New Central Bank Governor Presented 10 Point Agenda

The new Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has on Thursday presented his 10-point agenda.
Godwin Emefiele (M) formally assumes office as governor, Central Bank of Nigeria on Tuesday, June 3, 2014 at the Bank's Headquarters in Abuja. Credit: CBN

Emefiele said he was committed 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 out beloved country, Nigeria."

Before introducing his agenda, Emefiele praised the work that the previous governor did to achieve financial system stability, low inflation, an effective payment system, and exchange rate stability.

Monetary policy

Emefiele said the CBN would pursue a gradual reduction in interest rates, an apparent shift away from his predecessor’s hawkish monetary policy that was credited with bringing inflation down to single digits. Interest rates have been stuck at 12 percent since late 2011, and several measures have been made to tighten liquidity, which has been brought inflation down but made businesses complain that lending rates are too punitive.

"Such high rates create preserved incentives for commercial banks to simply buy virtually risk-free government bonds rather than lend to real sector," Emefiele said.

He said that while reduction in deposit rates would encourage investment attitude in savers, a reduction in lending rates would make credit cheaper for potential investors.

Emefiele also said that the apex bank would begin to include unemployment rates "as one of the key variables considered for its monetary policy decisions". He added that the CBN would design its monetary policy taking into account the potential fiscal expansion in the run-up to the 2015 elections.



The CBN chief said the bank would continue to maintain exchange rate stability in view of the high import dependent nature of the economy. Emefiele cautioned that a systematic depreciation of the naira may translate to considerable inflationary pressure with negative effect on macro-economic stability.

"Therefore, under my leadership, the bank will continue to focus on maintaining exchange rate stability and preserve the value of the domestic currency."

"We will sustain the managed float regime in the management of the exchange rate as this will allow the bank to intervene when necessary to offset pressure on the exchange rate."

Economic development and employment

Emefiele said that the Central Bank would no longer focus solely on monetary and price stability. Citing the experience of Japan, the US and France, the governor said that the CBN would start supporting selected economic sectors using "direct methods" of intervention to support the overall performance of the economy as well as boost employment.

"With an annual additional 1.8 million Nigerians to the labour pool, the Central Bank cannot afford to sit idly by and concentrate on price and monetary stability.

"Additional measures would be required towards identifying productive sectors of the economy and channeling credit towards these sectors, while imposing proper monitoring and performance measures in order to ensure that the goals of increased employment and poverty reduction are attained."


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