CBN to monitor politicians’ election spending

Owing to the huge bad loans traced to politicians and the need to keep inflation in check, the Central Bank of Nigeria (CBN) on Thursday said it would monitor credit to politicians to finance their electioneering activities for the 2019 general elections. The Governor of the CBN, Mr Godwin Emefiele, revealed this to journalists after the two day Monetary Policy committee meeting which was held at the headquarters of the apex bank in Abuja.

Emefiele while responding to question on the steps the apex bank was taking to check excessive credit from banks to politicians, said that the CBN would be monitoring their activities and would intervene when things are about to go wrong. He said that Deposit Money Banks would not want to take excessive risks by increasing their lending exposure to politicians due to past experiences.

He said 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 the CBN had met with chief executives of banks and during the meeting, and they were warned on the dangers of involving in money laundering. He warned that the Apex bank would not hesitate to impose the appropriate sanction on any bank caught to be involved in money laundering activities.

He said, “We ve had meetings with the banks and we ve 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 and I think that the right thing is for everybody to conduct their businesses… “We at the Central Bank we are watching that when things go wrong or about to go wrong we will deal with it 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, the final decision of the apex bank on the matter would be announced.

Emefiele said apart from MTN, no other company in Nigeria is 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 the meetings with MTN Group. “They flew in from South Africa and we have held meetings and at the verge of making announcement on what the agreements are.

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 unanimously voted 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. He said while the rate of inflation has been trending downward, there is still some risk in the near term. He gave some of these risks as destruction of agricultural products from flooding, insurgency in the North-East, herdsmen and farmers crisis, high cost of energy, anticipated spending in the run up to the Christmas festivities and campaign relates spendings towards the upcoming general elections.

He said there is need to come up with measures to address these challenges as well as 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. He said the apex bank is working on a new initiative to channel the flow of credit to small businesses in the rural areas.