The director of ESCAP Management, Esili Eigbe urged Olayemi Cardoso, the governor of the Central Bank of Nigeria to convene an urgent Monetary Policy Committee (MPC) meeting in order to raise interest rates at the bank.
He added that while the Central Bank’s reforms on the Forex market are a positive development, they were implemented later than necessary.
Despite the Central Bank’s changes, Eigbe stated in a Tuesday interview with ARISE NEWS that there is still plenty that can be done to stabilise Nigeria’s economy and stop the devaluation of the naira.
“I think we will start to see some improvement, but I don’t think it’s enough,” he stated, referring to the steps they’ve made to try and address the situation. I believe the Central Bank is still capable of much more.
He claimed that because the central bank has “possibly lost control” over the Naira at the moment, the reforms are happening slower than they ought to.
When asked what could be done, Eigbe stated that interest rates have to be significantly higher. In my opinion, the governor of the central bank ought to have scheduled an urgent meeting of the MPC in order to raise interest rates.
According to him, this must be done in order to provide both domestic and foreign investors the assurance that the top bank is capable of supporting the naira and boosting Nigeria’s economy.
He stated, “To attract the kind of capital that you need to sort out a lot of the FX deficits that they currently have, you need to be at levels that are globally competitive.”
He claimed that although it has always been a question of when, the Central Bank has appeared to want to raise interest rates based on the state of the market.
Regarding the questions of when interest rates will rise, it appears to me that he was attempting to organise his affairs and assemble a competent team at the MPC so that he would have credibility when the time came to decide where interest rates would go. We will therefore have to wait until the 26th to find out, but if I were in that situation, I might call an urgent MPC meeting in order to raise the rate.
Then, in response to Cardoso’s claim that the CBN’s FX forwarding duties, totaling $7 billion, are invalid, Eigbe addressed the matter, stating that the CBN had written to those organisations to explain their order, but they had not done so to their satisfaction.
“It means that maybe the proper paperwork wasn’t submitted, maybe the purchases were made for the incorrect kinds of goods and services—I suspect there are problems around that,” he stated.
However, they were contacted in writing and requested to appear to defend the foreign exchange they had ordered, but once more, they were unable to satisfy the Central Bank.
He went on, “The governor of the Central Bank right now is attempting to increase transparency in the foreign exchange market, and it appears that he is quite worried about his credibility.”
“You heard him say that he was taking his time to plan or make the announcement of the first MPC. He did repeatedly stress the necessity for the MPC to have credibility, which is a significant departure from the former governor of the Central Bank. The market must be able to interpret the Central Bank’s announcements and respond appropriately.
