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CBN implementing ‘panicky’ policies — ECCIMA

By on August 14, 2015

The Director-General, Enugu Chamber of Commerce, Industries, Mines and Agriculture, Mr. Emeka Okereke, has said policies introduced by the Central Bank of Nigeria to stop the slide in the value of the naira are “panicky” measures that could be counterproductive.

Okereke also said the withdrawal of public sector funds from commercial banks could lead to the crash of some of the banks.

The ECCIMA director general spoke in an interview with our correspondent in Enugu.

He said, “It is just panic measures that the CBN is using to save the naira, which is not sustainable.

“We understand that the CBN is making very frantic efforts to strengthen the naira, but it is like the CBN is fighting from every flank. In a war when you fight from every flank of the war-front, you might end up defeating your own army.

“It is very critical that in as much as CBN is dedicated and committed, and frenzied to ensure that the naira is saved from further fluctuation, from dwindling further, care must be taken not to introduce policies that are in the first instance not sustainable, as that would end up being counter productive to the economy.”

Giving an insight into the impact of the decline in crude oil prices on the economy, particularly in the South East Okereke noted that most businesses had been hit by cash crunch.

He added that the situation was exacerbated by the unwillingness or inability of commercial banks to make credit available to businesses.

Okereke blamed the development on the withdrawal of public sector funds, a development which, he said, had drastically limited the amount of cash available to the banks.

“Funding is a major challenge because most businesses that go to banks to access credit have been finding it very difficult.

“Now there is almost near cash crunch with the new policy introduced by the Federal Government that all public sector funds should be domiciled with the CBN.

“It would squeeze the economy and slow the pace of commercial and industrial activities,” he said.

“We should realise that 90 per cent of the country’s liquidity flow comes from the government, which means there might be tendency for systemic failure of the economy because so many banks would be compromised.

“They might not be able to meet their operational demands, let alone meeting the need of credit to businesses.

“Some banks may fail,” he added.

Noting that ECCIMA was worried about the current state of the economy, Okereke urged the President Muhammad Buhari administration to clearly define its policy and direction for the country’s economy.

“Generally speaking, economic activities have been docile, so to say, not just because of the low price of oil in the international market, but also because the government of the day is yet to come out with a clear policy on its economic direction.

“Everybody is apprehensive, and of course the new policies introduced by the CBN are also causing confusion in the economic system.

“We are very worried about the new CBN policies, which for us, based on past experiences, never last and never really helped the naira in any way,” he said.

Okereke advised the apex bank to review some of the policies it introduced in a bid to stem the slide in the value of the country’s currency.

He said, “CBN needs to revisit some of their recent policies. Such panic measures are not necessary because they will add up to the apprehension in the system.”

According to him, the directive that public sector funds should be pulled out from commercial banks amounted to policy somersault, having been implemented, and reconsidered, in the past.

“Policy somersault does not help in business and economic activities.

“How can we expand the manufacturing base when funds are not available. We can’t save the naira when the productive base is weak,” Okereke added.

He equally canvassed a review of the list of imported items that were affected by the apex bank’s foreign exchange restrictions.

 

[Punch]