The newly appointed governor of the Central Bank of Nigeria assumes full control of the organisation this week, his biggest challenges will be to rebuild trust in the institution after eight years of poor management. He’ll also have to increase confidence in the nation’s currency; the naira, which has taken a good beating over the years, and produced one of the highest rates of inflation on the continent.
President Bola Tinubu has implemented a number of new measures since taking office in May, including eliminating a $10 billion yearly fuel subsidy and liberalising the foreign exchange market. The much-needed changes, however, negatively affected an already weak economy. The naira went on free fall precipitously, reaching previously unheard-of lows, and petrol costs have more than tripled, driving the inflation rate to an 18-year high.
However, the CBN governor in response to questions from senators at his screening in Abuja on Tuesday, plans to deploy instant measures that will help strengthen the fragile trust of foreign investors in the Nigerian economy with the expectation that it will put the brakes on the free fall of the naira against the dollar. The decision is based on two main objectives, including the idea that paying down a sizable amount of past-due dollar debts could relieve the naira’s ongoing pressure and free up foreign currency operations, which have recently been constrained by speculative demand for the dollar.
The second step, which the former Citibank Nigeria chair promised to implement, entails enforcing compliance with all regulations pertaining to making the foreign currency market accessible to investors and transparent. “A refocused CBN will better serve the country. In restoring the CBN to its core mandate, we must limit CBN to its advisory role and facilitate a new regulatory framework,” he said.
Cardoso further explained, saying, “We have to be transparent so that any of the players in that market will understand.”