The combative rejoinder by CBN to the recent economic report released by NESG is very appalling. As the monetary authority that controls money, CBN jointly manages the economy with the fiscal authority that handles production and trade policies.
Being a public organization, CBN activities ought not be shrouded in secrecy. Consequently, for the Bank to castigate NESG for publishing its comments concerning CBN openly instead of reaching them privately, an erroneous impression is being created that CBN has ceased to be accountable to the public.
They must purge themselves of this misconception. CBN’s immature and harsh portrayal of its territory as a no go area is also not tenable under today’s democratic dispensation. The said NESG economic report is well researched and illuminating. It draws attention to areas of economic shortcomings and recommends remedial measures.
CBN as one of the country’s macroeconomic managers, ought to take the report with equanimity and undertake a sober reflection on it. Instead of grandstanding and arrogantly attempting to defend its mismanagement of the foreign exchange market and its dangerous Interest rate policy, CBN needs to yield to expert advice by correcting the anomalies cited.
The Bank’s claim that its current administrative method of allocating forex is transparent, is falsehood glorified to high heavens. Only a market based mechanism can ensure integrity and allocative efficiency of forex. As it stands, it is an arena for shady deals and corrupt practices.
Concerning the issue of Interest rate mismatch with movement of Inflation rate, it defies economic logic for Interest rate to forcefully decline when Inflation rate is increasing, in an import dependent economy. Will this not exacerbate pressure on forex and increase imported inflation?
I am astonished by CBN’s justification for increasing money supply in Nigeria, citing similar measure in advanced economies. This is shocking because apeing the economic polices of others when the underlying factors are different is certainly a road to disaster.
While the need for quantitative easing is compelling in advanced economies because their recession is caused by deflation and hence, need for reflation, Nigeria’s impending recession is due to inflation. Quantitative easing in Nigeria is like adding fuel to fire.
The Bank’s justification for border closure which is daily harming the economy, is shameful and disgraceful. It admits the lack of capacity by Nigerian government to police its borders. Are they not government officials at the borders who undertake, aid and abet smuggling? CBN has shied away from widely known national disgraceful issues to pursue shadows by glorifying government incompetence.
Finally, the alarm raised by NESG that there are aspects of the proposed BOFIA which are unconstitutional, should be acted upon. The repugnant sections should be reexamined and expunged by the National Assembly, notwithstanding CBN’s objection.
The Bank should operate within the constitution, answer to the judiciary and account to the public. Perhaps, the time has come for it to be restructured to take the shape of US Feds which is a conglomeration of the regional Feds.