Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, yesterday met with 300 of the nation’s business leaders for whom he brought a rather re-assuring word in these times of economic uncertainty. He said, “We will not panic and you don’t panic.”
Global prices of oil, Nigeria’s mainstay, have fallen by 55 percent, piling pressure on the local currency with rates at the black market segment hovering around N208 per dollar, but the CBN governor who reserved his strongest words for speculators, including unnamed banks, repeatedly said the apex bank was capable of defending the reserve and the currency.
“With foreign reserve of $34bn, we can support this economy, we can defend the reserve, we can defend the currency,” the governor said, adding that the volatility in the foreign exchange market was being fully monitored.
Emefiele admitted some persisting imbalance in the structure of the economy, asking for instance, why as a nation, Nigeria should continue to import rice and other items like sugar.
His key message was there should be no panic, there should be an end to front loading by banks, speculators betting on the naira will lose their money, the CBN will suspend the dealing license of any defaulting bank, firms which support foreign exchange purchase with fake documents will be banned, the CBN will continue to encourage and support companies engaged in import substitution and the CBN will defend the naira.
BusinessDay learnt that the apex bank was watching at least four banks over unholy foreign exchange transactions and one has already been fined N400 million.
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Emefiele raised a poser over the rising demand for foreign exchange, supposedly for the importation of refined petroleum products, saying when the government put a searchlight on the management of the bogus oil subsidy regime, the demand for foreign exchange fell and now it is rising again without good reason.
Our reporter learnt that in one week alone recently, of the total demand of $900 million for foreign exchange on RDAS, a whopping $800 million was traced to importers of refined products.
The apex bank governor had good company in such leading lights like Pascal Dozie, founder of Diamond Bank and founding chairman of the NESG, who said he was particularly consoled by the assurance that the CBN would not panic but he pointed to the need to carry the message for restructuring of the economy to policy makers in Abuja.
Dozie’s concern about how the nation’s policy makers have failed over the years to chart a true path to diversifying the economy was re-echoed by another veteran of Nigeria’s industrialisation, Mohammed El-khalil, founder of 7up Plc who spoke of a sense of dejavu for those who have watched the Nigerian economy for many years.
Aliko Dangote, Africa’s richest man suggested to the governor that there may be the need to make an example of at least one bank, by suspending its operating license, saying this gesture would be enough to keep all others in check.
Dangote, who is building a $9bn petrochemical plant in Lagos state, said by 2017, Nigeria would be one of the largest exporters of ammonia and urea. He also hinted that by 2018, Dangote group would be the largest single seller of foreign exchange in Nigeria after the Central Bank.
Jim Ovia, founder of Zenith Bank, where Emefiele was CEO until he took the apex bank chair, said as a people “we have been spoilt. We have wasted years of high oil price.”
He was however hopeful, saying, “when you face adversity, the best usually comes. So let us seek ways to make this happen.”
George Coumantaros, the chairman of Flour Mills Plc whose firm is investing $250 million in a sugar project in northern Nigeria, joined in stressing that import substitution and policy stability are paths to economic growth for Nigeria.
Flour Mill’s investment joined with others by Dangote Group, are aimed at halting sugar importation in another four years.
Nigerian banks are to begin reporting full year 2014 earnings in about two weeks. The results are expected to be mostly lack luster due to last year’s tough operating environment and the CBNs tight money policies.
HOPE MOSES-ASHIKE
