The Governor, Central Bank of Nigeria (CBN), Godwin Emefiele, has allayed the fears of Nigerians and the international community over the inability of the Bank to hold the Monetary Policy Committee (MPC) meeting earlier scheduled for Monday, January 22 and Tuesday, January 23, 2018, due to the non-confirmation of the MPC nominees by the Nigerian Senate.
A statement personally signed by Mr Emefiele and issued to the media explained that the MPC meeting would not be held in January 2018 as a result of the Bank’s inability to form a quorum as stipulated in the CBN Act 2007.
In spite of the statutory meeting not holding in January, the CBN Governor noted that key economic indicators continued to move in the right direction.
Consequently, he said the CBN would continue to maintain the key monetary variables as decided in the last MPC meeting of November 2017, which was to hold Monetary Policy Rate (MPR) at 14 percent, CRR at 22.5 percent, Liquidity Ratio at 30 percent and the Asymmetric corridor at +200 and -500 basis points around the MPR.
He cited the recovery in oil prices and boost in domestic production, Nigeria’s exit from recession in 2017, decline in inflation rate to 15.37 percent, and accretion to the country’s Foreign Exchange Reserves, which now stands at $40.78 billion, as positive indicators, stressing that these underscored the fact that the Nigerian economy remained strong.
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Furthermore, he noted that strong investor confidence in Nigeria had attracted inflows of about $13 billion through the Investors’ and Exporters’ (I&E) window, opened by the CBN in 2017. According to him, these inflows have boosted FX supply and helped to stabilize the exchange rate.
“We have also seen Market Capitalization of our Stock Exchange improve by 22.3 per cent from N13.21 trillion on November 30, 2017, to N16.15 trillion as at 19 January 2018, while the All-Share Index (ASI) rose by 18.8 percent from 37,944.60 to 45,092.83 over the same period,” he added.
Mr Emefiele assured that a revised schedule of the Meetings for the MPC would be communicated as soon as the Bank meets the statutory requirements of membership and quorum for the MPC.
He also assured that the Management of the CBN would continue to sustain the gains recorded in the economy as well as its vigilance and proactivity to ensure overall macro-economic stability throughout 2018.
It will be recalled that the President, Muhammadu Buhari, last October nominated Mrs. Aisha Ahmad as Deputy Governor of the Central Bank of Nigeria. He also sought the confirmation of Adeola Festus Adenikinju, Aliyu Rafindadi Sanusi, Robert Chikwendu Asogwa, and Asheikh Maidugu as members of the CBN’s Monetary Policy Committee.
However, the Senate, thereby preventing the committee from forming a quorum, has confirmed none of the nominees. The Second Schedule of the CBN Act (Section 12(5) and 54, stipulates that the MPC shall meet at least four times in a year and that the quorum shall be six members, two of whom shall be the Governor and a Deputy Governor or two Deputy Governors.
Analysts in the financial services sector have ruled out any immediate impact of the cancellation of the Monetary Policy Meeting (MPC).
Johnson Chukwu, managing director/CEO, Cowry Asset Management limited, told BusinessDay that he expects that there will be no immediate impact on the economy.
But other analysts raised concern that the gains recorded in equities market and stability in the foreign exchange rate might face risk over a lack of the MPC meeting holding occasioned by Senate’s confirmation delay.
Speaking with BusinessDay by phone, Ayodeji Ebo, Managing director, Afrinvest Securities limited said this development sends a negative signal to foreign investors.
Specifically, he said it would impact the positive market sentiment that the capital market currently enjoys. “It will be good for the Senate to act fast to ride on the positive gains the economy is enjoying currently,” Ebo said.
The MPC has kept the key rate at a record-high 14 percent since July 2016, trying to balance bringing down inflation and boosting an economy that exited recession last year.
Chukwu said there will be no adjustment in the policy rate but was concerned that no credit will go to the private sector of the economy.
Godwin Emefiele, governor of CBN had in November last year expressed optimism that the rate may return to very low double-digit or high single-digit levels this year barring any unforeseen shocks, adding that inflationary pressure will continue to ease.
Nigeria’s inflation rate, measured by the Consumer Price Index (CPI), dropped to 15.37 per cent in December 2017 from 15.90 per cent recorded in November 2017 according to the National Bureau of Statistic (NBS).
Ita Enang, Senior Special Assistant to the President on National Assembly Matters (Senate) who signalled possibility of resolving underlying issues said the presidency is engaging Senate on confirmation of the CBN nominees. His optimism is a response to heightening concerns that the pending nominations at the Senate could stall the forthcoming MPC meeting- the first in the year.
“On the pending confirmations before the legislature, the President has submitted as required by law. It is pending before the legislature and we are engaging with the legislature within the law,” Enang stated.
“Therefore we are conscious that the National Assembly, and in particular the Senate, is very responsive and very concerned about the economy of the country. And the Senate is also conscious that nothing should be done that will be detrimental to the international image of Nigeria and perception of Nigeria.”
But the continued squabbles between the presidency and National Assembly which has led the Senate to insist that it will no longer confirm most nominations from the presidency is now posing a serious challenge on the Monetary Policy Committee which cannot form a quorum without those key appointments.
