The Central Bank of Nigeria (CBN) says there is no correlation between the performance of the nation's economy and the current political impasse resulting from the inability of President Umaru Musa Yar'Adua to perform his duties as president.
The bank's governor, Sanusi Lamido Sanusi, told NEXT in Abuja on Tuesday that there are no indications of any negative impact on the economy as a result of the president's poor health, which had made him stay outside the country for about 94 days for medical attention in a Saudi Arabian hospital.
"The Economy has been growing. Exchange rate has been stable. Interbank rate has been low. We have continued with the banking reform," Mr. Sanusi said.
The central bank Governor also said Acting President Goodluck Jonathan is satisfied with the operations of the bank.
"The activity of government continues. We have continued to get approvals from the Acting President, and consult with him at any point in time.
"We, at the Central Bank, at any point in time, have not felt that there is any difficulty in getting things done.
"I have said this repeatedly, and I will continue to say it, that we do not have any problem," Mr. Sanusi said.
Asset Management Company
On the status of the bill seeking to establish the Asset Management Company (AMC), Mr. Sanusi expressed optimism that, given the pace of the legislative process at the National Assembly, the decision on the matter will be made within the next few weeks.
"As at last week, the three committees in the House of Representatives laid the report before the full house. As of today, the AMC Bill has been tabled for the second reading at the Senate. We expect that all things being equal we can get it passed within two weeks, after all the committee processes, before the harmonisation of any differences, and then presidential assent.
"We are on track to get the AMC Bill approved within this quarter. We are on track for making rapid progress on the final resolution of the policy on capitalisation of the banking industry in the second quarter and for getting all shareholders' approval in the third quarter. By September 30, all issues with all the affected banks would have been resolved," he said.
However, Victor Ndukauba, an analyst at Afrinvest, a finance and research firm, disagreed with the central bank governor's position saying that the political impasse has increased investment risks, as the political risk rating of any economy is a high determining factor for investment.
"Most investors, external investors particularly, are looking at political risk while considering economies for investment. They look at the whole political setup, the transition, the instability and the impact of all on industry and business" he said.
Mr. Ndukauba told NEXT in Lagos that "In the absence of a president, one of two decisions usually lies pending and one of these is in terms of direction and policy making and how these would impact on businesses and investments. It begins to raise a concern to any investor who would begin to factor this as a major point for decision making.
"He (President Yar'Adua) was away for about 93 days and then it was reported by foreign and local media that he returned.
"We were told that an ambulance, along with an escort headed to the seat of power, (Aso Rock) none of the media saw him, he is yet to grant an address to the public either by national address or any form of public discourse.
"This scenario creates a lot of uncertainty and that is not good for the investment climate of the nation. In my opinion, I think this would worsen the situation because while he was away, the legislature had found a way to make the Vice president act as the president, foreign players and other counterparts were more assured of the stability of the nation under one man but this recent uncertainty makes it challenging for investors" he said.
The Trade Union Congress of Nigeria, in the early days of the president's return, had warned that "Unless the situation (political uncertainty) is properly managed, self serving politicians who have fuelled the tension in the polity thus far over this issue, are capable of adding political, sectional and religious connotations to the whole issue and this is capable of causing serious problems for a fragile country and our fragile economy and our overall stability."
Speaking on infrastructure challenges in the country, the CBN governor said all the 24 bank chief executives identified, power, transport infrastructure and agricultural development as the three key areas of intervention by the banking sector that can positively impact the economy.
He said the Bankers' Committee has constituted a technical committee to work in consultation with state governments to identify bankable projects that require funding as well as other issues, such as approval to accept bonds issued by well managed states for liquidity.
He also said the CBN would encourage states to access the capital market to source for funds for their projects, pointing out that one window is the deployment of the excess liquidity by banks with the apex bank to the state governments for 10-15 year bonds through the capital market for financing long-term infrastructure development activities such as power projects.
"It's a combination of working with the banks and the government to ensure that the projects are commercially viable; pushing the advocacy for capital market reforms (like the tax), which is awaiting the president's signature," adding that this would open up the bond market to the private sector and direct lending through consultation and appropriate advice.