The Central Bank of Nigeria (CBN) is set to shift its focus away from direct development finance interventions and transition into an advisory role in promoting economic growth. This transformation, led by the new governor, Dr. Olayemi Cardoso, was revealed in a document acquired by LEADERSHIP,
Under Dr. Cardoso’s leadership, the CBN will discontinue its involvement in various development finance programs, including the Anchor Borrowers Programme, the 100 for 100 Policy on Production and Productivity (PPP), the Real Sector Facility (RSF), and the Nigeria Electricity Market Stabilization Facility. These programs have collectively disbursed over N9.71 trillion in the past three years. The document highlighted that the CBN’s foray into development financing had blurred the lines between monetary policy and fiscal intervention.
The document stated, “In refocusing the CBN on its core mandate, there is a need to shift the CBN’s role from direct development finance interventions to more limited advisory roles aimed at supporting economic growth.”
In this new advisory capacity, the CBN will act as a catalyst for the establishment of specialized institutions and financial products that bolster emerging sectors of the economy. It will also facilitate the creation of new regulatory frameworks to unlock dormant capital in land and property holdings, enhance access to consumer credit, expand financial inclusion, and focus on de-risking instruments to attract private sector investments in sectors such as housing, textiles, clothing, food supply chain, healthcare, and educational supplies. The CBN aims to harness its convening power to engage key multilateral and international stakeholders in government and private sector initiatives.
The document emphasized the economic policy goals of the Administration, aiming to achieve a $1.0 trillion GDP within eight years. It noted that achieving this goal would require substantial economic reforms, including addressing challenges like inflation, foreign reserves, and the capacity to recover quickly from economic downturns.
Dr. Cardoso acknowledged the need to clean up the CBN and its monetary policies, mentioning the appointment of a special investigator to oversee this process. He also outlined key challenges facing the CBN, including corporate governance, institutional autonomy, and the need to refocus the CBN on its core functions, such as evidence-based monetary policies. The document called for discontinuing unorthodox monetary policies, addressing issues related to Ways and Means spending, clearing the backlog of FX demand, clarifying fiscal and monetary relationships, and responding to inflation and price stability concerns.
Additionally, the document questioned the mechanisms for access to the foreign exchange (FX) market and FX price discovery. It also highlighted the role of the Central Bank in the FX market and the potential need for interest rate realignment to factors like money supply, inflation, and market conditions. Lastly, it mentioned the need to monitor the stability of the financial system, especially in light of the expanding use of electronic payment systems by Fintech and Telcos.