+ As Things Fall Apart…Has Olayemi Cardoso Played His Last Card?
+ Pundits Rue Worst Case Scenario Amid Currency Crunch
Olayemi Cardoso’s butts are scorched red right now. His appointment as the Governor of the Central Bank of Nigeria (CBN) thrust him into the core and hot seat of public governance.
His mind is in constant flux as he grapples with the riot of running the CBN and the Nigerian economy. Since he took over as head honcho of the country’s apex banking regulator, Cardoso has been stuck in an administrative maze of sorts.
His dilemma is pitiable as he seems to wallow, daily, confusing his heartfelt wishes for reality. The most confused he could ever get is when he tries to convince his heart and spirit of something his mind knows is a lie, like his capacity to halt the rapid decline of the Naira, in local and international monetary circuits.
Cardoso seems at his wit’s end as the Naira maintains a steady fall against the dollar across the foreign exchange (FX) market – a situation that has persisted since he assumed duty as the acting and substantive CBN governor.
Cardoso, a former chairman of Citigroup Inc.’s Nigerian operations who was appointed to his post in September 2023, has signalled that the bank will adopt a far more orthodox approach than it did under his predecessor Godwin Emefiele, who was suspended by President Bola Tinubu and then arrested on a raft of charges, including fraud. His trial continues and he denies wrongdoing.
The Naira fell to an all-time low of N1,400 per dollar, losing 0.51 per cent of its value compared to N990/$1 recently at the parallel market, also known as the black market.
With the current exchange rate, the naira has year-to-date weakened by 34.82 per cent from N738 per dollar at the beginning of the year.
Instructively, the national currency has declined by at least 50 per cent in the last year and the situation is not likely to get better says Bloomberg, a US-based media organisation, which predicted last month that the naira will experience further decline this year.
The publication predicted that the currency would experience the worst devaluation since 1999, noting that the naira has become the worst-performing currency globally.
Bloomberg made this known in a report released on Friday, December 29, 2023.
At the time of the report naira was traded N1,043 per dollar, “and that’s in the official market. On the streets, the currency trades at 1,208 naira per dollar,” Bloomberg stated.
The publication warned that the situation could even get worse except the federal government ramp up efforts to attract foreign capital into the country, in other to shore up the foreign reserves.
Bloomberg said: “Foreign reserves in Africa’s biggest crude producer are at the lowest in six years with most of them encumbered by overdue short-term overseas obligations.
“Unless President Bola Tinubu’s government lures international investors or ramps up oil output, the naira may slip further, according to Vetiva Capital Management Ltd.”
Against the backdrop of the currency decline, Cardoso recently asserted that the naira is undervalued. This claim by the CBN governor has, however, been dismissed as his ordinary opinion; keen financial analysts who have watched the misfortune that has befallen the currency since June 2023, argued that Cardoso’s claim should not be taken seriously.
Speaking at the “unveiling of the Nigerian Economic Summit Group, NESG, 2024 Macroeconomic Outlook Report, in Lagos, Cardoso said, “We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term,” Cardoso said yesterday at the unveiling of the Nigerian Economic Summit Group, NESG, 2024 Macroeconomic Outlook Report, in Lagos.
The CBN boss spoke as the naira continues to decline in value at both the I&E and parallel windows. The currency was traded for N1,355 to the Dollar on Wednesday at the parallel market while the official CBN rate stands at N882 to the American currency.
Meanwhile, analysts insist that the worst misfortune that has hit the Naira started in June last year after the CBN announced the unification of all segments of the Nigerian forex market.
The CBN policy had collapsed all windows into the Investors & Exporters, I&E, window, saying it decided as part of the Nigerian government’s efforts to improve liquidity and stability in the market and attract foreign investors into the nation’s economy.
Cardoso said the bank will now focus on achieving monetary and price stability and steadying the naira. It intends to use inflation targeting — rather than trying to control the money supply — to achieve those goals. The annual inflation rate reached 28.9% at the end of 2023, an almost three-decade high, due in large part to the naira’s slump and the scrapping of fuel subsidies. The bank’s monetary policy committee is due to meet in late February for the first time in seven months, and a steep rise in borrowing costs is anticipated. Cardoso expects inflation to moderate in 2024 and considers the Naira to be undervalued.
But despite his assurances that the situation would improve soon, stakeholders in the nation’s financial sector repose little confidence in his assertions.
Not a few people are wondering if Cardoso is capable of effecting the much-clamoured turnaround in the fortunes of the country. As the bleakness persists, pundits raise salient posers about the struggles and capacity of the CBN governor: Is he the most qualified man for the job? How confident is he about the strategic policies initiated by his administration? Is he capable of seeing them to a fruitful end?