ABUJA, Nigeria – In a candid acknowledgement of the Central Bank of Nigeria’s (CBN) limitations, Governor Yemi Cardoso has admitted the bank’s inability to resolve Nigeria’s escalating economic challenges single-handedly.
This statement, part of an emailed speech reported by Reuters on Tuesday, November 14, 2023, underscores the enormity of the hurdles facing Africa’s largest economy.
“The CBN does not have a magic wand that can be waved at the current economic challenges,” Cardoso stated, confronting the harsh reality of a nation grappling with a weakening naira, soaring inflation projected to hit 30%, and a staggering N87 trillion debt, as analyzed by KPMG.
Despite these challenges, Cardoso outlined a strategic shift in the central bank’s role. Moving away from direct financial interventions, the CBN aims to foster economic growth by supporting institutions and financial products that can stimulate emerging sectors.
This includes enhancing financial inclusion and collaborating with multilateral stakeholders to back government and private sector initiatives.
Significantly, Mr. Cardoso indicated a departure from the policies of his predecessor, Godwin Emefiele. Under Emefiele’s tenure, the CBN adopted an unorthodox monetary policy. This involved maintaining an artificially strong naira and infusing liquidity into money markets.
Furthermore, Emefiele extended loans to the federal government, exceeding constitutional limits, and heavily invested in sectors like agriculture through the Ways and Means Act, amounting to N23 trillion.
“There is a need to pull the Central Bank back from direct development finance interventions into more limited advisory roles that support economic growth,” Cardoso explained.
He argued that the bank’s current approach blurs the lines between monetary and fiscal policy, undermining its capacity to manage inflation and foreign reserves effectively.
This policy shift marks a significant turn in Nigeria’s economic strategy, potentially impacting both domestic and international stakeholders.
As the country navigates these turbulent economic waters, the CBN’s revised role could play a crucial part in charting a sustainable path forward.
