The Central Bank of Nigeria (CBN) has warned Nigerian state governors to mind how they spend funds accruing to their states as their lifestyle and bogus spending habit is responsible for the rising cost of products in the country.
The deputy governor, financial system stability of the Central Bank of Nigeria (CBN), Kingsley Muoghalu, issued the warning during the presentation of a paper at the 5th Annual Banking and Finance Lecture of the Nnamdi Azikiwe University, Awka.
Muoghalu said that a survey has shown that Nigerian politicians, especially state governors, deliberately involve themselves in flagrant and ostentatious expenditure as a way to show off their class, without the knowledge that their action is responsible for inflation and devaluation of the country's currency.
Speaking on the topic, "The contributions of CBN to the economic development of Nigeria", Muoghalu, who represented CBN governor Mallam Sanusi Lamido Sanusi, said that it is the reason CBN needs its independence.
"When the CBN loses its independence to the level that a state governor or a top politician can call the CBN governor and say, 'Mr XYZ is coming for loan, please give him at 6%', then you know that the fall of the country is imminent."
He said the CBN must get the autonomy to make its budget and determine its own expenditure without interference from politicians if the country must continue to move ahead. "CBN is one of the managers of the country's economy and our role is a special role. The central bank of any country acts as the guiding flame of that country and should not be dictated to.
"In Nigeria, people have continued to challenge our independence, but it is so because we are in a democracy, and people can talk. This is a policy battle that is still being fought, but the politicians cannot continue to dictate for the CBN what the interest rate should be."
He stated that those opposing the autonomy and independence of the bank are either doing so as a result of ignorance or clearly do not want the growth of the nation's economy. He added that, without the autonomy of the CBN, it would only be answerable to politicians who would manipulate it at will to suit them, thereby killing the economy.
"Imagine a CBN where the governor is answerable to another personality who is the chairman of the board, and that chairman happens to be a committed member of a political party and his party is standing for election; the tendency is that he will want a lot of favour from the bank, at the detriment of the nation's economy," Muoghalu said.
We'll investigate CBN's claim - Governors' Forum
In a reaction yesterday, the director-general of the Nigeria Governors' Forum, Dr. Asishana Okauru, said the secretariat cannot react in a vacuum, adding that it would investigate the circumstances under which the statement was made.
He said that the CBN is a credible organization and, as such, he did not expect such comments to emanate from it.
"I don't want to react in a vacuum. I will check it up with the CBN. The CBN is a credible institution and so we will look into the matter. We do not expect the CBN to make such statements," he said.