|Image: via Vanguard|
Immediate Past Governor of the Central Bank of Nigeria (CBN) and the Emir of Kano, Muhammadu Sanusi II, has thrown his weight behind the sale of government assets to enable it pull the economy out of recession. Sanusi, who spoke in Lagos Wednesday supported business mogul, Aliko Dangote and Senate President, Bukola Saraki, who had earlier called on President Muhammadu Buhari to sell the Nigerian Liquified Natural Gas plant (NLNG) to generate funds for critical infrastructure projects.
The Kano Royal father said the option would enable the country finance key projects that will improve the economic status of the country, while it can buy back such assets when the economy bounces back. The former CBN boss also supported the retention of Monetary Policy Rate, (MPR) at 14 per cent, lamenting that the Naira today is undervalued at over N400 to the dollar.
This was as global and local financial experts hailed the Central Bank of Nigeria’s (CBN)’s decision to leave interest rates unchanged despite advice by Mrs Kemi Adeosun, the Minister of Finance, urging the Monetary Policy Committee (MPC), to lower interest rate to enable government borrow locally to boost the economy. Speaking on the topic, “Searching for Investor Confidence,” at an annual banking report presentation by Afrinvest in Lagos, Sanusi, said reducing the rate would not lead to increase in credit but higher inflation.
He said: “If you lower the MPR by 100 or 200 points today, it is not going to lead to rapid increase in credit; that will reverse a downtrend in output. You will, however, fuel inflation and reduce yields in fixed income market as the Federal Government is trying to attract foreign exchange. “I personally feel it is a positive trend. When the fiscal authority and many people said they wanted lower rates, I was concerned the CBN would succumb to pressure and the fact that CBN did not seem to me that it is beginning to reclaim its independence, which to me, is a good thing for this economy.”
He noted that reversing its tightening stance will further fuel inflation and reduce yields at a time when the country is trying to lure foreign investors, adding that the country is in dire need of foreign exchange and portfolio investors.
Sanusi also commended the flexible exchange rate policy of the CBN as well as its tightening stance saying, “some decisions will seem to fly in your face within the first week or two, the naira today is undervalued if you take Purchasing Power Parity (PPP), the stocks are grossly undervalued, the fixed income is offering high yields.