New CBN governor, Cardoso must restore confidence in Nigeria’s FX market–CPPE

The Centre for the Promotion of Private Enterprise (CPPE) has urged the newly appointed acting governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso, to restore confidence in Nigeria’s Forex Markets, deepen the financial system, encourage efficiency in Nigeria’s financial system and suspend the naira redesign policy indefinitely.

CEO of CPPE, Dr. Muda Yusuf who gave the advice in a statement, said restoring confidence in the forex market is key as Cardoso is assuming the leadership of the CBN at a very crucial time in Nigeria’s economic history.

“The CBN must ensure strategic and transparent intervention in the forex market to minimize volatility, as far as the reserves can support. In addition to the I and E window, it has become necessary to create an autonomous window in the banking system where the currency can trade freely without any encumbrances. This is necessary to avert the diversion of remittances to other jurisdictions or the black market.”

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CPPE called for an imperative to deepen the financial intermediation role of the deposit money banks, which is their primary role in an economy.

“Besides, small businesses which account for an estimated 50% of the GDP, have access to just about 1% of the credit in the banking system.  The implication is that the banking system is still largely disconnected from the investing community, especially the small businesses in the economy.  The financing gap in the small business space has been estimated at over N600 billion.

“This anomaly needs to be corrected.  All these underscore the need to deepen synergy and complementarity between the banking system and the economic players, especially the MSMEs.

They urged that the spread between deposit and lending rates in the Nigerian banking system is too high.

CPPE noted that the minimum capital requirements of the banking industry need to be reviewed in light of the considerable loss of value amid depreciating domestic currency.