The Governor of the Central Bank of Nigeria, Dr Olayemi Cardoso, has flayed the past administrations of the Central Bank of Nigeria (CBN) for straying from its core mandates and dabbling into fiscal policies under the guise of developing financial activities.
This is even as the apex bank’s czar disclosed that under the past administrations, there was also a lack of clarity in the relationship between fiscal and monetary policies which was evident in the implementation of quasi-fiscal policies that injected N10tn into the economy through various intervention programmes.
Cardoso made this revelation while delivering the keynote address at the 58th Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), which was held in Lagos on Friday.
“I am aware that events over the past few years have also put the CBN in a bad light. These issues can be attributed to various factors, such as corporate governance failures, diminished institutional autonomy of the Central Bank of Nigeria, a deviation from the core mandate of the Bank, unorthodox use of monetary tools, an inefficient and opaque foreign exchange market that hindered clear access, a foray into fiscal activities under the cover of development finance activities. There was also a lack of clarity in the relationship between fiscal and monetary policies, among other challenges.
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“Hitherto, the CBN had strayed from its core mandates and was engaged in quasi-fiscal activities that pumped over 10 trillion naira into the economy through almost different initiatives in sectors ranging from agriculture, aviation, power, youth and many others. These clearly distracted the Bank from achieving its own objectives and took it into areas where it clearly had limited expertise.”
The apex bank boss however promised that the issues affecting the bank would be tackled under his administration.
He said, “Under my leadership, the Central Bank of Nigeria will vigorously address these issues. We will tackle institutional deficiencies, restore corporate governance, strengthen regulations, and implement prudent policies. We assure investors and the business community that the economy will experience significant stability in the short-to-medium term as we recalibrate our policy toolkits and implement far-reaching measures.”
Reiterating the mandate of the CBN, Cardoso said the primary mandate of the CBN is to ensure price stability, in addition to other objectives such as issuing legal tender currency, safeguarding external reserves, promoting a sound financial system, and providing economic and financial advice to the government.
“In line with our strategy to refocus on our core mandate, the CBN will discontinue direct quasi-fiscal interventionist activities and instead utilize orthodox monetary policy tools for implementing monetary policy. As part of this refocus, the CBN has just approved the adoption of an explicit inflation-targeting framework to enhance the effectiveness of our monetary policy. The details and requirements for this framework are currently being finalized alongside the fiscal authorities.
“Additionally, the CBN will provide forward guidance, enhance transparency, and maintain effective communication with the public to anchor expectations and build trust among stakeholders,” Cardoso concluded.
By Babajide Okeowo
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