In an important development on September 27, 2023, the Senate of Nigeria confirmed the appointment of Mr. Yemi Cardoso as the new Governor of the Central Bank of Nigeria (CBN) and four deputy governors to serve alongside him. The Senate, which resumed its activities after a recess, charged the CBN leadership with addressing key economic issues such as inflation control, preserving the value of the Nigerian Naira, revitalizing the manufacturing sector, and reevaluating the floating exchange rate.
The newly appointed deputy governors are Mrs. Emem Nnana Usoro, Mr. Muhammad Sani Abdullahi Dattijo, Mr. Philip Ikeazor, and Dr. Bala M. Bello.
Mr. Cardoso unveiled his ambitious vision for the CBN, aiming to propel Nigeria’s Gross Domestic Product (GDP) to an impressive $1 trillion within the next eight years. He also pledged to instill a culture of compliance and internal control within commercial banks, combat the persistent devaluation of the Naira in foreign exchange markets, and address the rising inflation rate.
Senator Adams Oshiomhole, representing Edo North, emphasized the importance of well-crafted monetary policies with a clear focus on specific macroeconomic objectives such as job creation, price stability, exchange rate management, and inflation control. He stressed the need for collaboration between monetary and fiscal authorities, emphasizing that over-reliance on market forces alone cannot stabilize the Naira.
In addition, Senator Oshiomhole criticized the market devaluation initiated during the era of former military head of state, Ibrahim Babangida, highlighting the limitations of market-driven approaches in stabilizing the Naira.
Simon Davou Mwadkwon, the Minority Leader representing Plateau North Senatorial District, expressed concern about the Naira’s low value, labeling it as one of the weakest currencies globally. He called for a reconsideration of the policy of floating the exchange rate and urged immediate action to salvage the economy.
Senate Deputy President Barau Jibrin emphasized the importance of robust internal control mechanisms within commercial banks to ensure stability in Nigeria’s financial system.
Mr. Cardoso reiterated the need to restore the CBN’s independence and credibility by refocusing on its core mandate and reducing its direct involvement in development financing activities. He emphasized the importance of evidence-based monetary policy decisions.
Nigeria’s inflation rate climbed to 25.80% in the previous month, driven by factors such as the removal of petrol subsidies and the devaluation of the official exchange rate.
Cardoso outlined a comprehensive strategy to address foreign exchange rate challenges, inflation, and deficit financing. This strategy includes economic diversification and the establishment of transparent rules to encourage foreign direct investment.
There is a pressing concern regarding the growing gap between the Nigerian Naira and the U.S. Dollar, with the exchange rate surpassing N1000/$1 in recent weeks due to surging demand. This has raised fears of increased currency round-tripping activities, as some foreign exchange buyers may exploit the Interbank Foreign Exchange (I&E) window for personal gain, potentially leading to adverse economic consequences.