Harmonize monetary, fiscal policies, financial expert tasks CBN acting Governor
A financial expert, Babatunde Salami, has admonished the acting Governor of the Central Bank of Nigeria (CBN), Folashodun Adebisi Shonubi, to prioritize price stabilization and management of foreign exchange in the operation of the apex bank.
He also urged the CBN boss to harmonize monetary policies with the fiscal policies so as to strengthen the nation’s currency on the global stage.
Salami, who said this while featuring on a Radio Programme in Ilorin, called on the apex financial institution not to dabble into activities that are not within the confines of its core mandate.
The admonition came on the heels of the suspension of the CBN Governor, Godwin Emefiele, who is currently undergoing grilling in the custody of the Department of State Services.
Shonubi, who prior to his appointment as acting Governor, was the CBN Deputy Governor of Operations Directorate, was cautioned to take a lesson from the suspended Emefiele and focused solely on his primary assignment, which included ensuring curtailment of inflation, especially reduction of prices of food stuff to ease people’s pains and effective management of foreign exchange.
Salami said, “The acting CBN Governor should take a lesson from Emefiele, he shouldn’t venture into activities that are outside his primary assignment and usurp the duties of other government institutions.
“He should focus on price stabilization and management of forex, he can also collaborate with Ministries for development rather than usurping their duties, like the suspended Governor did.
He should try to harmonize monetary policies with the fiscal policies”.
Speaking on the hardship the redesigning of naira notes inflicted on the citizens, the financial expert blamed the situation on the lack of proper planning on the part of the CBN, saying that, “the whole situation was not well thought out”.
Salami, a banking Expert who is a Former Group Head of First Bank for the North central Zone, disclosed further that the lack of proper planning led to the excessive queuing depositors experienced during the implementation of the policy in the banks.
He said, “it is not a new thing. Other countries do redesign or change their currencies within a duration of 5 to 8 years. Ours is long overdue but the timing the CBN gave was rather too short; three months. In other countries, it takes about one to three years to implement such policy. Ours resulted in excessive queuing, rationing of depositors funds and waste of man hours in banks.
“Other technical aspects of the entire scenario that are not known to many people were that CBN wanted to print the money locally through Nigerian security printing and minting company but they failed to make necessary consultation as to what is their capacity to mint what is needed by the economy
“When the CBN Governor gave out the contract, it was realized that the company only had the capacity to mint between seven to eight million pieces of banknotes daily, and for the amount of money needed to withdraw from circulation, he needed like a year or more and the CBN Governor had shortened that to three months only.
“Secondly, the company needed minting papers and went abroad but they were on a queue because the type of paper needed is not something that can be gotten off the shelf; you need to place order alongside other countries. So, you need to be on queue, and instead of coming out to make it known that they’re having a challenge, maybe because he doesn’t want people to spend money during the election. But I doubt there is any country where they don’t spend money during election for logistics.
“Even if he doesn’t want people to get naira, they would get Dollars or Euro, pounds and other currencies. So, I think the whole situation was not well thought out, and the apex bank did not know the implications of their actions”, he said.
On the current issue of hike in price of fuel as a result of recent removal of fuel subsidy, Salami said the price of the commodity will not be as stable as it was in the past, pointing out that the price would now be determined by the global price of crude oil.
He said, “The price fuel can swing in either direction. What affects petroleum is the price of crude in the international market. As we have today, the price of crude oil is about $75 per barrel. If the price reduces to like $40, the overall effect will be that the pump price will reduce as well but if it goes up to something like $100, we will also see the adjustment as well. So, it is not going to be stable as we have before”.