Monday, January 14, 2013

CBN: Nigeria is Not a Poor Nation


The Central Bank of Nigeria (CBN) has debunked the impression that Nigeria is a poor country, saying instead, there is inequality in the income of the citizenry.

Making this assertion in Lagos Monday, the CBN Director of Communications, Mr. Ugo Okoroafor said: “Nigeria is not a poor nation, what we have is income inequality.”

Okoroafor who spoke at a roundtable on the theme: ‘Nigeria’s Fiscal and Monetary Crises: The Way Out,’ organised by the Save Nigeria Group to mark the first year anniversary of the 2012 subsidy removal protest tagged ‘Occupy Nigeria,’  maintained that the country’s economy is a major rival to South Africa in Africa.
Earlier, the duo of the Director of Research, Charles Mordi and Director, Monetary Policy of the bank, Dr. Okorie Uchendu, had defended the bank’s policies and placed blamed where necessary.
The trio reacted to a critic of the CBN, Mr. Henry Boyo, who vehemently maintained that the inflation and interest rates were too high and that money in the federation account should be disbursed in dollars.
Mordi, however, agreed that the idea of distributing the money in dollars was worth considering,” he said.
“I’m not saying we shouldn’t consider it. It is worth considering it.”

He also pointed out that it would be detrimental to the economy “if you share the money in dollar, you put dollar into the hands of economic agents, and it leads to naira shortage. When that happens, CBN will have to intervene because if you create naira shortage, it will lead to higher interest rate.”
Mordi explained that the CBN is duty bound by the constitution to disburse the fund in naira, stressing that “if the constitution says all revenue should be shared in dollars, we will comply with it.”
He also emphasised that if $43 billion was in foreign reserve, while $13 billion could be allocated, $30 billion, which the bank had paid for in naira was left with it and that the money was used to stabilise naira.
“We have to play in the foreign exchange market. We use the money to stabilise the naira when we feel there is pressure and the naira is depreciating, because the depreciation of the naira is not good for business,” Mordi explained.
He also noted that the trio of low interest rate, low inflation and stable currency are ‘unholy trinity’ that cannot be achieved at the same time.
The CBN officials maintained that the bank was transparent in it transactions, while Okoroafor harped on constitutionality as part of the constraints that are limiting the activities of the bank, and appealed to Nigerians to canvass support for the passage of CBN bills at the National Assembly.
He also encouraged Nigerians to inculcate the attitude of consuming home-made-goods.
Okoroafor also emphasised that the country required reforms. “We need structural reforms. For example, the Land Use Act must be repealed. The N3.3 trillion in the pension fund, why is a significant portion in treasury bill? If we cannot put the money into productive use, then there is problem,” he noted.
Pastor Tunde Bakare who coordinated the roundtable session, wondered why there is no evidence of serious pursuit by the CBN to achieve the desired low interest rate.
He also asked: “What is needed to be done to get Nigeria’s economy right and how long is required to deflate the economy gradually?” to which the officials maintained that Nigeria needed to improve on its infrastructural development, especially the provision of reliable electricity, to improve the nation’s production capacity and reduce reliance on foreign products.
Boyo, however, maintained that the “unholy trinity,” which he said was propounded by former CBN governor, Prof. Charles Soludo, was “false,” stressing that low interest rate, inflation and a stable naira are achievable.
-----------SHOLA OYEYIPO/THIS DAY
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