Stakeholders in the financial sector such as the Pol Eco Analyst and the Centre for the Promotion of Private Enterprises (CPPE) have set agenda for Nigeria’s Central Bank Governor, Olayemi Cardoso. They want the new CBN boss to sanitise the country’s financial institutions.
Cardoso came on board the Central Bank amidst chronic crisis in the foreign exchange market leading to the speculative onslaught on the naira with price stability out of control despite hike in monetary policy rate.
During his screening, some lawmakers raised concerns about the banking system and the need to sanitize their operations.
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In his speech during his confirmation by the Nigerian Senate, Cardoso vowed to discontinue the unorthodox policies of the past regime led by Godwin Emefiele.
CPPE’s Chief Executive Officer, Muda Yusuf called for a strategic and transparent intervention in the forex market to minimize volatility based on the capacity of foreign exchange reserves.
Yusuf said clearing the backlog of forex obligations should be accorded high priority to restore the confidence of domestic and foreign investors.
The CPPE CEO also wants the CBN governor to deepen the financial intermediation role of the deposit money banks, which is their primary role in an economy.
Yusuf also said the spread between deposit and lending rates in the Nigerian banking system is too high. It is an indication of serious efficiency issues in the banking system.
According to him, the minimum capital requirements of the banking industry need to be reviewed in the light of the considerable loss of value amid depreciating domestic currency.
He argued that during the banking consolidation exercise of 2004, CBN raised the minimum capital requirements for banks from N2bn to N25bn. He explained further that the revised capital requirement was an equivalent of $187m, noting that currently, the same N25 billion is an equivalent of just $32.5m.
“Recapitalization of the banks has therefore become imperative. It is important to ensure that the capital base of banks can support their current exposures in the interest of stability of the financial system,” Yusuf said.
Also, Pol Eco Analytics, a Tink-tank said Cardoso must subject himself to the CBN Act of 2007.
Pol Eco Analysts said the Act has dully spelled out the roles of the CBN in the economy, and essentially outlines the functions of the CBN Governor and his deputies.
It added, “We urge the Governor to strictly abides in obedience to the CBN 2007 Act and align himself to due process and transparency in discharging his duties by avoiding the nation political waters.
“In this light, the new CBN Governor must recognized the need to chart a new course and must endeavor to link these critical reforms with improving fiscal and trade policies of the federal government, that would strategically lead to export-oriented economy.”
The firm also advised Cardoso to review the 41 ban items on foreign exchange restrictions by rethinking it broadly.