must moderate our demands for forex. We are working very hard
to bring back credibility to the CBN, and many of the investors who, over the
years, have considered the environment inimical—we don’t have to beg them. If
we are doing the right thing, investors will come. For them to come, they have
to believe that you will do the right thing.
I also want to say that in establishing credibility, there
are certain things that we need to do.
“We must moderate our demands for forex. Where there are
opportunities to substitute locally, we should. The total quantum for education
and medical are greater than our external reserves. If we can up our game on
education, medicals, there won’t be a need for our people to go abroad.
“The Nigerian foreign exchange market is currently facing
increased demand pressures, causing a continuous decline in the value of the
naira. Factors contributing to this situation include speculative forex demand,
inadequate forex supply, increased capital outflows, and excess liquidity.
“To address exchange rate volatility, a comprehensive
strategy has been initiated to enhance liquidity in the FX markets. This
includes unifying FX market segments, clearing outstanding FX obligations,
introducing new operational mechanisms for BDCs and IMTOs, enforcing the Net
Open Position limit, Open Market Operations, and adjusting the remunerable
standing deposit facility cap, among others.
“Distinguished Senators, these measures, aimed at ensuring a
more market-oriented mechanism for exchange rate determination, will boost
foreign exchange inflows, stabilise the exchange rate, and minimise its
pass-through to domestic inflation.
“Indeed, they have already started yielding early results
with significant interest from foreign portfolio investors (FPIs) that have
already begun to supply the much-needed foreign exchange to the economy.
“For example, upwards of $1 billion in the last few days
came in to subscribe to the Nigeria Treasury Bill auction of 1 trillion Naira,
which saw an oversubscription earlier this week.
“Our measures, aimed at improving USD supply into the
Nigerian economy, have significant potential for taming the volatility of the
exchange rates. However, for these measures to be sustainable, we must, as a
country, moderate our demand for FX.
“It is also clear that the task of stabilising the exchange
rate, while an official mandate of the CBN, would necessitate efforts beyond
the bank itself. It will also include actions by corporations and individuals
to reduce our frequent demand for the dollar for business and personal needs.”.
On Inflation rate, the apex bank governor, who assured
Nigerians that it would reduce to 21.4% in 2024, said, “Distinguished Senators,
inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting
policy, aiming to rein in inflation to 21.4 per cent at the medium term, aided
by improved agricultural productivity and easing global supply chain
Aside from the CBN Governor, top government functionaries
like the Ministers of Finance, Wale Edun; Budget and National Planning, Senator
Atiku Bagudu; and Agriculture and Food Security, Senator Abubakar, also made
presentations based on questions asked by the Senators on the state of the
In his remarks, the Minister of Finance and Coordinating
Minister of the Economy, Wale Edun, noted that there was a need to ensure that
government expenditures are wisely spent.
However, he agreed with the CBN boss that fiscal and
monetary policies of the government should complement each other, just as he
said that the won’t increase tax, but we
would use technology to yield revenue, adding, “We will use dialogue and moral
suasion to appeal to operators. I can assure us that in the medium term the
measures that have been taken will boost domestic revenue. We won’t increase
tax but, we will use technology to generate revenue.
“For the medium term, let us know that the fiscal and
monetary measures will yield the target goals.
Difficult reforms take time for the benefits to come
through, but our goal is to minimise the pain before the gains.”
As Tinubu’s ministers
fault subsidy removal, floating of Naira
Meanwhile, the Minister of National Planning, Senator Atiku
BBagudu, and the Minister of Agriculture and Food Security, Senator Abubakar Kyari,
however, faulted the subsidy and floating of the naira, saying that farmers
were the worst hit in the process.
On his part, Bagudu, who noted that fuel costs were
affecting planting by farmers, said that the balancing of the reforms, ensuring
that necessary measures were put in place adequately, and the benefit of fuel
subsidy reforms have to be supported by measures that will guarantee food
production and stability.
Bagudu said, “The managing director even said one of the
experiences, particularly from Turkey, as to how you don’t lose some of the
stakeholders while the economic reforms are taking time to have a positive
effect, and then equally, again, this came up yesterday in another meeting and
it has been touched upon here.
“From our perspectives, particularly budget and planning,
there are places today in about 18 states in the country where you can still
plant rice for dry season farming, including the constituency of the chairman
of the National Planning in 5 local governments, where if care is not taken not
for reasons of insecurity, 70% of the planted area might not be planted because
of fuel cost, and the same thing in the constituency of my brother senator Adamu
Aliero in some places.
“So the balancing of the reforms and ensuring the necessary
measures have been implemented urgently to ensure that we even support the
reforms, that is the point made by Senator Aliero and the commendable act of
removing fuel subsidy needs to be supported by measures that support domestic
production in other to achieve the full impact.”
On his part, the Minister of Agriculture and Food Security,
Abubakar Kyari, also expressed concern that while the government was
subsidising farming implements, fuel costs and insecurity were a bane to
On his part, Chairman, Senate Committee on Finance, Senator
Sani Musa, APC, Niger East, in the series of posers fired at the Ministers and
CBN Governor, queried the $3.3 billion collected as a loan to rescue the
naiara, since expected positive effects are not being felt months later.
But the Chairman of Committee on Banking, Insurance, and
other Financial Institutions, Senator Adetokunbo Abiru, APC, Lagos East, who
told the CBN governor to ensure a proper handshake between monetary and fiscal
policies, urged to make available to the committee an audited account of the
apex bank and its budget.
Abiru, who underscored the need for a forensic investigation
of past transactions and the issue of bank compliance, said, “We have serious
economic challenges; they are largely macroeconomic challenges.
“We have inflation in several countries, including
developing countries, but in Nigeria, we have inflation at almost 20%. What
special measures do we have to take to address this?
“Do we have the place to assist the government to boost food
supply with a view to also kind of reducing the weight of food inflation in the
consumer price index? That’s my second question.
“How does CBN plan to support the productive sectors of the
economy—the agriculture and manufacturing sectors? Because there are two
critical sectors already experiencing heavy growth rates.
“Today, the money supply is estimated at close to about 75
trillion and thereabouts. I don’t know what is impeded in that 75 trillion; we
have 30 trillion ways and means that ordinarily should have been impeded, but
we have structured this into a 40-year instrument at a subdued interest rate of
9%. These are part of what is creating the distortions in the economy.”
In his remarks, Senator Orji Uzor Kalu, APC, Abia North, who
called for the ban of dollar use in Nigeria, stressing that the government must
go back to abolishing the use of dollars in business transactions, said, “What
plans are you putting in place to strengthen the naira?” We must go back to
abolishing the use of dollars, unless for those who are authorised.
“In South Africa, nobody buys anything with dollars. I can
see the shops in Abuja putting their goods in dollars. So, what have you done?
Where we are now, there is no foreign direct investment that will come to
Nigeria. I’m really worried. People are leaving.
“And what else have you done to bring to book those 2.7
billion dollars that you say have been in default on the documents? Who are the
Nigerians who have defaulted on these documents?
“You must bring them the book, and you must make it public
because people are attacking us. I can’t go to my constituency. If I go to my
constituency, people are hungry, people are shouting at us, and people think
we, the senators, are the cause of the economic problem. We are just making
laws. It’s left for you people to execute it.
“So for me, what plans are you making right away to
reconcile with NLC and TUC? They have given a 14-day ultimatum. What are we
doing to stop that movement? I don’t want to see people say this is politics;
this is not politics. These people are legitimately doing what they are doing,”
In his remarks, the Chairman of the Joint Committees,
Senator Yahaya Abdullahi, PDP, Kebbi North, called for the responsible parties
present to work together to provide solutions to cushion the economic crises.
The country said, “I am 74 years old, and I have never seen something like
this. We need solutions. We have to sit down and seize all the opportunities
that we have. We need to not only think outside the box but also bring
innovative and creative thinking.
“We in the National Assembly are united, and we are with the
executive arm of government to move this nation forward. We have to sit down,
put on our thinking caps, and work together to address these issues that are
bedevilling this country.”