The long ominous silence from CBN over MPC meetings

If Nigerians and indeed the global community ever needed information on policy direction on the Nigerian economy, it is now more than ever before. Unfortunately, it seems no agency of the current Federal Government musters the guts anymore to give a definitive stance as to the (exact) policy direction of the President Bola Ahmed Tinubu administration. All we get are prevarications and tergiversations; or, mere propaganda. This is especially with respect to monetary policy trajectory — where wholesale reign of ‘market forces’ has woefully failed in the past five months or so. And so, for two consecutive times, the Central Bank of Nigeria (CBN) has remained silent when its Monetary Policy Committee (MPC) was scheduled to (statutorily) meet.

Specifically, the MPC’s 293rd meeting which was scheduled for Monday and Tuesday, September 25 and 26, 2023 was ‘put off.’ Again, what would have been its 294th meeting, scheduled for Monday and Tuesday, November 20 and 21, 2023 also did not hold. In both instances, no tangible reason came from the apex bank to fully explain to its stakeholders as well as the general public why the MPC meetings did not hold. Obviously this avoidable vacuum has given a large room for speculations, rumours, outright guesswork and disinformation. With respect to the 294th MPC meeting, the corporate communications director of the apex bank merely glibly said in a terse statement: “MPC not meeting this week. All roads lead to the 2023 Chartered Institute of Bankers (CIBN) dinner scheduled for November 24, 2023.”

But rather than douse the worry and concern of genuine stakeholders in the nation’s financial system, this shallow ‘excuse’ by the CBN’s spokesman threw up more suspicion and worry. First, is the downplaying of the place and importance of the MPC and its meetings in the financial system in particular and the economy at large. Perhaps, it is not clear to the current leadership of the apex bank that the MPC meetings are statutory mandates — derived from the CBN Act 2007. Thus, the MPC meetings are held bi-monthly (once every two months) to x-ray the state of the economy (global and local) to take critical stance on the country’s monetary policy trajectory.

Secondly, although the CBN governor chairs the MPC, with his four deputy governors as members, there are about three or four others from outside the apex bank who are also members. Therefore, the MPC and its meetings are not entirely an internal/domestic affair of the CBN, and cannot be treated as such. Thirdly, over the years, the outcomes of MPC meetings have become so critical to financial and business analysts, industry players, investors and other stakeholders that the current situation as an aberration, poses a dangerous lacuna. Two consecutive meetings of the MPC not holding leaves a wide gaping lacuna in the availability of monetary policy direction of the government.

Fourthly, the glib reference of the spokesman of the CBN to “all roads leading to the CIBN 2023 annual dinner” is at best confusing and laughable. Although the CIBN has invited the CBN Governor, Olayemi Cardoso, to its dinner, whatever he is going to say at the dinner cannot and should not be a substitute for the usually rich communique that normally emanates from the MPC meetings. The CBN governor’s address at the dinner will be his personal opinion on financial and/or economic matters; and cannot be a substitute for MPC communiques.

And truly, the reference to the CIBN dinner appears diversionary, because Mr. Cardoso as a ‘rookie’ governor will be operating in unfamiliar terrain — the CIBN dinner that he will be attending for the first time in his new capacity. He will have no grounds to flaunt the achievements of the CBN so far this year; nor has he been part of their challenges either. He will not be presenting the score card of his immediate predecessor in office nor will he be comfortable with projecting recent policies/reforms of Tinubu administration that have put the economy in tatters. Cardoso will equally be hamstrung in saying anything about the monetary/fiscal policy thrust of the government because the outlook of both the fiscal and monetary terrain is yet thickly foggy. 

The Naira — a victim of market forces doctrine — is yet to find its level in the foreign exchange market, since its full floatation mid-June 2023. The free market (full interplay of demand and supply) into which it was ‘dumped’ has battered it to no end. From about N460/US$ at the point of full floatation in June, the exchange rate of the Naira now hovers around N1000/US$ whether in the official or parallel market segment. Demand for dollars far outstripping the supply is still the order in the forex market; and the local currency remains on a blind alley.

The forex market itself is yet beleaguered by (outstanding) ‘backlogs’ that run into billions of dollars, and which the CBN is in no position to clear any time soon. The apex bank also has not much elbow room even to borrow since some forex ‘forward deals’ contracted in recent years are still an Albatross. Inflow from crude oil sales is already threatened by lingering massive oil thefts, pipeline vandalism and incidents of sabotage. The CBN is therefore highly encumbered when it comes to forex availability or liquidity of the forex market.

There is also little or nothing the apex bank can do as regards the runaway inflationary trend — with the rate standing at 27.33 percent as at end-October 2023. Local and foreign observers/analysts, including the World Bank and the International Monetary Fund (IMF) have projected that the inflation rate would hit about 30.0 percent by end-December 2023. A key driver of this trend — food inflation — keeps galloping higher, owing to acute food shortages in most parts of the country, owing to insecurity. Therefore, no magic wand can be wielded by the CBN to curb the raging and ravaging inflationary trend. The manipulation of the monetary policy rate (MPR) and other policy instruments (like the cash reserve ratio, CRR) has already failed in curtailing the rising inflation rate.

It is also not likely that the apex bank will not fall to the pressure for “Ways and Means” facilities for the Federal Government, going forward. It is on record that in the past few years the CBN remained a source of ‘easy funding’ to the immediate past administration, with outstanding facilities still amounting to about N23 trillion by May 2023. Unfortunately, the situation has not changed remarkably: upshot of recent economic policies are scorching many corporate operators to death. So, projections of huge taxes from company income tax (CIT) into the tills of the government are seriously unrealistic. Not even much will come from other economic agents who are desperately looking up to the Government for palliatives to cushion the ravaging effects of recent economic policies. Most businesses are barely operating skeletally on shoestrings. Many have quietly folded up!

All said, Governor Cardoso and his team should not take the CIBN dinner invitation as an escape from the high expectations of critical stakeholders of the Nigerian economy. The CBN Governor’s speech at the dinner cannot be a substitute for the MPC communique, which has been very much expected for close to five months. The authorities of the apex bank must use the appropriate channel to inform Nigerians and the global community about the policy thrust of the government. Further delay or adoption of some decoy will be ill-advised at this point in time. And shrouding government’s policies and methods in secrecy can only breed public distrust and whittle down confidence in the administration.

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