The Governor of the CBN, Mr Godwin Emefiele, disclosed this while briefing journalists shortly after a two-day Monetary Policy Committee meeting which were held at the headquarters of the apex bank in Abuja.
Responding to a question on what steps the apex bank was taking to check excessive lending by banks to politicians, the governor said that the CBN would be monitoring their activities with a view to intervening when things are about to go wrong.
He expressed optimism that due to past experiences, Deposit Money Banks would not want to take excessive risks by increasing their lending exposure to politicians.
Emefiele said that while banks have their own risk assessment criteria, the apex bank would be closely monitoring their activities so as to protect the banking sector.
He said that the CBN had met with chief executives of banks and during the meeting; they were warned on the dangers of involving in money laundering activities.
The CBN boss said that for any bank that is caught in money laundering activities; the apex bank would not hesitate to impose the appropriate sanction on such bank.
He said, “We have had meetings with the banks and we have asked them to be very careful on money laundering issues, and I believe they will be careful themselves because they know that if they are caught, it means that they will be heavily penalised.
“When you talk about lending to politicians, banks have their risk acceptance criteria and I don’t think that the banks would do that at this time. Everybody must have learnt their lessons.
“We at the Central Bank we are watching. When things go wrong or about to go wrong, we will deal with it as appropriately as possible.”
On the MTN $8.1bn controversy, he said that apex bank had met with top executives of the company who came in from South Africa on the issue.
He said very soon, a final decision of the apex bank on the matter would be announced.
Emefiele said apart from MTN, no other company in Nigeria was under investigation for irregular Certificates of Capital Importation.
He said, “We are in a process where we are saying this matter will be resolved. We have held meetings with the MTN Group.
“They flew in from South Africa and we have held meetings and we are at the verge of making announcement on what the agreements are. I am very optimistic that we have reached the end of the road on this subject.
He added, “The sanctity of our CCI is sacrosanct and no other company is being investigated on the issue of CCI. No other person is being investigated on the issue of CCI. This is an isolated matter.”
On the Monetary Policy Rate, the governor said the Monetary Policy Committee left the rate unchanged at 14 per cent.
He explained that all the 11 members of the committee that attended the meeting agreed to maintain the current monetary policy stance
He said apart from the MPR which was retained at 14 per cent, the committee also retained the Cash Reserves Ratio at 22.5 per cent. Also retained are the Liquidity Ratio which was left at 30 per cent; and the Asymmetric Window which was left at +200 and -500 basis points around the MPR.
Explaining the rationale to hold the MPR at 14 per cent, the governor said, “The committee continues to hold the view that although loosening will encourage the flow of credit to the real sector, help in the reduction of aggregate cost of credit on small business spending and investment, it, however, believes that doing so will reverse more rapidly the gains of pro and exchange rate stability achieved so far.”
He said while the rate of inflation had been trending downward, there were still some risks in the short term.
He gave some of these risks as destruction of agricultural products from flooding, insurgency in the North-East, herdsmen and farmers’ crises, high cost of energy, anticipated spending in the run up to the Christmas festivities and campaign relates spending towards the upcoming general elections.
He said there was need to come up with measures to address these challenges as well as to ensure speedy implementation of the budget.
On the issue of minimum wage, the CBN governor explained that the increase in wages would boost aggregate demand in the economy.
Emefiele also said the apex bank was working on a new initiative to channel the flow of credit to small businesses in the rural areas.
He said, “The committee urged the bank to deepen and broaden access to finance to high employment elastic sector with particular emphasis on small and medium enterprises.
“The committee called on the bank to extend the success recorded under the Anchor Borrowers’ Programme to other items including fish and palm oil by introducing more stringent measures to curb access to foreign exchange for products that can be produced in Nigeria.”
