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CBN closeness to presidency contributing to Naira tumble – Moghalu

FORMER Deputy Governor of the Central Bank of Nigeria, Kingsley Moghalu, has disclosed that the apex bank’s closeness to the presidency has contributed to the decline of the naira.

Prof. Moghalu disclosed how he and the former CBN governor, Sanusi Lamido Sanusi stabilised the naira against the dollar for five years from 2009 to 2014.

The former deputy governor, who served at the apex bank between 2009 and 2014, made this known in an interview with Punch on Thursday.

Both Sanusi and Moghalu were at the apex bank during the administrations of the late President Umaru Yar’adua and then, Goodluck Jonathan.

The naira steadied around N150/$1 during the periods, but has maintained an unprecedented downward trend in the last six years since the beginning of the administration of President Buhari, and the CBN Governor, Godwin Emefiele.

While naira now trades at N570/dollar at the parallel market, it trades around N412/$ at the I&E forex window, which is the only official rate recognised by the CBN.

There have been calls for the sacking or resignation of Emefiele by some political groups including the People’s Democratic Party due to the downward trend of the naira, with blames apportioned to Emefiele, who has been CBN governor since June 2014, for poor monetary policies.

Speaking on Thursday, Moghalu, who was also former presidential candidate of the Young Progressive Party in the 2019 election, blamed the downward trend of the naira on the activities of speculators and lack of autonomy of the apex bank.

Asked how he and Sanusi stabilised the naira against the dollar for years, Moghalu told Punch Live that the apex bank worked on investors’ confidence during the period.

He said, “We worked very hard on the matter of the exchange rate because we wanted to create a very investment-friendly climate for both local and foreign investors in the Nigerian economy and we knew that one of the keys to that was an exchange rate that was stable.

“So, we made sure that you could bring in your money for investment in Nigeria and take it out, 100 per cent, it’s yours, with no real complications. That gave investors confidence.

“We, of course, had high oil prices at that time which also was helpful. So, the reserves were never really above the early 40s, in terms of billions of dollars.

“It was just the way we managed the Central Bank’s own responsibilities in the economy in general – the banking reforms that we did; we really cleaned out the system, we stabilised it and we opened it up for business.

“We laid the foundation for the fintech boom that we are enjoying today. We introduced a lot of payment system innovations like the Bank Verification Number when I was deputy governor of operations and responsible for the payment system reforms.

“It’s a whole set of factors that contributed to our success.”

Moghalu lamented that the CBN has lost its autonomy to the political class and has little or no investors’ confidence.

According to the former presidential candidate, the current administration does not respect the independence of the CBN and it becomes a choice for whoever is the governor whether to play along or assert his or her independence and bear whatever cost given the kinds of political leaders in the country.

“There was confidence in the Central Bank during my tenure as deputy governor of the bank. I am not sure it is the same today and there are many reasons for that; one of the reasons is that a Central Bank should endeavour to maintain its autonomy.

“When people begin to perceive that the Central Bank has become too close to the government and by this case, too close to the Presidency, it erodes business confidence around the country, it erodes investors’ confidence. This is also part of the problem.

“We maintained our independence scrupulously; we did not allow politicians to give us instructions about how to run the bank,” he added.

Moghalu added that, by pumping more forex into the market, the CBN is depleting the foreign reserves of the government, noting that economic diversification and exportation are the ways out of Nigeria’s FX crisis.

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