Cardoso Suggests CBN ‘Reset’ Amidst Naira Crashing to 1,000/$

The recently confirmed Governor of the Central Bank of Nigeria, CBN, Olayemi Cardoso has proposed to reset the apex bank. This comes as the naira fell to an all-time low of 1,000 per dollar on the parallel market.

Cardoso said he would prioritise working out ways to aggressively offset huge FX obligations as part of measures to attack the current naira freefall, which has become a huge burden for the economy.

The new CBN governor promised to withdraw from aggressive development finance, ensure a culture of transparency, compliance and collaboration and embark on zero tolerance for breaches of the CBN Act.

He also emphasised the need to reverse evidence-based monetary policies and place an open, transparent, ruled-based system.

Cardioso outlines short-term measures to address Naira free fall

During the screening at the National Assembly, Cardoso said: “We do need to have an exchange rate that is stable for a country that we all dream of. And quite frankly, there are short and medium-term measures, but I would say something about the short-term measures because that really is what bothers most people today.”

He also went further to say, “Understandably, the medium-term measures have to do with the balance of payments on time, like the sorts of things that are being done already, with respect to ensuring that you’re getting more petroleum resources and diversifying the economic base of the country that I believe will continue by the present administration. And of course, they take time.”

Issues of priority at the CBN

Cardoso said: “Number one is that of what I would term an operational issue. Right now we have this situation where we all know that we can argue about the numbers, but we are aware that the central bank has some unsettled obligations, whether it’s $4 billion, $5 billion, $7 billion, I don’t know.

The new CBN governor also added “But definitely the immediate priority will be to be able to verify the authenticity of what is on the ground and then of course, once we do that, we need to promptly find a way to take care of that. It will be naive for us to expect that we’ll be making too much progress if we’re not able to handle that challenge of foreign exchange.”

Cardoso outlines plans to attract serious foreign investors

Cardoso said, “We can also expect that those players who generally have an impact on your markets will not do so if you do not have an open, transparent system that everybody understands – one day, it is one way and the next day you review without any notice in setting up those guidelines.

“We will obviously carry relevant stakeholders along and to engage people and to hear views. And that will obviously be one of the major objectives to be able to get stakeholders together, understand where things are, probably very quickly come up with a strategy and a game plan that is well known to each other and to everybody.”

He added, “These short-term measures and no matter what, I know that the impact will be such that we will be able to have investors coming into the market and confidence will come back in.” 

Cardoso to ensure zero tolerance for breach of CBN Act key

Cardoso told lawmakers,  “We will have zero tolerance for abuse of compliance. That is a cultural shift, a change in mindset, but we will definitely make sure this happens. We are clear as to what the Act says; we are clear as to how we need to visit the House and share the things we are doing.

He explained “We will do so because now that we propose to have a reset in the central bank, we are open and we are appealing also to the members of this hallowed chambers to work with us to ensure that every six months, from what I gather, there has to be discussions with the Senate. Whatever the 2007 Act says, we need to comply with it. I personally believe that the Act is a strong and robust document. I feel what has been lacking has been the issue of implementation and compliance.”