Nigeria economy will collapse if… – CBN warns

ABUJA- THE Central Bank
of Nigeria, CBN, warned
Wednesday that if the
present autonomy being
enjoyed by it was
removed, the nation’s
economy stands the risk
of collapsing.
The country’s apex bank
also urged the Senate to
jettison the move if the
nation’s economy must
grow and for the
realization of the set
target of becoming one
of the top largest
economies of the world in
the year 2020, adding
that the CBN will be
incapacitated once there
was no longer the
existing autonomy.
Answering questions from
the Senate Committee on
Banking, Insurance and
other Financial
Institutions when she
appeared for screening
for her second tenure in
office, the CBN Deputy
Governor on Economic
Policy, Dr. Sarah
Omotunde Alade told the
Senators that world
over, the autonomy of
the Apex Bank was
always recognized,
adding, ‘’once the
autonomy of the CBN is
tampered with, then it
becomes incapacitated.
It becomes easy for
government to then
wake up and ask the
bank to print more
money to meet certain
expenditure and the
economy collapsed.’’
Meanwhile, the Chairman
Senate Committee on
Banking, Insurance and
other Financial
Institutions, Senator Ayo
Ademola Adeseun, ACN,
Oyo Central has warned
that if very drastic
action was not taken on
the nation’s economy and
the present challenges,
the next two years will
be bad for the country,
just as he promised that
the National Assembly will
continue to support the
Central Bank in its move
to drive the economy of
the country.
Speaking further, the
CBN deputy Governor,
Mrs Alade while answering
question on the $6.9
billion external borrowing
being sought by the
Federal Government, said
‘’we don’t want the debt
to be too much because
of the capacity to service
it. It is not the loan but
what it is used for.
‘’As long as the
government is sure that
the loan will be used to
create employment and
pay itself. When we take
a loan, the burden should
not come back to the
government. The
quantum of the loan is
also an issue’’.
On Mortgage in Nigeria,
the Deputy Governor
disclosed that the apex
bank has been working
with relevant institutions
especially in the area of
mortgage as that will
help generate
employment as well as
address the much needed
housing for all.
According to her, the
failure of any bank should
not be blamed on
consolidation because the
exercise as carried out
by the CBN has yielded
results especially as it
succeeded in placing the
banks in position that will
make them withstand
financial crisis caused by
the global meltdown,
adding that if there was
no consolidation, there
wouldn’t have been any
bank existing in Nigeria
today especially after the
global financial crisis.
According to Alade, ‘’the
reason they had problem
was because they
channeled their money
into capital market
instead of productive
sector.’’
The CBN Deputy Governor
who noted that
Omotunde with past
experience, there was
the need for concerted
effort so that monies
lend by banks do not find
their ways back to the
capital market.
Besides Alade, the CBN
has three other Deputy
Governors and they are
Dr. Moghalo Kingsley who
is in charge of Financial
Systems Stability; Tunde
Lemo, Deputy Governor,
Operations and Alhaji
Suleiman Barau, Deputy
Governor, Corporate
Services.
It will be recalled that
following a motion by
Chairman, Senate
Committee on Rules and
Business, Senator
Solomon Ita Enang, PDP
Akwa Ibom North East,
the Senate had moved to
force the Central Bank of
Nigeria, CBN to submit its
budget to the National
Assembly for scrutiny and
approval through a bill
that scaled the second
reading.
According to the Senate,
the Apex Bank cannot
arrogate to itself powers
it does not have
especially where it must
keep to itself its
expenditure without
recourse to the National
Assembly for assessment
and subsequent nod from
the legislators for the
bank to go ahead and
spend.
The bill, also recalled was
referred to the Senate
Committee on Banking
and Judiciary and if finally
passed, it will ensure that
given statutory functions
and powers conferred on
CBN by Acts of the
National Assembly or
institutions created by
laws, the funding of such
Agencies were done
according to the enabling
laws by the Central Bank
of Nigeria especially as it
relates with the activities
of the Asset Management
Corporation of Nigeria,
AMCON.
Source: Vanguard Newspaper