A recent British court ruling affirming that Nigeria owes and should pay a foreign firm $9 billion (about N3.2 billion) could affect Nigeria's monetary policy, the Central Bank governor, Godwin Emefiele, said on Monday.
Mr Emefiele spoke in an interview with journalists at the State House during a retreat for new ministers.
PREMIUM TIMES reported how a British court ruled against Nigeria's appeal of an arbitration ruling in favour of the foreign firm.
The British court ruled against Nigeria's objection to arbitration that ruled in 2017 that the Nigerian government should pay $6.6 billion as damages to a company, Process & Industrial Development Limited (P&ID).
The money with interest has now accumulated to about $9 billion (approximately N3.24 trillion), over one-third of Nigeria's 2019 budget.
P&ID has already signified its intention to target Nigerian assets in order to satisfy the judgement.
The Nigerian government on Friday described the judgement as "completely wrong and obviously unjustifiable."
On Monday, Mr Emefiele said the government would strongly challenge the judgement which could have an implication on Nigeria's foreign reserves.
"We know that the implication of that judgement has some impact on monetary policy and that is why the CBN is going to step forward and very strongly too to ensure that we defend the country and defend the reserves of the Federal Republic of Nigeria."
The CBN governor also spoke on the African free trade agreement and other matters.
Read the full interview below.
Q: You are not one of the new ministers, what brings you here?
Emefiele: Yes, I am not one of the ministers but as one of the senior government officials in the area of policymaking, we have also been invited to come and join the ministers designate in listening to Mr President about the policy trust for the next four years. I think this is a very brilliant initiative because what it will do is that it will set the focus, everybody will know what the assignments and responsibilities will be in specific terms between now and the next four years. I am here because as a member of the monetary policy authority, it is part of the attempts for collaboration between the monetary and fiscal authorities in Nigeria.
Q: How far have you gone with the implementation of the directive from Mr President not to give Forex to food importers?
Emefiele: Let me say this, Mr President's comment on the issuing of forex to people who import food items into the country, is in the logic of CBN's management foreign exchange policies that we started since 2016.
If you recall, we started with about 41 items (food and non-food items), because we believe that those items can be produced in the country.
As we stand today, there are about 43 items on that list and I will say substantially most of them are food items. We are basically saying if we have a food item that can be produced in the country, why should we waste scare foreign exchange importing those items into the country, when those can be produced in the country.
It is important for me to say that the attempt to misrepresent the comments of Mr President is very unfair and unfortunate. But, what we will say from the CBN is that Mr President has made this comment purely to strengthen the position of the CBN, to say that he believes in what the CBN has been doing since 2016 and there is need for us to reinforce that going forward.
I will say that to honest, we would aggressively go more into the list of items that are being imported into the country, items that can be produced in Nigeria.
I will like to stress that we would ensure that more of these items will get on the list of items that are going to be restricted from accessing foreign exchange in Nigerian banking industry not just from the CBN source. Because, I have heard some comments that maybe it's about the CBN's source, it is not the CBN's source, we are saying you will not be able to access foreign exchange from the Nigerian banking industry because it is important for us to produce these items in Nigeria and we will follow through on them.
Q: So you saying there will be no amendment to this policy?
Emefiele: There will never be an amendment because the issue is this, why should we be exporting jobs to other countries? Today we are complaining that there is a high rate of unemployment, leading to some extent the level of insecurity in the country, why should we allow people to import food that can be produced in the country? We need to improve wealth in our rural communities and I am saying we will not change course, we will even be more aggressive on this Programme.
Q: What sort of impact do you hope to make at this event?
Emefiele: Mine is just to listen and see who what we are doing at the CBN's monetary policy side, is in tandem with what the fiscal authorities are also coming up with. But I know certainly there are because all we are saying is that Nigeria yearns for growth, for improved level of employment in this country and I know at the end of this Programme, everybody will be on board to say we must reduce the level of unemployment in Nigeria, we must grow this country and must increase productivity and output in Nigeria.
Q: It was reported at the weekend that Nigeria is about to lose as much as $9bn of its reserves as a result of a judgement debt in London on Friday. Are you not scared of losing so much from your forex reserves?
Emefiele: I am not scared at all and I think it is also important that this question has come up. Since the news about the judgement broke out late on Friday, we have been discussing with our counsels, and they have advised that there are sufficient and strong grounds on the basis of which we could file a stay of execution and also an appeal against that judgement. There are certain anomalies in the process leading to the award of that contract which is currently being looked into by the EFCC and I believe that the EFCC themselves have their own investigation reports about that.
So, we will follow through and aggressively too on ensuring that the execution of that judgement is stayed and that the appeal succeeds at every level both within Nigeria and abroad.
It is important for me to use this opportunity to assure our friends, local and foreign investors who called to expressed solidarity with us, not to express concern but to say that there is no need for anybody to worry. We know that the implication of that judgement has some impact on monetary policy and that is why the CBN is going to step forward and very strongly too to ensure that we defend the country and defend the reserves of the Federal Republic of Nigeria.
Q: Won't the president's directive affect the Africa Free Trade Continental Area Agreement Nigeria just subscribed to?
Emefiele: It will not affect the content of the AfCFTA, in any case the AfCFTA is an agreement that is ongoing, the terms of engagement are still being discussed and negotiated. The important thing is that Nigeria needs to stand as the largest economy in Africa and the largest populated countries in Africa, we need to stand and dictate the terms under which we want to be in it and this is what we are staying. But what I am saying is that it is wrong, it is inappropriate that an item that can be produced in Nigeria should be imported into Nigeria. When we get into the AfCFTA issues we will also look at the details of it, but at this time we are saying we need to create jobs for our country, for the youths and we need to create jobs, we yearn for growth and the only way we can really accelerate growth in a Nigeria between now and next four years is to see to it that items that can be produced in Nigeria are indeed produced in Nigeria rather than being imported into the country.