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CBN response to NESG

Monetary Policy: War of attrition between CBN, NESG

By on September 11, 2020 0 144 Views

By Oludare Mayowa

“A fight with the CBN that has the capacity to pull the plug on many fronts on the group may be an unequal battle that could leave the NESG prostrate.”

The Central Bank of Nigeria (CBN) is unarguably at the apex of financial market regulation in the country, its power over banks and other financial institutions is enormous and this gives its governor extensive and wider authority, even beyond the primary sector it has the mandate to regulate.

The CBN role in the economy is also dominant that its Governor has a power that is more extensive than a minister of finance and budget and perhaps second to the power and authority vested in the president of the country.

The only authority that could put a check on the power of the CBN governor is that of the president and maybe the National Assembly that could also wield its own power to tweak the enabling Act of the apex bank to reduce the power conferred on the bank and its officials.

RELATED STORY: CBN Hits Back At NESG, Says Group Allegations Have Sinister Motives, Malicious



A sneeze by the Governor of the CBN could cause the entire banking industry and even the economy to quack, with top-level officials of corporates often at the mercy of the CBN as a result of their reliance on foreign exchange which for now it’s the sole responsibility of the CBN to provide for those who require it for their business survival.

The news on Thursday that four chief executive officers of some banks resigned their positions on the board of the Nigerian Economic Summit Group (NESG) in protest against the group position criticizing the CBN on certain issues did not come as a surprise and the action is seen by many industry observers as the continuation of the verbal war sparkled by the initial statement of the summit group.

The NESG had in a statement on Monday lashed at the CBN forex management and the amendments to the BOFIA, which the group described as draconian and the transactions on the forex market by the apex bank as lacking transparency.

The CBN did not take such criticism lightly and fired back the following day after the news had hit the newsstand.

According to the CBN, the NESG position should have been discussed first with the bank before making such public and therefore considered it as an affront on the governor of the CBN and perhaps with a sinister motive to impugn on the image of the governor.

“The false alarm raised by the Nigerian Economic Summit Group raises serious credibility questions on the actions of the group … significantly harmed the credibility of the Governor and the CBN as an institution,” the CBN had fired back at the NESG.

Considering the important role of the NESG as the think tank of the private sector group, it’s not out of place that the CBN regarded the position of the group on the way the CBN is running the country’s monetary policy as a vote of no confidence on the governor.

The NESG has since inception became a strong voice in the shaping of the country’s economic policies and had become the government reservoir for policy options.

The group is currently working on various projects with a number of government institutions on the MDGs and development of policy options for alternative economies outside the oil sector.

Having seen the position of the group as not only a vote of no confidence on the governor but an indictment of the capability of the apex bank in the management of the monetary policy, the bank may have chosen to fight back big to teach the NESG some lesson on power and authority.
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Apart from the four chief executives of banks that were said to have quit their position on the board of the group, more of such move is also expected from other stakeholders who are within the reporting ambiance of the CBN.

According to sources, the governor of the CBN is considering mounting pressure on some other members of the board to move against both the chief executive of the NESG Laoye Jaiyeola and its chairman, Asue Ighodalo who is the chairman of the board of a bank under the CBN supervision.

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Unfortunately, unlike the CBN with enormous power and wealth, the NESG is like an orphan who has to depend on the generosity of others for its survival both financially and otherwise.

A fight with the CBN that has the capacity to pull the plug on many fronts on the group may be an unequal battle that could leave the NESG prostrate.

What are the options available for both parties to resolve the issues at stake without resorting to ego fight?

What are the key issues raised by the NESG against the CBN and are there any merit in those allegations or not?

Why is the CBN reacting in such a manner to the position of the NESG on the role of the apex bank on the economy?
The conversations continue in our weekend special edition. Subscribe to Global Financial Digest to read all the intrigues, back door moves, and insight into why CBN is fighting back and the reason behind the NESG anger against the apex bank.

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