Cardoso: Injecting Fresh Air into CBN

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Uzoamaka Eleko

The four key objectives of the Central Bank of Nigeria (CBN) includes to ensure monetary and price stability; issue legal tender currency in Nigeria; maintain external reserves to safeguard the international value of the legal tender currency; promote a sound financial system in Nigeria; and act as banker and provide economic and financial advice to the federal government.

However, the country’s weak fiscal space which created very wide space in terms of funding and interventions in critical sectors of the economy, saw successive leadership of the country’s central bank, through its development finance mandate, intervening in certain sectors of the economy.

While some of the initiatives were laudable, over the years there have been calls for the CBN to focus mainly on its core mandates so as to deliver the expected outcomes to the generality of Nigerians.

Indeed, from his response when he appeared before the Senate last week for his confirmation as the Governor of the CBN, Mr. Olayemi Cardoso, gave a clear indication that he was prepared to heed the call to ensure that the apex bank focuses purely on its core mandate as well as to inject fresh air into monetary policymaking at the bank.

Cardoso, also pledged to address identified distortions and ensure a conducive atmosphere for different categories of investors.

Tinubu had on September 15, nominated Cardoso as the new CBN Governor to serve for a period of five years. He was appointed alongside Emem Nnana Usoro, Muhammad Sani Abdullahi Dattijo, Philip Ikeazor and Bala M. Bello, as deputy governors.

Cardoso was at various times Chairman of Citibank and also served as Commissioner for Budget and National Planning when Tinubu was Governor of Lagos State (1999 – 2007).

He took over from Emefiele, who resigned following his suspension and detention as CBN Governor since June 9, 2023,

Before his confirmation, Folashodun Adebisi Shonubi, one of the then deputy governors, had been in charge of the apex bank in acting capacity following his appointment by Tinubu.

Cardoso is from Lagos state and received his early education at Corona School Ikoyi and St. Gregory’s College in Lagos for his primary and secondary schooling. His father, Felix Bankole Cardoso, made history by becoming Nigeria’s first indigenous Accountant-General of the Federation in 1963. In 1980, he earned his Bachelor’s degree (B.Sc.) in Managerial and Administrative Studies from Aston University.

He furthered his education at the Harvard Kennedy School of Government (HKS) and graduated as a Mason Fellow with a Master’s degree in Public Administration in 2005.

In recognition of his exceptional contributions to both the private and public sectors, Aston University honoured Cardoso with an honorary Doctorate in Business Administration (DBA) in 2017. He is also distinguished as a Fellow of the Chartered Institute of Stockbrokers. Cardoso held the position of Chairman on the board of Citibank Nigeria and played an active role as a member of the Cities Alliance’s Africa Think Tank Group, dedicated to addressing urban development challenges.

He has served on the board of MRS Oil and chaired the board of EFinA. Previously, he served as the Commissioner for Economic Planning and Budget for Lagos State and was the founding Chairman and Co-Chair of the Ehingbeti Summit, an economic summit in Lagos State.

Cardoso, while responding to questions from Senators last week, promised to pursue, reset, evidence-based monetary policy and measures to  address  challenges in the country’s foreign exchange market and stabilise the exchange rate.

He described the current exchange rate in Nigeria as very worrisome but pledged that the new management of the apex bank would in the coming days, come up with rules that would be open and transparent to the players and stakeholders in the economic sector to understand. He identified short, medium and long term strategies to address it.

Cardoso said, “On the issue of foreign exchange which everybody has been talking about, it is very worrisome to everybody. It goes without saying that for the sort of country we want, we need to have an exchange rate that is very stable for a country that we all dream of.

“There are short and medium term measures. The major short term measure has to do with balance of payments over a period of time like the sort of things that are being done already with respect to ensuring that we are getting more petroleum resources and diversifying in the economic base of the country.

“That, I believe, will continue by the present administration and of course it will take time I think we should take that as a medium term approach. There are two very important issues that we will have to address if we are confirmed.

“It is what I will term un-correlational issues. We are aware that there are unsettled obligations by the CBN. Whether it is $4 billion, $5 billion or $7 billion, I don’t know but definitely the immediate priority is to ascertain the extent.

“We need to find a way to take care of that. It will be naive for us to be expecting to succeed if we are not able to handle that side of the foreign exchange market.”

Speaking further, he said: “Secondly, we have to be transparent so that any of the players in that market will understand. We have to come up with rules that are transparent also.

“You cannot reasonably expect serious foreign investors, portfolio investors full direct investment, without addressing the short term measures.

“Those players who will have direct impact on our market will not do so if we do not have an open transparent system that everybody understands, that can be relied upon, and which is not subject to review at will without the involvement of critical stakeholders.”

He noted that relatively, reliable studies had shown that in the past 10 to 15 years, at least 50 per cent of inflation had been as a result of money supply and deficit financing.

He said, “This is a big problem, at least it certainly has been over a period of time and it’s something we have to face frontally.”

He added that the CBN would ensure that the issue of deficit financing would not be a problem for the country.

Cardoso, enumerated plans to help President Bola Tinubu’s administration to achieve its projection of $1trillion GDP growth within eight years.

He said, “What is important to us is the element of economic growth. Our feeling is that in identifying the important issues with economic growth, we believe very strongly that size matters.

“The economic policy proposal of the administration identified a set of physical reforms and growth patterns that will be achieved in $1 trillion GDP within eight years.

“In reviewing selected growth targets that can achieve $1 trillion GDP growth in comparison with selected countries with large population and similar characteristics as Nigeria, it is interesting to identify micro-economics indices that point to Nigeria’s economic trajectory being faithful to implementation of the proposed economic reforms.”

Speaking further on inflation, Cardoso said: “On the issue of inflation and the price of goods, the jury is out, some people will say structure, some others will say it is money supply issue. Truth is, it is a combination of both.

“If indeed it is food inflation we need to ramp up food production. That is the effort that the fiscal side will tackle and it is tackling and we will collaborate with them to ensure that it happens.

“If it is energy we know the challenges of energy that if you were importing things into the country that has energy component, automatically you are importing inflation.

“The whole objective of ensuring that the energy side of the country is ramped up. We will also work very closely with the fiscal side to ensure that it happens.

Also, speaking with a group of investors in his office in Abuja, Cardoso said under his leadership, the new management team at the apex bank would do its best to tackle impediments to liquidity in the foreign exchange market in Nigeria.

While disclosing plans to formally unveil his agenda for the monetary and financial sector in the days ahead, Cardoso stressed the importance of credibility and transparency in implementing the central bank’s monetary policy.

To achieve this, he said the apex bank would focus on strengthening its data-gathering system to ensure that only verifiable data would be relied upon for evidence-based decisions. According to him, the CBN would also adhere to rules that are known, acceptable and transparent for the conduct of monetary policy.

Speaking further on liquidity management, he said his team had a short-term goal of addressing structural issues within the financial system that gave rise to the liquidity challenge in the first instance.

 On the relationship between the monetary and fiscal authorities, the new CBN Governor said there would continue to be consensus between both authorities to harmonise their positions on the interest rate and inflation. He, however, said the Bank would remain open to different views in its push for greater transparency.

Furthermore, Cardoso said the bank would only provide strategic policy support to critical sectors of the economy while allowing experts to take charge of such critical sectors, given that the expertise lies within other relevant agencies.

In their remarks, the investors, led by Mrs. Ireti Samuel-Ogbu, said they were at the CBN to discuss ways of strengthening collaboration to boost foreign investment in Nigeria.

From the foregoing, it is clear that the new leadership at the CBN is prepared to reform monetary policymaking at the bank as well as strengthen collaboration with the fiscal authorities so as to stimulate economic growth in the country.