Buhari’s abuse of ways and means fuels inflation, weakens naira – Muhammadu Sanusi II

Khalifa Sanusi.
Khalifa Sanusi.
Buhari’s abuse of ways and means fuels inflation, weakens naira – Muhammadu Sanusi II

Former governor of the Central Bank of Nigeria, Khalifa Muhammadu Sanusi II, has said the apex bank’s lending to the federal government under the administration of former President Muhammadu Buhari through Ways and Means triggered inflationary pressure in Nigeria and weakened the value of the Naira.

The CBN’s loan to the federal government hit N22.7 trillion, an amount the CBN said had been securitised not to dampen its balance sheet. Ways and Means is a way in which the federal government raises funds by borrowing from the CBN.


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The 14th Emir of Kano and leader of the Tijjaniyya Order in Nigeria also said the central bank had embarked on aggressive monetary tightening through various liquidity control instruments, including open market operations, Open Buy Back (OBB) and high T-bills rates, an indication that the bank was sticking to its core mandate of financial systems stability and inflation control.

“I am optimistic, especially in the short term. We’ve had eight years of rapid expansion of the central bank’s balance sheet through ways and means. And that has fueled inflation and weakened the currency. And that is the fact,” Sanusi II said yesterday at MTN Capital Markets Day, an event organised by MTN Group to provide updates and insights to the financial community, including investors, analysts, and stakeholders.

Acknowledging that the central bank can use different instruments to mop up excess money in circulation, Sanusi said it needs to do it in a manner that minimizes the cost to both the central bank and the government’s balance sheet, and that’s why it has to rely a little more on non-conventional instruments.

“If you look at OMO Bills and OBB rates in the last few weeks, I can see that the central bank has started a process of aggressive tightening. OBB rates are beginning to approach what they should be. And I think that’s what the market needs to look at; that the central bank is taking this role of tightening money and fighting inflation as a primary focus,” he stated at the event.

He urged the audience to show understanding with the fact that those new monetary policies take time to manifest.

“For the short term, I don’t think we have a problem. I think the central bank is doing the right thing – tightening money, clearing the backlog, trying to fund the market, and I think we will have stability.”

Earlier, CBN’s director in charge of the research department, Dr Omolara Duke, who represented Cardoso at the event said: “The Ways and Means will no longer be more than five percent, going forward. The period for the government to access Ways and Means is over.”

She also disclosed that the central bank is looking at how to drive down the cost of remittances to increase the inflow and move them away from the informal sector into the formal.


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