By Dipo Olowookere
Experts in the financial sector in Nigeria have warned that the ongoing standoff between the presidency and the Senate over the confirmation of members of the Monetary Policy Committee (MPC) was already affecting confidence of investors in the nation’s economy.
On Monday, the Central Bank of Nigeria (CBN) could not hold its MPC meeting as a result of the confirmation issue.
The nominees sent to the upper parliament for confirmation by President Muhammadu Buhari were not attended to because the Senate said the executive arm of government must first remove Mr Ibrahim Magu as Acting Chairman of the Economic and Financial Crimes Commission (EFCC), a thing the President seems not ready to do.
Though the CBN announced yesterday that it was holding the rates as they were at the last MPC meeting in November 2017, the stock market suffered for it on Monday, depreciating by 0.40 percent.
Today, the equities market recorded another loss, declining by 1.16 percent, the heaviest this year.
According to analysts interviewed by Reuters, the standoff between the executive and the legislature is already telling on the stock market.
Managing Director of Financial Derivatives, Mr Bismark Rewane, disclosed that, “Once investors believe that governance has broken down in the country, it could lead to an erosion of confidence.”
“If there’s an emergency, what policy adjustments will the central bank make and how quickly?” he asked.
On his part, Chief Economist at Vetiva Capital, Mr Michael Famoroti, stated that, “The development is a blow to the idea of central bank independence in the country and could erode confidence.”
At least six members of the MPC are needed to approve an interest rate decision, but at the moment there are only four.
The committee was supposed to announce rates today, but because they lacked quorum to seat, the meeting did not hold yesterday.
However, Governor of the CBN, Mr Godwin Emefiele, disclosed yesterday that a new date would be announced as soon as they form a quorum.
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