The Central Bank of Nigeria (CBN), has reacted to the allegations levied against it by the Nigeria Economic Summit Group (NESG) describing it a “malicious attempt by the group to tarnish the economic recovery program of the apex bank.”
The CBN, while admitting to taking extraordinary measures in order to stabilize the economy, fact-checked the issues raised by NESG.
Contrary to NESG’s allegation that the recipients of intervention funds did not go through required processes, the apex bank insisted that the beneficiaries went through an expansive process of Participating Financial Institution (PFI), and additional assessments by the CBN before disbursements.
On FX, it explained that the CBN operates two windows: wholesale and retail.
It stated, “In wholesale, Banks are allocated FOREX weekly, which they allocate to their customers, reflecting customer size and distributive efficiency and that the CBN does not know the final buyers of this FX.
“In Retail, the banks scrutinize and submit a detailed list of applicants who are then allocated FX based on availability.”
The group had earlier raised concerns over some of the measures taken by CBN to support the stability of our financial system and enable faster economic recovery.
Backstory: The contended article titled, “Matters of Urgent Attention” signed by the CEO, NESG, Laoye Jaiyeola, pinpointed critical issues that should be urgently addressed.
- The inappropriate policy clarity with which the CBN has conducted the foreign exchange transactions, loan disbursements (intervention funds), and price-fixing
- The immunity conferred on CBN officials via the ‘repealed and re-enacted’ Bank and Other Financial Institutions (BOFAI) Act 2020 recently passed by both houses of the National Assembly
- Rate distortions caused by some distortions in the liquidity and interest rate management of our financial system
Meanwhile, in a strong response, the apex bank started by rationalizing the dire impact of the pandemic on the state of the economy, “…the imposed lockdown measures resulted in depressed economic activity in the first half of the year,” noting that except for China and Vietnam, “advanced, emerging, and frontier market economies all experienced significant negative growth in H1 2020, and some are currently in recession.”
Call to Action
The NESG urged the Federal Government to re-open the borders given its negative impact on trade and employment and ratify the African Continental Free Trade Agreement (AfCFTA), so Nigeria can move to full membership status and take its rightful place in subsequent negotiation rounds.
Also, an economist, Mr. Nonso Obikili, via his Twitter handle knocked the CBN stating, “on various intervention programs, in the last decade @cenbank has not published one proper academic style research on the impact of its various interventionist programs. No actual data either. The best way to demonstrate impact is with research and not press releases.”
The CBN, however, expressed disappointment at NESG’s recommendation, noting that it is not against border reopening but that the real reasons for the border closure which includes the smuggling of fake drugs, arms, and other goods; creating a viable market for the produce of our local farmers, must not be forgotten.
To read the press statement in full, click HERE