The Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi, has called for transparency and accountability in the oil sector of the economy, so as to plug the leakage in the system.
Making particular reference to between 2010 and 2011, Sanusi at the Metropolitan Club meeting, in Lagos, observed that Nigeria ought to have saved more considering the rise in the oil prices at the international market.
He decried the situation where only the Excess Crude Account (ECA) was being used to service subsidy, adding that a situation where the subsidy moved astronomically from N300 billion to N2.1 trillion in a few years, left much to be desired.
Also, the CBN’s recently released three tiered Know Your Customer (KYC) requirements implementation strategy is to ensure the success of KYC policy started by the banks last year, expected to end April 30 this year.
The success of the tiered regime would not only promote financial inclusion but also increase the effectiveness of KYC requirements and improve the quality of KYC information obtained by financial institutions by their customers, Nwoha I.T., acting director, financial policy and regulation department, CBN, said in a letter to all banks and other financial institutions.
“We have, however, observed that the laudable policy would produce lasting result, if it is properly implemented and monitored timely, from its inception. It is on this note that attached implementation strategy for the Three Tiered KYC Requirements was developed by the CBN in other to ensure its success,” the letter reads.
The governor, however, acknowledged the contributions of Ngozi Okonjo-Iweala, finance minister, for the economy in curbing the leakage, saying “we cannot deny that there is a need for serious governance review of transparency and accountability in the oil sector, because the ECA is what is used to pay subsidy and if subsidy moved from N300 billion to N2.1 trillion in a few years, then questions should be asked.”
Now, having said that, no one can deny that between 2010 and 2011 when oil price was going up, we should have saved more than we actually did and we spent more than we ought to, he said, saying as CBN governor I spent the whole of those two years talking about fiscal leakage.
“This is not to say there were no truth in the questions raised. But I must say that there have been tremendous amount of progress made on the fiscal side. We have seen a lot of work being done to shut down some of these leakage, and it is that work that is being done by the finance ministry since Ngozi took over that has actually helped in bring up reserves and stabilising exchange rates,” Sanusi said.
The CBN governor also decried the present situation whereby the economy was focusing on selling goods abroad and thereby denying the citizens of the benefits of investing the resources, noting that
“we don’t need to have an economy that focuses on selling goods abroad. We have the market. The business model for Nigeria has to be developed. Taking our leathers, when we kill our cows, lets leave the skin for shoes and bags, instead of eating it.”
He, however, commended the stability being experienced in major economic indices, adding that in terms of stability, “Nigeria has not been at this place for a very long time. Where exchange rates are, where reserves are and where the banking system is.”
To him, there is need to get the economy to a point where if oil price crashes to $10 per barrel, even if we feel the hurt, we would not cause a distortion, as fixing the financial services sector alone can not create the desired positive effect, since it contributes only about 4 percent of GDP.
“Fixing it (financial services sector) doesn’t fix much, and how many people are employed in the financial system compared with the number of people employed and the impact in the agricultural sector and manufacturing. Financial services sector cannot be the engine for growth,” he said.