click here to read Central Bank of Nigeria Communiqué No. 93 of the Monetary Policy Committee Meeting of Monday 20 and Tuesday 21 January, 2014

The Monetary Policy Committee (MPC) met on January 20 and 21, 2014 against the backdrop of uncertainties in the global economy, especially arising from the commencement of the QE3 tapering by the Fed. In attendance were eight (8) out of the ten (10) members following the retirement of Mr. Tunde Lemo, Deputy Governor, on January 11, 2014 and Mr. John Oshilaja, an external member of the MPC, who completed his term on December 31, 2013. The Committee reviewed key global and domestic economic developments in 2013 and re-assessed the short- to medium-term risks to inflation, domestic output and financial stability and the outlook for 2014.

International Economic Developments

The global economy is expected to continue recovering from the global financial crisis, as growth is projected to accelerate in 2014. The International Monetary Fund (IMF) projected global growth at 3.4 and 3.5 per cent in 2014 and 2015, respectively, up from 2.4 per cent in 2013. Some other sources, however, have produced less optimistic projections of global growth for 2014; for example, the United Nations Department for Economic and Social Affairs’ (UNDESA) has projected 3 per cent growth. The decision by the US Federal Reserve to reduce its monthly asset purchases from USD85 billion to USD75 billion left most markets stable having already priced-in the development. The quantitative easing measures by the US Federal Reserve had helped to restore momentum to the US economy and also contributed to the improvement of the Eurozone economy in 2013.

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Amid intense lobbying by candidates hoping to succeed the incumbent Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, indications have emerged that President Goodluck Jonathan is looking towards the South-West for the plum job.

Sanusi’s five-year single term tenure expires in June and he has consistently said he will not seek a second term in office.

Among those reportedly vying for the position of the CBN governor are the Managing Director, Access Bank Plc, Mr. Aigboje Aig-Imoukhuede; Managing Director, First Bank of Nigeria Limited, Mr. Bisi Onasanya; and Managing Director, Asset Management Corporation of Nigeria, Mr. Mustapha Chike-Obi.

Others are the four Deputy Governors, Mr. Tunde Lemo (Operations); Dr. Kingsley Moghalu (Financial System Stability); Dr. Sarah Alade (Economic Policy); and Alhaji Suleiman Barau (Corporate Services Directorate); as well as the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga; and the Minister of State for Finance, Dr. Yerima Ngama.

Out of the lot, Onasanya, Alade and Lemo are from the South-West region, while Aganga is representing Lagos State in the federal cabinet, though originally from Edo State in the South-South region.

A source told one of our correspondents in Abuja on Sunday that although the President had not picked any candidate for the post, he was keen on fulfilling a promise he made to some Yoruba leaders a few months ago.

The South-West leaders had during a visit to the President complained about the alleged marginalisation of the zone, especially in the area of political appointments under Jonathan’s administration.

The source said the President promised to reserve some key political appointments for the region in order to redress the perceived imbalance against the South-West in political appointments by the administration.

The Yoruba are disenchanted with the loss of the position of the Speaker of the House of Representatives to the North-West, among others.

It was learnt that the recurring complaints of the region were responsible for the long delay in the appointment of a substantive Minister of Defence, which saw a former Deputy Governor of Osun State, Mrs. Olusola Obada, as the acting minister for two years after the then substantive minister, Haliru Mohammed, was fired by the President.

The source also said those claiming that the President was planning to give the job of the CBN governor to somebody from the South-South were wrong.

The source said that it would amount to an error of judgment for the President to give the positions of the Executive Chairman of the Federal Inland Revenue Service and the CBN governor to the same zone.

The President had last year forwarded the name of Mfon Akpan to the Senate for confirmation as the FIRS chairman.

The source explained further that the CBN job could only go to another zone if serious changes were made in the cabinet of the President.

Meanwhile, analysts have called on Jonathan to quickly name a successor to Sanusi because speculations surrounding   his replacement may have negative impact on the economy.

They advised the President to appoint an economist rather than a core banker as Sanusi’s successor, noting that the country needed a CBN governor who would focus more on economic rather than banking issues.

Speaking in a telephone interview with one of our correspondents, the Head, Research and Strategy, BGL Plc, Mr. Femi Ademola, said, “Most of the appointees that we have had in the past as the CBN governor have always focussed on banking regulation rather than the economy.

“But the governor of the CBN goes beyond regulating the banks because we even feel the banks have been stabilised. So, there is no need to focus much on the banking sector.

“Rather, we need a governor that will start focusing on the economy and to bring out policies that will help to create jobs and revive key sectors of the economy such as agriculture and manufacturing.”

Also speaking, the Registrar, Chartered Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi, said the task before Sanusi’s successor would be how to reduce interest rates and bank charges, as well as ensure exchange rate stability and boost reserves.

He said despite the successes recorded in the reform of the banking sector under Sanusi, much work still needed to be done.

Investigations revealed on Sunday night that some of the candidates being speculated to become the next CBN governor had begun to lobby friends and close aides to the President to aid their emergence as the preferred candidate.

A senior government official, who spoke with one of our correspondents on the condition of anonymity, said since last week when Sanusi reportedly fell out of favour with the President, a lot of politicking had been going on among the contenders for the office.

The source said, “You know that the appointment of the CBN governor is a political rather than a technical decision and remember that we are in a pre-election year where a lot of politicking is going on.

“Within the last one month, a lot of names have been brandished and I can tell you that some of those people have started serious campaigns and lobbying.

“But, again, there are feelers that whoever will become the CBN governor will have to be someone that is a friend of the President because I am sure that unlike Sanusi, the Presidency will not want to appoint anyone that will not be loyal to Jonathan.”

Source: Punch (by Fidelis Soriwei and Ifeanyi Onuba)

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The Central Bank of Nigeria (CBN) has introduced a new payment system called Real-Time Gross settlement (RTGS) system as part of efforts to implement Payment System Vision (PSV)2020 strategy.

Mr Tunde Lemo, CBN Deputy Governor (Operations), made this known while briefing newsmen on Thursday in Abuja.

The News Agency of Nigeria (NAN) reports that Lemo, who is expected to proceed on retirement on January 11, said that CBN put live operations to the new system on December 16, 2013.

He said that the new RTGS was integrated with Scrip less Security Settlement System (SSSS) and would replace the old payment system in use since seven years ago.

“The SSSS, on the other hand, is a new initiative to issue, manage and settle government and other money market securities processed as electronic records in a Central Securities Depository (CSD) system.”

He explained that the RTGS was an inter bank payment infrastructure that was facilitating the real time settlement of electronic funds transfers on gross and irrevocable basis.

Lemo said that RTGS was built on swift standards to allow for safer, easier and faster inter connectivity with other payment system infrastructure both locally and internationally.

“It serves as the nucleus of the national payment system, as all payments finally settle in central bank money through settlement accounts maintained for designated financial institutions.”

On SSSS, he said it would facilitate the electronic management of the entire life cycle of securities transactions.

He said that the system would manage the primary and secondary market securities and facilitate efficient open market operations.

Lemo said that the integration of RTGS and SSSS was a major strategic move with lots of benefits.

The benefits, he said, included reduction of settlement and systemic risks in payment system and provision of collateral management platform to mitigate settlement risks.

”Achievement of instant value for and by bank customers via Straight Through Processing (STP) as funds transfers are transmitted from one party to another without manual intervention,’’ he said.

He said that it would provide efficient payment landscape that would encourage foreign investments and enhance financial inclusion.

Lemo said that the RTGS and SSSS payment system would help improve all retail payment schemes.

He said that it would help to achieve PVS 2020 objectives and meet world class standards as indicated in the principles for financial market infrastructure.

Lemo said that it would also trigger rapid transformation development in the financial market, among others. (NAN).

Source: Vanguard

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