The Emir of Kano and former Central Bank of Nigeria (CBN) governor, His Highness Muhammadu Sanusi II, has said the disparity in the opinions of the Finance minister and the CBN on bench mark interest rate signifies the beginning of the independence of the apex bank.
Speaking at the launch of the Afrinvest 2016 Banking Sector Report in Lagos, yesterday, Sanusi said Monetary Policy Committee of the CBN had taken the best decision as a cutting rate would not translate to credit growth.
The MPC rising from its meeting on Tuesday had maintained monetary policy rate at 14 per cent inspire of comments by the finance minister, Kemi Adeosun that the apex ban cut rates earlier.
The Emir of Kano stated that he had been worried that the CBN would bow to pressure to cut rates. “I personally felt it is a positive trend. When the fiscal and many people said they wanted lower rates, I was concerned the CBN would succumb to pressure and the fact that CBN did not seems to me that the CBN is beginning to reclaim it’s independence which to me is a good thing for this economy,”he said.
He noted that reversing it’s tightening stance will further fuel inflation and reduce yields at a time when the country is trying to lure in foreign investors, adding that the country is in dire need of foreign exchange “and portfolio investors are important.”
Sanusi also commended the flexible exchange rate policy of the CBN as well as its tightening stance saying, “some decisions will seem to fly in your face within the first week or two, the naira today is undervalued if you take Purchasing Power Parity (PPP) the Lagos stock market you see gross under valuations, the fixed income is offering high yields.
“If you allow people to come in with their dollars ans sell at whatever rate people want to buy, people will see that they are going to make huge profit on fixed income, on equity market or currency appreciation and you have liquidity in the market.”
Commenting on the economy, the Emir said the Buhari government cannot be held responsible for the present predicament of the country stating that the crisis had been inherited from past administrations.
“This present government inherited a real mess. I was there, I know that the reserves that were left in 2015 should have been much higher if we did not have the kind of leakages we were having. As far back as 2013, I warned and told the government that this is where we are, this is where I think reserves should be. I think we are losing about $1 billion a month, if we don’t do something about it and the price of oil falls, I think we are going to be here. That did not happen.
“So we are also paying a price for profligacy and recklessness of previous years and the silence of Nigerians when all these was happening.
Now we are getting the right responses and we need the courage to continue.”
Meanwhile the Managing Director and Chief Executive of Afrinvest West Africa Limited, Ike Chioke has said the outlook for the Nigerian banking industry looked bleak even as he urged for a re-evaluation of polices that is crippling the activities of the finance industry.