…advises Nigerians to reduce appetite for dollar, foreign goods
By Tunde Opalana & Haruna Salami
Governor of Central Bank of Nigeria (CBN) , Olayemi Cardoso, has said the current slide of the Naira against foreign currencies could not be immediately halted by the bank.
He said there are short, medium and long term measures put in place to address the daunting issues around Nigeria’s foreign exchange.
Cardoso, however, said Nigerians can stop the free fall of naira in exchange for US dollar and other hard foreign by reducing their appetite for dollar , consumption and usage of foreign goods .
The CBN governor, the Coordinating Minister of the Economy and Minister of Finance, Mr. Wale Edun, Minister of National Planning and Budget, Senator Atiku Bagudu and Minister of Agriculture, Senator Abubakar Kyari were among members of the national economic team who were at the National Assembly on Friday at an interactive session with the Senate Committees on Finance, Appropriations, Banking, Insurance and other Financial Institutions on the state of the nation’s economy.
Cardoso said without moderation of demands on USD, the CBN has no magic wand to hurriedly get Naira stabilized.
According to the coordinating minister, series of measures put in place by the apex bank recently, are yielding results with inflow of about $1billion into the economy.
He said: “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, stabilize the exchange rate, and minimize 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 day 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, has significant potential in 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 corporates and individuals to reduce our frequent demand for the dollar for business and personal needs”.
On Inflation rate, the apex bank governor assured Nigerians that it will reduce to 21.4% in 2024.
” 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 percent at the medium term, aided by improved agricultural productivity and easing global supply chain pressures”, he said .
Aside the CBN Governor , top government functionaries like the Ministers of Finance , Wale Edun , Budget and National Planning , Senator Atiku Bagudu , Agriculture and Food Security , Senator Abubakar , also made presentations based on questions asked by the Senators on the State of Economy.
Senator Sani Musa who chairs the Senate Committee on Finance , in series of posers fired at the Ministers and CBN Governor, queried the $3.3billion collected as loan to rescue Naira , since expected positive effects are not being felt , months after .
He criticized what he described as lapses in the economy such as rising inflation adding that about 70 percent of Nigerians can’t boast of three square meal while lamenting riding unemployment at about 37 percent
He said “we must tell ourselves, these policies of government are not working.”
On insecurity, he said investors would definitely shun Nigeria as investment destination. He asked, “how many foreign direct investment have we attracted as a country?” Rather, he said many companies have divested from the country.
Sen. Orji Uzor Kalu lamented that manufacturing and farming sectors are dead with bandits and herdsmen taking over farms.
He said the CBN should stop dollarisation of the economy. He called for abolition of dollar transaction in the country. He said in South Africa, nobody buys anything with dollar
Sen. Ostia Izunaso said the CBN has no capacity to track the supply of the foreign currency. He said while there is scarcity of cash in banks, billions of naira is stashed in private homes.
He alleged that the CBN give dollars to commercial banks but they engage in illicit transaction with those who mop up the dollar and create artificial scarcity in the market
“No liquidity in the system, the CBN should apply for a bail out from the World Bank”.
Sen. Adamu Aliero asked the CBN to answer how much of foreign loans has been approved by the NASS, how much gas been accessed, and how much has been allocated to sectors for which they were obtained?
He said Nigeria has capacity for food sufficiency, therefore, there is no ex use for food importation.
Sen. Olamilekan Adeola charged the CBN to start its avowed transparency by promptly submitting it’s budget proposals to the NASS.
He castigated the CBN for playing extra- judicial role such as committing much of the nation’s fund to the anchor borrower scheme. He said “the CBN has suddenly become the largest producer of rice in the country”
He said it will be highly appreciated if the CBN can be truly transparent
But the Chairman of Committee on Banking , Insurance and other Financial Institutions, Senator Adetokunbo Abiru in his remarks , told the CBN governor to ensure proper handshake between Monetary and Fiscal Policies .
He specifically, urged the CBN governor to make available to the committee, audited account of the apex bank and its budget.