The Central Bank of Nigeria has come under immense scrutiny in the last few months for its forex policies as investors, analysts and businesses criticize its timing, implication and scope of coverage. Many have often wondered if the CBN could have every gone ahead with these policies without the backing of the current government especially as earlier indications suggest the APC Government was favorably disposed to removing him.
Then came last month President Buhari was quoted as saying;
“I don’t think it is healthy for us to have the naira devalued further. That’s why we are getting the central bank to make modifications in terms of making foreign exchange available to essential services, industries, spare parts, essential raw materials and so on — but things like toothpicks and rice, Nigeria can produce enough of these.”
The quote from President Buhari above was the first official admission that the Government was fully in support of the CBN’s policies.
Now the Vice President has once again buttressed these claims following an interview with reporters over the weekend. According to Reuters the Vice President was responding to likelihood of a loosening of currency restriction in the long term. He reponds
“restrictions are definitely short term. There is no question about that…..So, long term, we expect that the central bank will ease restrictions as we go along.”
Whilst one may argue that there is nothing wrong in supporting the CBN’s forex policies especially from the Government, this also suggest a form of monetary policy dictate to the CBN. A policy dictate by all measures is a potential concern for investors and analysts who expect the CBN to be independent in its decision making. Most analysts believe the current CBN policy response to the forex situation is contrary to what is expected as a further devaluation should have been the logical thing to do. As such, many wonder if the CBN’s decision is heavily influenced by the APC Government that clearly tilts towards socialist policies.