Yusuf sets agenda for CBN as Cardoso takes charge

As Dr Olayemi Cardoso’s assumes his new responsibility at the Central Bank of Nigeria (CBN) ahead of the Senate screening, Director General of the Centre for Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said he would need more than character to get the job done. He listed about 10 issues he should focus on to achieve success.

In a document shared with The Guardian, Yusuf wrote: “Cardoso has the pedigree, disposition and character that the position demands” but admitted the job at hand requires much more than character to get the right result.

The economist said: “Cardoso is assuming the leadership of the CBN at a very crucial time in our economic history. There is a serious confidence crisis in the foreign exchange market fueling an unprecedented speculative onslaught on the naira. The economy is grappling with severe adverse effects of depreciating exchange rate, soaring energy costs, ravaging inflationary pressures, a huge backlog of foreign exchange obligations that need to be cleared and debt service obligations that need to be redeemed. Sadly, these outcomes are manifesting at a time when the country’s foreign reserves have been substantially encumbered.

“There is an apparent deceleration in the pace of economic reforms as the outcomes are at variance with expectations. The social costs of the reforms were substantially higher than anticipated, resulting in push-backs from the civil society.

The economic management orthodoxy of market forces is being called into question in light of the social outcomes of the market-oriented reforms. There is a measured re-emergence of the political economy with the reappearance of fuel subsidies and divergence in exchange rates. This is an economic management quandary that the new economic team would have to manage, and urgently too. And the CBN has a key role to play in this.”

The CBN must ensure strategic and transparent intervention in the forex market to minimize volatility as far as the reserves can support. In addition to the I and E window, he said, it has become necessary to create an autonomous window in the banking system where the currency can trade freely without any encumbrances.

“This is necessary to avert the diversion of remittances to other jurisdictions or the black market. We cannot afford to live in denial at this time. The clearance of the backlog of forex obligations should be accorded high priority to restore the confidence of domestic and foreign investors,” he said.

He also called for the deepening of the financial system, saying is imperative to deepen the financial intermediation role of the deposit money banks. This responsibility, he noted, entails the mobilisation of financial resources from the surplus end of the economy.