CBN Tackles Inflation, Foreign Exchange Challenges To Ensure Business Continuity

The bank noted that its monetary policy approach is aimed at reducing inflation while ensuring that businesses remain operational.

Speaking at a panel discussion titled “Fiscal and Monetary Policy Reforms: Removing Barriers to Private Sector Investment” during the Nigeria Economic Summit in Abuja, Dr. Adetona Adedeji, Acting Director of Banking Supervision at the CBN, highlighted the bank’s efforts to balance inflation control with business sustainability.

“We don’t want to get to the corridor of hyperinflation,” Dr. Adedeji stated, appealing for public understanding of the CBN’s policies. “Our priority now is price stability, but we are not unmindful that businesses still have to continue operating.”

Dr. Adedeji explained that while the CBN has been increasing interest rates as part of its inflation-targeting strategy, it remains aware of the challenges this poses for businesses.

On the issue of foreign exchange, he pointed out that rent-seeking behaviours were being curbed, as the bank worked to achieve a stable and balanced foreign exchange market. “The rent seekers are not finding it easy again. We are trying to achieve an equilibrium,” he said.

He also addressed the issue of liquidity, noting the correlation between Federal Accounts Allocation Committee (FAAC) disbursements and spikes in foreign exchange demand. According to Dr. Adedeji, the CBN, in collaboration with fiscal authorities, is actively working to manage this challenge and stabilize the market.

Dr. Adedeji called on Nigerian banks to make significant investments in cybersecurity to protect depositors from rising cyber threats. Acknowledging the rapid innovations in electronic banking, he urged banks to stay ahead of cybercriminals by implementing robust risk management systems. “There has been a lot of innovation in the banking sector today, especially with e-channels. Therefore, we want a very robust risk management system,” he said.

He stressed the importance of safeguarding customers’ funds, particularly those brought into the formal financial system through financial inclusion efforts. “We don’t want a situation where, after having convinced people to deposit their funds in the bank, some criminals hack the system and steal their money,” Dr. Adedeji added. He urged banks to ensure that depositors can trust the safety of their funds, allowing them to bank with confidence.

The comments were made in response to concerns raised by Mrs. Oluwasoromidayo George, Chairman of the Non-Alcoholic Drinks Sector of the Manufacturers Association of Nigeria (MAN). She highlighted the challenges facing the sector, including declining sales, high energy costs, and the impact of inflation and currency devaluation.

“We’ve been experiencing declining sales performance, and productivity dipped from 9.98 percent in Q1 to around 8.4 percent in Q2. We’ve also been advocating for solutions to issues in the energy sector, electricity tariffs, inflation, devaluation of the Naira, and interest rates,” Mrs. George noted. However, she expressed optimism, acknowledging the government’s engagement with the sector and hoping for positive outcomes from ongoing reforms.