Bank chiefs exit as CBN knocks Economic Summit Group

By Chika Otuchikere

A day after the Central Bank of Nigeria (CBN) accused the Nigeria Economic Summit Group (NESG) of bias in its assessment of its handling of funds raised for combating the COVID-19 pandemic in Nigeria, prominent board members of the group, including commercial bank chiefs have resigned.

The NESG is a private sector-led economic think-tank and policy advocacy group under the Laoye Jaiyeola and Asue Ighodalo-led management.

The group had issued a press statement titled: ‘Matters of Urgent Attention’, which criticized the CBN’s handling of the COVID-19 fallout.

But some of the board members said the board did not make any input to the document, and this has led to the resignation of at least three directors – Mr. Kennedy Uzoka, the Group Managing Director of UBA Plc; Adesola Adeduntan, Managing Director of First Bank and Abubakar Suleiman, Managing Director of Sterling Bank Plc abruptly tendered their resignations on Wednesday, according to a report by The Will.

CBN in its reaction alleged that the present leadership of the Nigerian Economic Summit Group (NESG) has become visionless, lacks standards and seeking cheap popularity.

The apex bank which made the allegation in a statement on Tuesday, by the Director of Corporate Communications, Mr Isaac Okoroafor said there are better ways for the NESG “to resuscitate its brand other than through cheap popularity and tarnished attention using ambushed press statements made up of contrived allegations”.

The statement reads in part:

“The attention of the Central Bank of Nigeria (CBN), has been drawn to a recent press release titled “Matters of Urgent Attention” by the Nigerian Economic Summit Group (NESG), which calls into question some of the measures taken by the CBN to support the stability of our financial system and enable faster recovery of our economy, following the negative impact of the COVID-19 pandemic on Nigeria.

“As we all are aware, the impact of COVID-19 on countries across the world resulted in a significant downturn in the global economy. Consequently, countries including Nigeria were forced to impose lockdown measures in order to contain the spread of the pandemic.

“This action resulted in depressed economic activity in the first half of the year. Except for China and Vietnam, advanced, emerging and frontier market economies, all experienced significant negative growth in the first half of 2020, and some are currently in a recession.

“In response to these unfortunate events across the globe, central banks have embarked on measures aimed at stabilizing their respective economies by reducing lending rates, which declined to negative territory in several advanced economies, in addition to increasing the scale of their asset purchase programmes.

“Indeed, after reducing its Federal Funds rate to 0 percent, the US Federal Reserve Bank implemented a huge securities purchase programme, which included purchase of corporate bonds (including those below investment grades). The Reserve Bank also provided credit facilities to non-bank institutions which included, money market funds and corporations.

“The balance sheet of the US Federal Reserve in support of these activities increased by over $3 trillion, while the European Central Bank expanded its balance sheet by over $1 trillion. Furthermore, the Bank of England in an unusual move gave an open check to the UK Government in order to fund its recovery efforts.

The CBN also feels compelled to let Nigerians know that in spite of the cordial and open relations between both organizations, the NESG could have raised its allegations directly with us but never did. Instead they chose to release a Press Statement, having leaked its content to a leading Business Newspaper in the country. Let us now turn to the specifics of their diatribe.

“It is therefore pertinent to state that the Nigerian economy is not immune from these crises given the over 65 percent drop in commodity prices; disruptions in global supply chains and the unprecedented outflow of over $100bn of debt and equity funds from emerging markets between March and May 2020; in addition to the impact of the lockdown on economic activities.

“These activities resulted in an over 60 percent reduction in revenues due to the Federation Account, a significant drop in foreign currency inflows, which led to downward adjustments in the naira/dollar exchange rate and a rise in inflation due to the exchange”.

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