For Nigeria’s Central Bank (CBN), floating the naira is a no go area that would do more harm to the economy. Last weekend, the bank said that it had to resist powerful forces determined to pillage and control the economy by insisting that the naira be floated.
Below are five takeaways from the CBN’s Director of Corporate Communication, Ugochukwu Isaac Okoroafor, during an interactive session with editors in Abuja.
- Pro-floating forces: Powerful and influential individuals and organisations applied pressure on the bank and embarked on a campaign to force it to float the naira, the CBN said. Okoroafor argued that such a move and the accompanying uncertainty would have exposed the Nigerian currency to the “harsh vagaries of market forces.”
- Banned list: The 41 items on the banned list of items not eligible for forex from the official window will neither be reviewed nor removed. The CBN says its thinking behind that policy remains the same as it was when first introduced in 2015: There is a need to manage the excessive demand for foreign exchange, hence priority must be given to critical sectors of the economy.
- RIP Black Market: The CBN gave itself a pat on the back for its forex management system which “is yielding positive outcome.” According to Okoroafor, the parallel market (black market), “is already dead because of proactive policies of the bank.”
- Transparent CBN: “People erroneously believe there is a lot of money in the bank and they resort to blackmail hoping to get some money. We run an open, transparent and accountable system compared to any good central bank in the world. Our books are open and there is nothing to hide,” Okoroafor said.
- Not over-funding the FG: The CBN had recently been criticised for over-funding the federal government above the threshold. The CBN once again denied that claim. Okoroafor simply reechoed what the CBN governor, Godwin Emefiele, said last week after its Monetary Policy Committee (MPC) meeting. “The CBN is not funding the federal government beyond the threshold. The government on its own decided that its funds in banks be moved into the Treasury Single Account (TSA) in the CBN. It is the government’s money,” Emefiele had said. “What is over-drawn is much less than what the government has in its TSA account.”