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No action on lending rate ebfore general elections – Emefiele

By on June 9, 2014

The new Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has clarified his agenda on the planned reduction of lending rates, saying no action will be taken on the rates until after the general elections slated for next year.

Speaking to THISDAY in an exclusive interview Saturday, the CBN Governor said his agenda which he unveiled last week is to run for a period of five years, explaining that the apex bank will continue to hold unto to exchange rates and will not devalue the currency.

Emefiele, who said there is no need for panic, regretted that certain mischievous people were already twisting his statement of intent to create unnecessary panic in the market.

“There are some mischievous information being passed in the market and I want to correct them. First of all, the agenda that I presented is a five year-agenda. It is not an agenda for today and in that agenda, I said we will continue to hold unto the exchange rate and that we will not devalue the currency. Secondly, we said that there will be a gradual reduction in lending rates. The lending rate aspect is not an action that we are taking now. If you check my write-up on between pages nine and 11, I said there that the lending rate will be done with a gradual reduction and we will be looking at liquidity as well as the environment as we move towards the election. Then yesterday, I granted an interview to Reuters, where I stated very clearly and specifically that lending rate action is not an action that will be taken before the election. We will be monitoring liquidity and other parameters in the system, but some people are mischievously reading meanings to it and for that reason they are trying to react to the market,” the governor said.

Interest rates have been stuck at 12 percent since late 2011, and liquidity tightening measures are credited with lowering inflation from 15 percent in 2010 to 7.9 percent currently. But businesses say lending rates remain punitive.

Saying the misinformation is being carried too far, Emefiele said, the other mischievous thing being done is that yesterday (Friday), the interbank market rate closed at N162.55 to a dollar, whereas some papers carried it today that it closed at N164.4, which is wrong. This, according to him, is to create panic in the people.
Meanwhile, barely one week after his resumption, Emefiele may have commenced the restructuring of the institution, with the appointment of some key aides, a step which industry watchers described as an attempt to start on a clean slate.

Dependable sources told THISDAY yesterday that the appointments included that of Dr. Yakubu Umar, who is now his Special Assistant on Islamic Banking.
Other key appointments made included that of Alhaji Abba Masanawa, who becomes the governor’s Chief Liaison and Special Assistant on Inter-governmental Relations.

Also appointed was Dr. Kingsley Obiora, who is now a Special Adviser on Economic Policy.

All the new aides were said to have been officially notified since their appointments were with the immediate effect.

Umar’s appointment, it was gathered, was a demonstration of the new governor’s support for the Islamic Banking model and that it was aimed at correcting the impression that Emefiele, a Christian might not be favourably disposed to Islamic Banking model introduced by the Mallam Sanusi Lamido Sanusi administration. Watchers of the unfolding developments at the apex bank said the new appointments have shown that the new CBN boss was not coming to pursue any ethnic agenda in line with his promise at his maiden press conference to lay emphasis on professionalism and integrity.

It was gathered that contrary to the insinuations that Emefiele might attempt to uproot some of the loyalists of his predecessors, the new governor is resolved to lay emphasis on professionalism and integrity, a consideration said to have been responsible for the renewal of Umar’s appointment.

The list of his first set of appointees has also proved that he is not going to pursue ethnic agenda in his term.

Emefiele, had  at his maiden press conference promised to create a central bank that is professional, a central bank that is apolitical, and people-focused; a Central Bank that spends its energies on building a resilient financial system that can serve the growth and development needs of the country.

 

[This Day]