Godwin Emefiele has been under the spotlight for weeks now as Nigeria deals with a major depreciation of the naira with him as the chief trouble-shooter. After a spate of circulars and pronouncements that have jolted the markets, he decided to meet with the business community to allay their fears. Here is an official statement from the CBN summarizing what he told the business community when he met with them Tuesday morning at the Intercontinental Hotel.
The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin I. Emefiele, CON has charged Nigerians not to panic over recent developments in the country’s foreign exchange market, which has seen the Naira witness some depreciation.
He gave the admonition at a breakfast meeting with captains of industry and critical stakeholders in the economy, in Lagos, on Tuesday, January 27, 2015, assuring that the level of Nigeria’s external reserves, which currently stands at about $34bn, is adequate to meet all legitimate foreign exchange demands.
The Governor attributed the current depreciation to global macroeconomic developments including sustained fall in commodity prices, weak global economic recovery, geopolitical tensions and conflicts, cessation of the US Federal Reserve’s quantitative easing programme and weak external demand.
While pointing out that the Naira depreciated by 11.25 percent at the interbank market between January 31, 2014 and December 31, 2014, he drew the attention of his audience to the fact that several other emerging market countries also experienced depreciation in their currencies during the period for the same reasons. These include Russia (40.43%), Ghana (25.54%), Tunisia (14.12%), Brazil (8.65%), and Columbia (15.39%) among others.
He said that Nigeria was not alone in the currency depreciation phenomenon but quickly added that every possible step would be taken to improve the country’s standing because this is not a league to which the country wants to belong.
While also flaying the activities of currency speculators and rent-seekers, Mr. Emefiele warned that the CBN would not hesitate to suspend dealership license of banks fueling speculative demand and are involved in FOREX malpractices as well as infractions.
He tasked Nigerians to look inwards and explore opportunities for local production of more of the country’s needs because lopsided dependence on imports was a major exacerbating pressure on the exchange rate. He reminded his audience that “even one cent of import impacts negatively on the exchange rate”.
The Governor also pledged CBN’s support for entrepreneurs and manufacturers who go into local production of goods that would reduce demand pressure on the Naira. According to him, “if we are committed to a cause, there is no way we cannot grow the economy.”
Continuing, he noted that, because Nigeria was still heavily dependent on imports, the Bank would continue to defend the Naira as doing otherwise would result in uncontrolled inflation, impoverished citizens, declining businesses and stunted economic growth.
Stakeholders, who spoke, commended the CBN for the meeting and expressed great relief at the assurances from the Governor over the health status of the Nigerian economy.
The well-attended meeting, which was supported by the Nigerian Economic Summit Group (NESG), had in attendance Alhaji Aliko Dangote, President of Dangote Group of Companies; Mr. Folusho Phillips, Chairman of the Nigerian Economic Summit Group (NESG); Mr. Pascal Dozie, Chairman of MTN Nigeria; and Mr. Jim Ovia, Chairman of Zenith Bank Plc among many other leading corporate personalities.
Also present were members of the Management of the CBN, the Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, CEOs of deposit money banks and several others.