By Omoh Gabriel
The CBN said that its views on the impact of the financial crisis on the economy has been misinterpreted and misrepresented by Nigerians. The apex bank in a statement said that the CBN Governor had at no time said that the Nigerian economy is immune or insulated from the global financial crisis. Also yesterday Securities and Exchange Commission denied ever accusing banks of causing the current problem in the capital market.
The CBN statement said that at no time has Professor Soludo said that the Nigerian economy is “IMMUNE” or “INSULATED” from the global crisis.
According to the CBN ‚ÄúIndeed, the CBN’s Monetary Policy Committee (MPC) had, in its meeting of September 18, 2008, taken far reaching measures to proactively inject liquidity in the banking system as part of its strategy to minimise the effects of the global credit crunch on our banks. Prof. Soludo has also often warned of the likely inflationary impacts of the liquidity injection, and also put forward concrete proposals on how Nigeria can effectively weather through the global crisis including the key legislations which the National Assembly needs to pass urgently‚Äù.
The CBN further said ‚ÄúProf. Soludo has been consistent in assuring Nigerians about the health of our banks and the safety of our foreign reserves. At the beginning of the crisis, Professor Soludo had been invited to several fora to answer mostly two questions. First, Are Nigerian banks safe or do they require any bailout? Second, Are Nigeria’s foreign reserves safe? To the first question, Professor Soludo has been consistent in stating that because Nigeria moved ahead of the world to recapitalise and consolidate its banking system, Nigerian banks are robust and strong enough to take losses and that they are protected from the full effects of the global financial system.
‚ÄúHe has consistently assured that the CBN would take all necessary measures to ensure that Nigerian banks do not fail like their counterparts in some countries. To the second question, he has also consistently reassured that our foreign reserves are safe.
Furthermore, the CBN Governor ‚Äúhas consistently pointed out that some of the “shock absorbers” that could enable Nigeria minimise the full weight of the global crisis include: recapitalised and consolidated banks which continue to post profits and provide credit to the economy at unprecedented rate; higher external reserves than at previous times; lower debt-to-GDP ratio which provides room for greater fiscal expansion; agriculture as the dominant sector of the economy and hence the likelihood that Nigeria could avoid experiencing a recession; exchange rate flexibility to ensure external balance; the ‘excess crude savings’ which could provide some cushion; the liberalized economy and stronger private sector as well as the Government’s economic management.
‚ÄúAll these lead Prof. Soludo to conclude that Nigeria’s GDP, which is led by the non-oil sector, would continue to grow positively, despite the crisis. However, he is under no illusion about the magnitude of challenges that lie ahead, and how all stakeholders must work harder, together to ensure that Nigeria minimises the consequences of the crisis and takes full advantage of the opportunities offered by it.
‚ÄúSo far, Prof. Soludo has not been proved wrong. The latest estimates from the National Bureau of Statistics (NBS) indicate that Nigeria’s GDP grew by 6.8 per cent in 2008 compared to 6.2 per cent in 2007 despite the crisis, and this was led by the non-oil GDP at 9.5 per cent. Indeed, there is a consensus global expert opinion that developing countries (especially Africa) would continue to grow positively in spite of the crisis; Furthermore, no Nigerian bank has failed, and our external reserves remain safe.
We have taken pains to clarify these issues because at a time like this (unprecedented in human history), there is absolute need for clarity and effective communication. The Nigerian economy cannot afford any mis-communication regarding the crisis at this time‚Äù.