Sarah Alade Quotes

Throughout my period at the bank, I have one slight regret and that’s during the period I was acting governor. It was the time that the CBN was being investigated. It has never happened before that the activity of the CBN is under investigation.

The future of the Nigerian economy is very bright. The Economic Growth and Recovery Plan (ERRP) by the Federal Government with other complementary policies are set to propel the Nigerian economy out of the recession and move the economy forward. The broad government strategy of infrastructure development, structural reforms and investment in social safety nets are policies that will position the economy to a more inclusive and diversified growth.

The threat to CBN autonomy is also disturbing. Global best practice prescribes central banks’ independence to enhance policy coherence and sturdiness born out of freedom of vision and implementation space.

So I want to encourage us that whatever we need to do, let us do it right. We must not subject this institution to that type of incident again.

The monetary policy of the Central Bank of Nigeria in recent times has continued to focus on achieving price and financial stability for economic growth and development. The persistent inflation in the last one year is an issue of concern.

Financial illiteracy results in poor financial inclusion. Non-financial inclusion becomes a threat to the survival of the Nigerian financial sector as most adults and young Nigerians are financially excluded from the formal financial sector. A high percentage of adult Nigerians don’t have bank accounts, and this in the long run becomes a big headache for central banking.

In recent years, academics and policymakers have shown increasing interest in the independence of central banks with respect to the formulation of monetary policy. In the European Union, this interest was realized in the Maastricht Treaty, which gave the European Central Bank complete autonomy in conducting the monetary policy without political intrusion. Most empirical studies support central banks’ autonomy in the conduct of day-to-day monetary policy operations devoid of political pressure. This enables them to deliver better inflation outcomes, without compromising economic growth. The CBN Act of 2007 bestows independency on the Bank.

The Organization for Economic Cooperation and Development (OECD) countries in 2008 recommended the imposition of some form of capital controls that at least restrain inflows of short-term funds, which the CBN has done. The CBN will also do well to stick to its statutory mandate of maintaining price stability for growth. This will go a long way in moderating inflation and stimulating growth in the long run.

Poor financial literacy is another. It is only when the vast majority of the Nigerian population is financially literate that they can participate in the formal financial system; the reverse is the case.

Key global trends such as Brexit, the rising wave of populist and anti-globalization sentiments anchored by emerging bilateralism, divergent monetary policy stance of the advanced central banks and disorderly commodity price movements will also affect monetary policy at home. These global developments coupled with domestic factors will make monetary policy management very difficult this year. Based on these, monetary policy management in Nigeria must be diligent and collaborative to achieve its objectives of price stability in the home front.

I think for me, that was a low point. The credibility for this institution was eroded. For an institution this important to be subjected to that is bad. At the end of the day, it was not just the CBN that suffered for it, but the economy as a whole did suffer.

Monetary policy management has been made difficult by the uncertain global environment, arising from political and economic developments around the world. There has been an intense attack on free trade, multilateralism and globalization and the situation has not been helped by a growing preference for nationalist interest.

It is also expected that the fiscal authorities would provide direction and leadership while the monetary authorities would facilitate an enabling business environment conducive for growth. Nonetheless, the overriding mandate of the Bank continues to be price stability across the major price rates: inflation; loan interest; and foreign exchange. Stability in prices is essential for investment and consumption. Monetary policy can help through influencing short-term interest rate, but monetary policy alone is not enough to pull the country out of recession. Fiscal policy must come in and do its part to fully pull the economy out of recession.

For Nigeria, like most developing countries, policy has often times focused on the flexible exchange rate regime and financial integration, emphasizing monetary policy independence. However, as globalization, capital flows constraints and other adverse phenomena set in, it has become imperative to seek a convergence.

The inflationary pressure could be traced largely to structural factors, which included poor electricity supply, high cost of energy arising from scarcity of petroleum products, increase in the prices of imported food, raw materials and finished goods, seasonal factors, increase in electricity tariff, insurgency and insecurity in the North East, as well as pipeline vandalism by the Niger Delta militants. However, some monetary factors included exchange rate depreciation, and budget deficits in the face of dwindling oil revenues.