CBN should focus on fighting inflation – World Bank

The Central Bank of Nigeria (CBN) is trying to boost growth, keep foreign exchange stable and fight inflation. They can’t do these three things at the same time, Miguel Saldarriaga, the country’s economist at the World Bank, has said.

Miguel said the CBN has two primary goals, are to fight inflation and ensure financial stability.

“When the central bank tries to add more goals to what it does, things start to go wrong because the central bank cannot control many things at the same time,” Miguel said on Thursday at Lagos Business School’s World Bank Nigeria Development Update themed “The Continuing Urgency of Business Unusual.”

During the event, it was mentioned that CBN’s intervention programs to boost growth have not been effective, and there has been no data or audited reports to show the progress and efficiency of these programs.

Read also: Tracking CBN’s intervention funds and banking sector soundness

“CBN’s interventions in sectors such as agriculture haven’t really been effective.” Miguel added that CBN has a form of repayment where farmers can pay back with bags of rice. “No central bank in the world is doing that,” he said.

He mentioned that the world bank wasn’t against these interventions as they were needed to boost growth. He, however, said that the CBN shouldn’t be the institution in charge of it.

According to Miguel, in 2021 Central Banks across the world increased interest rates to curb inflation. “Only the CBN failed to do so amongst the emerging economies,” he said.

“CBN needs to be more transparent with its operations, focus solely on fighting inflation and ensuring financial stability,” Miguel said.