[b]CBN blasts FG over policy somersault
Headlines Mar 17, 2011
By OMOH GABRIEL, Business Editor
LAGOS – CENTRAL Bank Governor, Sanusi Lamido Sanusi, has described the recent lifting of ban on tooth picks and furniture as a breach of contract stressing that it portends lack of credibility on the side of government.

Sanusi said the CBN saw no urgency in that policy and wondered why it should be reversed without warning.

He regretted that as a result of that action, banks now establish letters of credit (LCs) for the importation of furniture from abroad.

The Central Bank governor who was briefing members of the monetary policy committee of the CBN on why banks were not usually disposed to lending to the real sector given current efforts being made to de-risk the industry and get banks to lend to the real economy, said: “This was because, a bank would only lend if it was satisfied with the risk criteria. Consequently, the CBN was pursuing other routes that would help to address bottlenecks including legal issues.”

He cited the alternative dispute resolution bill that was trying to address that problem, and informed members that seven value chains in agriculture, namely, rice, maize, cotton, tomatoes, cassava, cattle and soya beans have been identified.

He said that a steering committee which has the Ministers of Finance, Agriculture and Commerce as members was being set up and is to be chaired by him, noting: “The committee would attempt to find ways of unlocking credit to the real sector. But these are issues that go beyond monetary policy and require concerted efforts for effective results.”

The Governor remarked that some of the consultations took place after the pronouncements stressing that for effectiveness, monetary and fiscal authorities have to work together.

Sanusi said that the quantitative easing and low interest rate policies were pursued to assist government when there was no risk to inflation.

Reacting on behalf of the government, a member at the meeting remarked that those decisions were based on discussions with relevant stakeholders. He also said that one of the reasons for lifting the protection was to replace it with a levy, as it was discovered that some importers preferred to import through other ports leading to loss of revenue by government.[/b]

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