The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) yesterday, retained lending rate 14 per cent, even as it stressed the decision was intended to consolidate on and deepen the successes recorded by the economy in recent times.
The nine-member committee had also voted for the retention of the Cash Reserves Ratio at 22.5 per cent; Liquidity ratio at 30 per cent across Asymmetric Corridor at +200 and -500 points around the Monetary Policy Rate (MPR).
Speaking at a press briefing in Abuja yesterday after the meeting, the CBN Governor, Mr. Godwin Emefiele, dismissed rumours that the sale of 9mobile Telecoms (formerly Etisalat) had ran into troubled waters following allegation, that its Financial Advisers, Barclays Africa, had pulled out.
Emefiele said the bank does not have any letter to that effect, adding that, “Barclays was engaged via a letter and if it decides to pull out, it will also say so with a letter.”
He said: “You will all recall that at the last MPC the issue of 9mobile was raised because the regulators – believe 9mobile is a systemically important telecommunication network in Nigeria.
“These two institutions decided to intervene to see to it that the 21 million subscribers do not just start running up and down without finding a place for cover. So, the best thing we did was to stabilise the company and see to it that banks and other important creditors did not go into a journey of dismembering it, which may lead to a loss of confidence even in the telecommunication and the banking sectors.
“So NCC and CBN intervened to see to it that there is stability and also ensure that the transfer between the old and the new ownership is done in a seamless manner. That process has continued. It is just like a normal process; there would sometimes be cases where things are not done the way you expect them. But what the NCC and CBN had come in to do, is to correct some of the anomalies we found in the sale process at this time and I am optimistic that the sale process is still on track. There is a determination that, that sale must take place before December 31, 2017.
“We remain focused on it. Somebody hinted me that there was a news report that Barclays Bank has withdrawn, but I will say that Barclays Bank was hired with a letter, so if it decides to withdraw, it will do so by way of a letter. But as I speak with you, there is no letter to that effect. I want to say that the report was wrong; we are only trying to let you know the process,” said CBN governor.
Commenting on the stability in foreign exchange market, reduction in headline inflation and reforms in macroeconomic policy as some of the positive gains that have accrued to the economy lately, the CBN governor said MPC members in their wisdom voted to hold rates unchanged in order to consolidate on the modest gains.
The governor was optimistic that single digit inflation target is realisable in a short period given the current deceleration in inflation figure.
“Between early 2013 and 2014, and around 2015, the CBN set inflation target of 6-9 per cent and this was substantially adhered to,” he said.
We must realise that those were periods from 2012 and we keep saying five straight years from 2009 to about 2014, crude prices averaged $110 per barrel. Reserve accretion at a time in 2008 stood at $62 billion.
Exchange rate stability was taken for granted during those periods but unfortunately, beginning from the Q1 of 2014, we got hit by three external shocks – the drop in commodity prices, and for us crude price; the geopolitical tension along various trading routes across the world; as well as the US normalisation policy. These had tremendous adverse consequences on our economy and we could see that inflation moved from 9 percent in January 2016 to 18.7 percent in January 2017. And that is the reason most members of policy committee meeting think it is too high and we are working very hard, thinking very seriously and manage for price and monetary stability and see to the fact that inflation is brought down to the traditional level where we have our target of between 6-9 percent. We are working hard at it and I am very optimistic that with the focused and tenacity of the monetary policy committee that this will be achieved”, the Governor said.
