“Good wine needs no bush”. This para-phases the acceptance of the now about two years old Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso. The delivery of his monetary policy functions and the over-view of the Nigeria economy, according to top institutions experts, have been classic, writes Nik Ogbulie.
The Central Bank of Nigeria (CBN) has remained the epic institution over the years. Apart from its statutory function as the heart-beat of the country’s finance and economic activities, it also remains a point of reference on the Nigerian nation. This has been why its governors have been seen as primus inter pares. They are seen as the mirror which tells the reality of the Nigerian enterprise across the globe .They hold the most ebullient position in the committee and have been so perceived across the world. Its these expectations and more that Olayemi Cardoso has the task to drive, and he has been doing that since October 2023.
Coming at a time the monetary policy space was in taters, not many gave him a chance of stemming the broken chord that left the Nigerian economy bleeding and replete with trust deficit which many thought could be a situation as bad as managing a war-time financial institution. His approach to the poor economic developments in the country in his first two weeks indicated the application of independent engagement in the whole affairs before defining popular lines of action which he must sale to his employers who are incidentally arch-typical political conglomeration, with the tendency to right the wrongs that had the potency of making them lose the election in 2023. Because Cardoso is so humane, the backlash of coming from a ruling party that mismanaged the economy rather became an advantage to him as his ideas were reversals of most of the allergies that he found on ground. Given to not-so-much-talk, Cardoso has mainly been performing the good roles through strategic actions which take Nigerians by surprise. This has always been done after huge research considerations. Having worked in various places driving institutions through strategic planning initiatives, one can understand why his ideas easily win the opinion of all his followers at the cbn or other committees where he leads numerous members, either in Nigeria, Africa or at any global financial setting. Having worked at Citibank as Chairman for 22 years, there is the belief that he has gone through the most intricate financial decisions as well as keen tabs with global financial principles and regulations which can easily align with his challenges at the monetary policy reals in the Nigerian setting. Many Nigerians who have not been privileged to have gone through his records as a global manager may have taken his characteristic calmness as an indication of being laid back, For someone who drove the strategic plans and the accompanying financial involvements in building the formidable infrastructure that offer Lagos, Nigeria, the consideration as one of the well planned, developed and structured cities in Africa, there are strong indications that he has all to reconfigure the Nigerian economy looking at the monetary, fiscal and environmental policy framework imperatives.
As a matter of fact, the demise of banking sector instability or the indication of near financial instability that may be a backdrop of the many years of technical insolvency in Nigeria’s financial sector has been associated to his arrival which announced a zero tolerance to associated allergies from any banking institution, government or the stakeholders. The expansion of the financial inclusion mantra has further grown opportunities for the growth of banking sector services and the propagation of transaction options and speed in such a way that mobile banking becomes safe and timely. His entry as Governor of the CBN came with the integrity associated with his name through his various areas of passage and he does not need to flog banking officials to the lines while delivering his ideas. To a lot of bankers and financial operators who saw his appointment with scorn at the beginning, Cardoso’s statements have become law because of the obvious carefulness and very reasonable circus of consultations he is believed to have done before keeping off with matters affecting financial sector operators or allied global bodies. His very first idea of increasing banking sector minimum capital base by about 400% is an indication that efforts are strong to impose or insist on a very strong banking sector whose reform which started in 2005 laid the basis for a mobile financial sector imperative, where the industry would be ready to undertake activities that run into billions of naira without recourse to huge foreign borrowings and institution of bonds at regular intervals. Today almost all the banks are operating above a comfortable capital base that will be easy for them to handle financial intermediation issues and even run some formidable syndications as may be demanded by the economy and global transactional needs. This new policy took of and was done seamlessly. This accounts fo some very quiet lending and financial activities in the economy as could be identified in investment demand in the telecoms sector, oil and gas, trade and services and education. Banks can now be seen to have been encouraging growth in the remote growth areas like fintech, food processing, property, agriculture and education development.
Nobody knows what could have been the situation in the foreign exchange market today if merger was not considered as a way of creating a window for foreign exchange users and the implementation of the appropriate sanctions that would have truncated the process over time. The idea and processes of finding the adequate foreign exchange rate were really difficult based on the triggers in the market, but Cardoso’s indication that the chickens would soon come to roost has been vindicated. This kind of result, according to market watchers in Nigeria is what happens when management experts fall back to their time tested experiences to pontificate on issues of global relevance. With forex becoming somewhat predictable from the about N2200/$ rate late last year to a wobbly N1600-N14500/$ now, business people can now go to banks to make their quotes. These policies have gradually reduced the haemorrhage in the market as streamlined removal of unwanted or unwarranted imports have been able to reduce margin. The policies adapted at the various MPC sessions chaired by Cardoso have really been responsible for an efficient reduction on the inflation rate, especially headline inflation, lending rates. The foreign Reserve has equally gain a lot of traction which is known to have been the best record since the last five years. Cardoso may not be able to hit the apple chart, but has started to make the kind of moves that can take him away from the hoard of Central Bank Governors who came, saw nothing, and said nothing. When it was time to tinker a CBN Governor for the Tinubu administration, Cardoso was not on the list of any of the economic apparatchiks that were referred to as windows to the new Nigerian economy. He may not have established that character in his current office at the CBN, but current developments indicate that he has initiated frantic moves that could be akin to directing government to the right route. His position that the current problem in the Nigerian foreign exchange market is directly a consequence of the actions of governors and the Federal Government’s financial allocation misrule has been hailed as optimistic and patriotic as much as it is courageous. What this position entails is that Cardoso may not be one of the members of the federal executives that will continue to dance to the tunes that brew economic misfortune for Nigeria. Much as his office is important to him and considering the nature of its political undertone, his actions in addressing the dictates in the Central Bank remain very much a huge worry. His reactions to several inanities of governance at the last Monetary Policy Committee (MPC) were enough indications that he is committed to sound monetary and fiscal policy motives that could be good enough for the nascent economy.
In his explanations after the 297th Monetary Policy Committee (MPC), the Governor insisted that decisions of government which drive certain actions and inactions are reasons which the rates regime will always move in the negative direction with what happens in several other economies. He also noted that government’s fiscal policy actions are responsible for the discrepancies at the forex market, noting that the release of money to the State governments by the Federal Allocation Committee (FAC) defines the simple law of demand and supply. He said that there is a correlation between the fall in Naira value at the Foreign Exchange Market and the release of huge amount of dollar by FAC. He indirectly indicted the government on this and sues for a creative fiscal policy approach by the government so that the impact will not make nonsense of existing efforts and indication.
Cardoso’s reference to the FAC anomaly has been praised as it was a very bold spot to take the bull by the horn so that numerous distortions would not creep into the system The reaction is believed to have drawn positive responses from experts who dubbed the outburst as fearless from the point of view that distortions would be minimized. The Governor claimed that a growing spate of confidence in the economy has started to be identified as critical indices have reported very significant growth that could be seen as clear pictures of the effects of structured applications of policies, innovative developments and new attitude to work as has been invoked by President Bola Tinubu.
According to Cardoso, developments in the fiscal policy realms have been identified as efficiently driving the possibility of reducing the country’s import duty bill between 10% and 15% annually, leading to a substantial crash. This is believed to have to potentially reduce forex demands and induce some substantial return to Small and MSME programme as initially agreed under the country’s development master plan. If he can mount on this platform to achieve all these, he may have written his name in gold.
