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Sanusi backs assets sale, CBN on interest rate

By on September 23, 2016

The Emir of Kano, Muhammadu Sanusi II, on Wednesday joined the list of eminent Nigerians calling for sale of state assets to get the much-needed foreign exchange and shore up the nation’s fast-depleting external reserves.

Sanusi, who spoke in Lagos as the special guest at the launch of the 2016 Afrinvest Banking Sector Report, said, “One option is to sell down some assets; sell down some refineries in a manner that does not hurt your strategic interest; sell down some oil assets; sell down some refineries in a transparent manner that gives you value. You can also have options to buy them back later. You should expect basically forex.”

He also backed the Central Bank of Nigeria’s Monetary Policy Committee’s decision to keep the lending rate unchanged, praising it for not yielding to political pressure to increase the benchmark lending rate.

Sanusi said, “I think it is a positive thing when the fiscal authorities and the many people in the private sector said they wanted a lower rate of interest rate. I was concerned that the CBN would succumb to pressure.

“And the fact that the CBN did not succumb to the pressure is a fact that it is beginning to claim its independence, which is a very positive thing.

“And these are economic questions, you make choices. I can see why the CBN does not want to lower the interest rate at this time. If you lower the MPR by 100 or 200 basis points today, it is not going to lead to rapid increase in credit growth.

“You will not see an increase in credit growth that will reverse the downward trend in output by lowering the MPR by 100 or 200 per cent. You will, however, further fuel inflation, and you will reduce the yield in fixed income at a time you are trying to attract foreign exchange.

According to him, the economy is in a crisis and requires forex to survive, adding that the fiscal and monetary authorities must do everything to attract forex into the country.

In doing this, the emir said the CBN must demonstrate courage to implement the foreign exchange policy to the full.

He said, “The immediate oxygen that this economy needs is forex, because before you talk about long-term structural issues of power and refineries, you do need forex coming into this economy and portfolio investments are important.

“The CBN got the decision right, adopting a flexible exchange rate, and secondly, tightening monetary policy.

“But do we really have a flexible exchange rate? We need the CBN to take that risk and courage to implement the flexible foreign exchange policy. Let the market work in the next two or three weeks and see as people know they can come in, sell their dollars, buy stocks, sell their dollars and fixed income, make a profit in currency and capital acquisition; you are going to have gradually narrowing of the gap between the interbank and the parallel rates and have more liquidity in the market.”

 

[Punch]