Sarah Alade Quotes

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.

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.

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.

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.

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 independence of the Central Bank is necessary. The Bank needs the freedom and space to take a long view of what is best for the economy and take decisions accordingly. Central Banks have consistently moved towards policy independence to pursue policies free from political interference. Although no central bank can be entirely independent of government’s influence, it must be free to choose the instruments it needs to achieve its mandate. The Bank must also be free from fiscal dominance; that is a situation where fiscal considerations unduly dictate monetary policy.

The exercise paralysed activities at the apex bank.

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.

We went for the IMF meetings and when we met with investors, they asked us: ‘what is happening? We understand that there was some financial mismanagement in the CBN.’ It was humiliating.

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 experience was humiliating for her and the entire management of the bank, said it was the first time that the bank would be investigated in its entire history.

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.