CBN Governor Targets $1trn GDP Growth In Eight Years

Mr. Yemi Cardoso, the governor, Central Bank of Nigeria (CBN), has said that the bank is targeting to achieve a Gross Domestic Product (GDP) of $1 trillion in eight years just as he said that the bank will now focus more on core mandates.

Cardoso made the declaration in Mar­rakesh, Western Morocco, on Thursday, on the sidelines of the on-going 2023 World Bank/IMF Annual Meetings.

Cardoso said the CBN needs to return to its core functions of monetary policies and advisory roles to support eco­nomic growth.

According to him, under pre­vious leadership, the CBN had included fiscal intervention in its functions.

This, Cardoso said, blurred the lines between monetary and fiscal environments.

“In refocusing the CBN to its core mandate, there is a need to pull the CBN back from direct de­velopment finance interventions into more limited advisory roles that support economic growth,” he said.

He said efforts were on-going to refocus the CBN for overall economic growth, adding that the government would identify fiscal reforms and growth targets that would achieve the feat of achiev­ing $1 trillion within eight years.

He said that in a study of emerging markets, macro-eco­nomic indices pointed to Nige­ria’s economic trajectory, given the faithful implementation of the proposed economic reforms.

He explained that the study followed a review of economies like Brazil, Russia, India, China, and South Africa (BRICS) and Mexico, Indonesia, Nigeria, and Turkey (MINT), countries with similar populations and develop­mental characteristics as Nigeria.

“In economies bigger than $1.0 trillion, these indicators in­clude moderate inflation, sizable foreign reserves, and the capacity to quickly rebound from a cyclical economic downturn.

“Given this, a refocused CBN will better serve Nigeria through monetary policy interventions and advisory roles that sustain implementation of the admin­istration’s fiscal proposals,” Car­doso said.

He added that the lines be­tween monetary policy and fiscal intervention should be clearly delineated, and the CBN needed to be pulled back from its devel­opment financing initiatives to more advisory roles.

“Much has been made of past CBN forays into development fi­nancing, such that the lines be­tween monetary policy and fiscal intervention have blurred.

“In refocusing the CBN on its core mandate, there is a need to pull it back from direct develop­ment finance interventions into more limited advisory roles that support economic growth.

“The bank should act as a cat­alyst in the propagation of spe­cialised institutions and financial products that support emerging sectors of the economy.

“It should facilitate new regu­latory frameworks to unlock dor­mant capital in land and property holdings,” he said.

Cardoso listed other roles of the CBN to include accelerating access to consumer credit and expanding financial inclusion for the masses.

He added that the bank should de-risk instrumentation to in­crease private sector investment in housing, textiles and clothing, the food supply chain, healthcare, and educational supplies.

It should exercise its conven­ing power to bring key multilat­eral and international stakehold­ers together for participation in government and private sector initiatives, he said.

Cardoso admitted that the CBN did not have a magic wand that could be waved at Nigeria’s current economic challenges, as the problems facing the bank were large and complex.

He listed the challenges as including failure in corporate governance, unorthodox mone­tary policies and foreign currency management, unorthodox use of Ways and Means spending, and a backlog of FX demand.

“The bank has to establish how much of the FX backlog is real and how much is given to speculation or hoarding.

“It has to identify creative fi­nancing options for clearing the short- to medium-term backlog.

“These problems need in-depth review by the new CBN leadership team to determine what mechanisms are currently working, what can be tweaked or dispensed with, and what new tools need to be introduced.

“It has to examine how is­sues of governance could be ad­dressed,” he said.

Cardoso stressed that with fo­cused leadership and sustained reforms, however, “it is expected that over time, Nigeria will see gains and the opening of eco­nomic spaces.

“The country will also attract new investments, create employ­ment, and give its hardworking and talented people the oppor­tunity for a more prosperous future.”

The CBN governor also ex­pressed President Tinubu’s com­mitment to urgently clean up the CBN and its monetary policies.

“As a first step, Mr. President’s appointment of a special investi­gator into the affairs of the CBN went underway recently.

“Further to the clean-up ex­ercise, the president brought in a new leadership to the helm of affairs at the CBN,” Cardodo said.