24 May 2012

Nigeria: CBN Says Removal of Autonomy Will Hurt Economy

Photo: Chippla
Headquarters of the Central Bank of Nigeria, Abuja

The Deputy Governor of the Central Bank of Nigeria (CBN) Dr. Sarah Alade yesterday cautioned against attempts by the Senate to tamper with the autonomy of the apex bank, stressing that it could lead to economic collapse.

Alade, while speaking at her screening by the Senate Committee on Finance regarding her second term as Deputy Governor, also noted that the $6.9 billion external borrowing sought by the Federal Government was pegged in such a way that there would not be difficulty servicing it.

Reacting to the debate on autonomy of the CBN she stated "once the autonomy of the CBN is tampered with, it becomes incapacitated making it easy for the government to control it. "The government can just wake up one day and ask the bank to print more money to meet certain expenditure and the economy would collapse."

Concerning the $6.9 billion external borrowing plan of the Federal Government, she advised that the loan she be plunged into employment creation to yield the dividend.

She said "we don't want the debt to be too much because of the capacity to service it. It is not just the loan but what it would be used for.

"As long as the government is sure that the loan will be used to create employment and make it repay itself. When we take a loan, the burden should not come back to the government.

She also added that the quantum of the loan is also an issue.

Alade stated that the failure of banks should not be blamed on their decision to "channel their money into capital market instead of productive sector".

Exonerating the consolidation exercise from the cause of the bank collapse, she stated that there was need for measured effort to ensure that money lent by banks are not plowed into the capital market.

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