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Sanusi Lamido Sanusi, Central Bank of Nigeria (CBN) governor, yesterday expressed concern that the intended deregulation of the downstream sector of the oil industry could exert some inflationary pressure on the economy.

Mr. Sanusi

Sanusi who is known for speaking his mind even when his opinion is against government policy , expressed these concerns while briefing journalists on the outcome of the 211th Monetary Policy Committee meeting in Abuja. The CBN governor who had earlier expressed misgivings over Federal Government’s ability to achieve the goal of vision 20 2020, noted that the policy, if implemented, would frustrate the bank’s efforts at promoting the country’s growth prospects as well as containing inflation.

He had also stated that but for the rule of law, he would have suggested that the chief executives of the bailed out banks be tied to a stake and shot.

“The committee observed that while inflation has decelerated, it is important to recognize that seasonal factors and the planned deregulation of the prices of petroleum products pose a major risks to inflation outlook in the near to medium term.

“It is in this context that heightens the criticality of the policy dilemma now being faced by the CBN” the governor stressed.

He however maintained that the apex bank would take a balanced view of the measures required for fostering growth prospects and containing inflationary pressures on a sustained basis. In order to improve liquidity and encourage financial stability, Sanusi decided to leave the Monetary Policy Rate (MPR) unchanged at six per cent subject to the introduction of asymmetric corridor of interest rates around the MPR.

The asymmetric interest rate corridor, according to him, would have the standing lending facility at 200 percent above the MPR, while the rate on the standing deposit facility will be 400 basis points below the MPR.

“The significance of this”, he added, “is to encourage deposit money banks to leave their funds overnight with the CBN rather than lending to their customers.” This, according to him, will encourage the banks to lend their money more prudently, thereby seeking higher returns.

Sanusi also said that there will be quantitative easing to bridge the gap currently estimated at about N500 billion between the levels of the current monetary aggregates and the benchmarks level for 2009.

“The central bank , has to take a balanced view of the measures required for fostering growth prospects and containing inflationary pressures on a sustained basis and also to further strengthen the liquidity management,”
I love this guy. Never a yes men always daring his boss. Anyway, I expect their spin doctors and internet warriors to come and pounce on this guy and accuse him of pursuing a northern agenda. Am sure they will say deregulation does not favor his brothers from the north.

is anyone listening to him?

yes Naijaking1 is listening and will soon come up with a counter argument.

mbulela:

yes Naijaking1 is listening and will soon come up with a counter argument.

hehehehehe

So where do we go from here?

Ajambele

mbulela:

yes Naijaking1 is listening and will soon come up with a counter argument.

You guys never tire.
Sanusi is on a socialist strike here. Can somebody teach this guy about basic free market economics please. First, he doesn't want one man/family owned banks, then some CEOs make too much money, then he wants to redistribute bank shares, now he is saying inflation will kill us unless corrupt and ineffective goverment apparatus continues to run vital sectors of the economy? Where in this modern era does goverment successfully run everything from electricity to marketing gasoline, to schools, to hospitals, to banks. Thank God for OBJ, I'm sure Sanusi with his convoluted economics could not have seen anything good with breaking and privatiing the telephone industry.

hehehehehe. . . . speak of the devil. . . 

An Activist as a Central Banker.


Another one: Politicians' bank Deals should be exposed:
http://news.bbc.co.uk/2/hi/africa/8340165.stm

Sanusi, say this to your employers!.

Jarus:

An Activist as a Central Banker.
Another one: Politicians' bank Deals should be exposed:
http://news.bbc.co.uk/2/hi/africa/8340165.stm

This is not about his corruption fighting efforts---which is good, this is about his understanding of simple free market economics. That deregulation will cause inflation is a fallacy, otherwise US, UK, Germany, and other free market economies would have had run away inflation a long time ago.

some real interesting story!

Sanusi can do whatever he likes

This sanusi man just like to dey make noise.
Is he not part of the economic team, so why not make his "weird" economics known in their meetings , instead of this glory seeking noise before the entire world?

naijaking1:

You guys never tire.
Sanusi is on a socialist strike here. Can somebody teach this guy about basic free market economics please. First, he doesn't want one man/family owned banks, then some CEOs make too much money, then he wants to redistribute bank shares, now he is saying inflation will kill us unless corrupt and ineffective goverment apparatus continues to run vital sectors of the economy? Where in this modern era does goverment successfully run everything from electricity to marketing gasoline, to schools, to hospitals, to banks. Thank God for OBJ, I'm sure Sanusi with his convoluted economics could not have seen anything good with breaking and privatiing the telephone industry.

Naijaking

Calm down bro. We know you hate Sanusi with passion but that shouldn't becloud your reasoning, so much so that you quoted him out of context.

The deregulation Sanusi referred to was that of petroleum products prices. He was specific.

Or do you think the deregulation is in order?

fyneguy:

Naijaking

Calm down bro. We know you hate Sanusi with passion but that shouldn't becloud your reasoning, so much so that you quoted him out of context.

The deregulation Sanusi referred to was that of petroleum products prices. He was specific.

Or do you think the deregulation is in order?

I don't hate the CBN governor personally. Any modern economist would advocate deregulation any day, because it has been shown to work better than goverment control and monopoly of every company. Sanusi's denial below make me feel vindicated.
Here's an update on CBN and Deregulation:

[size=28pt]CBN refutes report, backs deregulation[/size]

Denies favouring ETB
From Mathias Okwe, Abuja
CONTRARY to a media report, the Central Bank of Nigeria (CBN) yesterday declared its total support for the planned reform in the downstream sector of the petroleum industry in the country.

The apex bank has also denied allegation that its action lately on the Equitorial Trust Bank (ETB) is discriminatory of decisions concerning other troubled banks.

The CBN's position on the planned oil sector reform is sequel to insinuations in a section of the press yesterday (The Guardian not included) that the apex bank was opposed to the deregulation programme, because it considers it as capable of triggering off inflation in the country.

But in a statement last night by its spokesman, Mr. Mohammed Abdullahi, the apex bank said nothing could be further from the truth. He admonished journalists to be cautious and refrain from sensationalism.

The statement reads in part: "The CBN has noted reports in some sections of the press alleging in screaming headlines that the CBN is against the Federal Government's policy of deregulation of the downstream sector of the petroleum industry. These press reports arose from the Monetary Policy Committee (MPC) briefing by the CBN Governor on Tuesday, November 3, 2009.

" The CBN wishes to put the issues in the right context. At no time during the briefing did the governor express the bank's opposition to the planned deregulation of the oil industry as portrayed by a section of the media. The MPC, in reviewing the outlook for the economy in the remaining quarter of the year, only made the following observation that 'while inflation had de-accelerated, it is important to recognise that seasonal factors and the planned deregulation of prices of petroleum products (through cost of transportation) pose a major risk to inflation outlook in the near to medium term.'

"The CBN however took cognizance of the moderating impact of the improved agricultural output as well as the slack in demand as a result of the slow growth in monetary aggregates in its decision to retain the Monetary Policy Rate, MRR at six per cent. From the above, the CBN made it clear that there was no basis to be wary of the inflationary effects.

"The governor during the question-and-answer session also made it clear that while inflationary threat was there, the long term positive impact of deregulation will far outweigh the initial pain as more funds will be available to the government for key infrastructure and power which directly impact on economic growth. He concluded that the investment in infrastructure and power would positively impact on output significantly and therefore dampen the inflationary threats.

"The CBN therefore wishes to state categorically that it is in full support of the Federal Government's policy on deregulation, in view of the inherent benefits and advantages to the economy and that the stories in a cross section of the media were completely out of context."

On the ETB, the CBN explained that its action was born out of immediate action initiated by the Board of the ETB to quickly redress the issues observed in the bank's audit.

The clarification is contained in another statement yesterday by Abdullahi.

According to him, the clarification is sequel to insinuations by some aggrieved operators that ETB has been specially favoured by the apex bank in the concession granted it.

The statement reads in parts: "Following the special examination of all banks operating in the country, and the subsequent actions by the CBN, the shareholders of Equitorial Trust Bank Limited requested the permission of the Central Bank of Nigeria to be allowed to rectify lapses identified in the bank. In pursuance to that, the shareholders executed a Deed of Covenant, the specific terms and conditions of which included the following:


The willingness of the shareholders to recapitalize the bank by way of injection of additional capital latest by June 30, 2010;

Restructuring, diversification and enlargement of the capital base of the bank either by way of a public offering of shares, securing a core investor or merger with a local bank within one year period;

Addressing the corporate governance issues in the bank, which were mainly ascribed to the previous executive management team in the bank;

Reconstitution of the Board of Directors of the bank through the retirement of two non-executive directors and the appointment of four new non-executive directors, including Dr. Mike Adenuga Jnr. (CON), an erstwhile member of the board, subject to the approval of the CBN; and

Convening a general meeting of the bank's shareholders to ratify, through a resolution all the nominated appointments to the bank's board.
"Having reviewed the terms and conditions of the Deeds of Covenant, the CBN has consented to the request aimed at further strengthening the bank. In granting these requests, CBN noted that the special examination had not raised issues of serious supervisory concern or criminal activity by any member of the Board of ETB.

"However, CBN will closely monitor the implementation of the terms of the Covenant to ensure that the lapses are fully rectified and in the overall interest of the banking system."

http://www.nigeriamasterweb.com/paperfrmes.html

when will NIGERIA remove her mind from oil. oil this oil that, are no other lucrative sector?

timpaker:

when will NIGERIA remove her mind from oil. oil this oil that, are no other lucrative sector?

I tire oo
All those yahoo yahoo guys should be rehabilitated so that their knowledge can be used in d IT industry but our own govt no get that time.
Na so so oil money them dey share n dem go come dey tell us stupid things

Mallam Sanusi should close his mouth for a while. He doesn't seem to understand that the press are out there to make money. At such any thing that sounds controversial is the order of the day.

naijaking1:

I don't hate the CBN governor personally. Any modern economist would advocate deregulation any day, because it has been shown to work better than goverment control and monopoly of every company. Sanusi's denial below make me feel vindicated.
Here's an update on CBN and Deregulation:

[size=28pt]CBN refutes report, backs deregulation[/size]

Denies favouring ETB
From Mathias Okwe, Abuja
CONTRARY to a media report, the Central Bank of Nigeria (CBN) yesterday declared its total support for the planned reform in the downstream sector of the petroleum industry in the country.

The apex bank has also denied allegation that its action lately on the Equitorial Trust Bank (ETB) is discriminatory of decisions concerning other troubled banks.

The CBN's position on the planned oil sector reform is sequel to insinuations in a section of the press yesterday (The Guardian not included) that the apex bank was opposed to the deregulation programme, because it considers it as capable of triggering off inflation in the country.

But in a statement last night by its spokesman, Mr. Mohammed Abdullahi, the apex bank said nothing could be further from the truth. He admonished journalists to be cautious and refrain from sensationalism.

The statement reads in part: "The CBN has noted reports in some sections of the press alleging in screaming headlines that the CBN is against the Federal Government's policy of deregulation of the downstream sector of the petroleum industry. These press reports arose from the Monetary Policy Committee (MPC) briefing by the CBN Governor on Tuesday, November 3, 2009.

" The CBN wishes to put the issues in the right context. At no time during the briefing did the governor express the bank's opposition to the planned deregulation of the oil industry as portrayed by a section of the media. The MPC, in reviewing the outlook for the economy in the remaining quarter of the year, only made the following observation that 'while inflation had de-accelerated, it is important to recognise that seasonal factors and the planned deregulation of prices of petroleum products (through cost of transportation) pose a major risk to inflation outlook in the near to medium term.'

"The CBN however took cognizance of the moderating impact of the improved agricultural output as well as the slack in demand as a result of the slow growth in monetary aggregates in its decision to retain the Monetary Policy Rate, MRR at six per cent. From the above, the CBN made it clear that there was no basis to be wary of the inflationary effects.

"The governor during the question-and-answer session also made it clear that while inflationary threat was there, the long term positive impact of deregulation will far outweigh the initial pain as more funds will be available to the government for key infrastructure and power which directly impact on economic growth. He concluded that the investment in infrastructure and power would positively impact on output significantly and therefore dampen the inflationary threats.

"The CBN therefore wishes to state categorically that it is in full support of the Federal Government's policy on deregulation, in view of the inherent benefits and advantages to the economy and that the stories in a cross section of the media were completely out of context."

On the ETB, the CBN explained that its action was born out of immediate action initiated by the Board of the ETB to quickly redress the issues observed in the bank's audit.

The clarification is contained in another statement yesterday by Abdullahi.

According to him, the clarification is sequel to insinuations by some aggrieved operators that ETB has been specially favoured by the apex bank in the concession granted it.

The statement reads in parts: "Following the special examination of all banks operating in the country, and the subsequent actions by the CBN, the shareholders of Equitorial Trust Bank Limited requested the permission of the Central Bank of Nigeria to be allowed to rectify lapses identified in the bank. In pursuance to that, the shareholders executed a Deed of Covenant, the specific terms and conditions of which included the following:


The willingness of the shareholders to recapitalize the bank by way of injection of additional capital latest by June 30, 2010;

Restructuring, diversification and enlargement of the capital base of the bank either by way of a public offering of shares, securing a core investor or merger with a local bank within one year period;

Addressing the corporate governance issues in the bank, which were mainly ascribed to the previous executive management team in the bank;

Reconstitution of the Board of Directors of the bank through the retirement of two non-executive directors and the appointment of four new non-executive directors, including Dr. Mike Adenuga Jnr. (CON), an erstwhile member of the board, subject to the approval of the CBN; and

Convening a general meeting of the bank's shareholders to ratify, through a resolution all the nominated appointments to the bank's board.
"Having reviewed the terms and conditions of the Deeds of Covenant, the CBN has consented to the request aimed at further strengthening the bank. In granting these requests, CBN noted that the special examination had not raised issues of serious supervisory concern or criminal activity by any member of the Board of ETB.

"However, CBN will closely monitor the implementation of the terms of the Covenant to ensure that the lapses are fully rectified and in the overall interest of the banking system."

http://www.nigeriamasterweb.com/paperfrmes.html

I believe deregulation will be the best thing for Nigeria at this point.

naijaking1:

This is not about his corruption fighting efforts---which is good, this is about his understanding of simple free market economics. That deregulation will cause inflation is a fallacy, otherwise US, UK, Germany, and other free market economies would have had run away inflation a long time ago.

Those countries you mentioned are governed by laws. In Nigeria these importers will simply form a cabal and ensure that local refineries never work. Read The Guardian editorial on this issue. What many are saying is that the government should take the basic step of fixing the refineries first. Then your free market might make sense.

Sanusi should go back to his cave. Deregulation is the way to go, let the Govt mind their sole business of price regulation.

MyJoe:

Those countries you mentioned are governed by laws. In Nigeria these importers will simply form a cabal and ensure that local refineries never work. Read The Guardian editorial on this issue. What many are saying is that the government should take the basic step of fixing the refineries first. Then your free market might make sense.

Do you know how much has gone down the drain trying to fix those refineries before? This is asking government to keep doing the same thing over and over again and expect different result. we don't want anybody to waste our money any longer. You know how much they spent on NITEL trying to revive it? Deregulation will make refineries fix themselves. Its basically economics.

MyJoe:

Those countries you mentioned are governed by laws. In Nigeria these importers will simply form a cabal and ensure that local refineries never work. Read The Guardian editorial on this issue. What many are saying is that the government should take the basic step of fixing the refineries first. Then your free market might make sense.

You are so correct. I've noticed putting the Cart before the Horse is the Nigerian Standard. Make the refineries work then DEREGULATE.

Hee heee heee heee 

See all these bagga's Deregulation Ko Deregulation Ni

It is so easy to be objective when you sit in the comfort of an arm chair several thousands of kilometers away in obodo oyinbo where things work and tell the poor man in naija that he will have to pay more for garri and rice because the government is tired of paying a cartel huge sum's of money that it wouldnt have had to pay if its refineries were working.
So because the government is tired of maintaining its refineries, paying subsidies, and tired of taking care of its citizens, it has no choice than to deregulate 

U just dont get the point

Im very suprised this is coming from sanusi!!! he should at least have a commom knowlwdge of a free market economy, deregulation is simply opening up the market and i dont see how thta is goin to lead to inflation in price of petroleum products because der would be loads of competiotion in the oil industry where no firm would have the power to determine the price of d productsss, its the market tht would determinee the pricess, Deregulation would be d best option for Nigeria cos it would do nigeria so much good in terms of employment, reduction in prices( deflation) cos as it is now in 9ja its d prices of oil that determine the price of other commodities, PLS LET US PUSH FOR DERGRGULATION OF THE OIL INDUSRRYY!!!!

Mr Sanusi is a human being like us,he was just appointed as the cbn governor.He will like to make himself popular so that he too can become the governor of his state later

Why will many nigerians never be straight forward for once. I read in the punch how sanusi had opposed deregulation becos of inflation.He granted full interview to jonalist in abuja which was reported on tv and other papers, How come the guy is refuting the comments he made? what type of country is this? Can u all rem this same sanusi when he was being screened by the senate how he critisized 7points agenda only for him to deny it the nextday.Rem ayoka adebayo the resident electoral commissioner in Ekiti sTATE RESIGNING HER POSITION OVER ELECTION FRAUD IN aPRIL ONLY FOR HER 2DAYS Later come out to deny that shes still a member of inec family.Whats going on are people not straight forward again.This is a terrible Country

beautiful movie.lets keep watching it,eehhm the title need I remind ya all NIGERIA IN DISTRESS.

youngmonie:

Im very suprised this is coming from sanusi!!! he should at least have a commom knowlwdge of a free market economy, deregulation is simply opening up the market and i dont see how thta is goin to lead to inflation in price of petroleum products because der would be loads of competiotion in the oil industry where no firm would have the power to determine the price of d productsss, its the market tht would determinee the pricess, Deregulation would be d best option for Nigeria cos it would do nigeria so much good in terms of employment, reduction in prices( deflation) cos as it is now in 9ja its d prices of oil that determine the price of other commodities, PLS LET US PUSH FOR DERGRGULATION OF THE OIL INDUSRRYY!!!!

Sanusi is right about inflation while u are wrong.Fine deregulation is to open up markets and increase competition and possibly reduce prices.But in the case of Nigeria's oil sector deregulation, prices will go up and this will cause inflation and poverty. How u may want to ask? let me educate u on why sanusi feared inflation after deregulation. In  Nigeria there is what is called multiplier effect i.e if the vat goes up it will tell on small things like bread,buiscuit,sweet etc. Even when the exchange rate goes up u will here Nigerians say dollar ti won i.e dollar has increased and prices of every thing will in turn increase. Same principle applies for deregulation. Now we buy a litre of fuel at N65 and after deregulation the price per litre can never be less than N100 a litre based on international price of crude oil at $70 or there about.This Increase is about 30-40% increament from N65.Now will other prices not be reviewed upward in the same proportion? transport, clothes, food and if possible salaries will all be increased will it not cause inflation? or even poverty, when transporters will increase fairs in accordance to what they buy.So sanusi is very correct about deregulation causing inflation. The present administration is not sincere thats y sanusi was called to order to retract his earlier statements

toba:

Why will many nigerians never be straight forward for once. I read in the punch how sanusi had opposed deregulation becos of inflation.He granted full interview to jonalist in abuja which was reported on tv and other papers, How come the guy is refuting the comments he made? what type of country is this? Can u all rem this same sanusi when he was being screened by the senate how he critisized 7points agenda only for him to deny it the nextday.Rem ayoka adebayo the resident electoral commissioner in Ekiti sTATE RESIGNING HER POSITION OVER ELECTION FRAUD IN aPRIL ONLY FOR HER 2DAYS Later come out to deny that shes still a member of inec family.Whats going on are people not straight forward again.This is a terrible Country

My dear, it's just fear for their lives and that of their families that make such people go back
on their words especially in the case of Remi Ayoka. If you take count, none of the murders
in Nigeria has EVER been resolved. But in any case, whether or not we fear, death will come
someday. They are only being humans (and being more specific, Nigerians).


As for deregualtion, as much as we support deregulation (which I also will advocate for), we
should consider sectors like the telecommunications (already deregulated) and do a thorough
analyses of the state of that sector. Are consumers still being 'ripped off''? Yes. Why? Because
the same govt that should regulate their operation decide that 'e no concern them'. I see similar
trend for a deregulated downstream sector. It will just mean direct deregulation into the pockets
of the government allies as usual. Some basic necessities ought to preced deregulation to make
it serve the good intended as opposed to how it is being practised in Nigeria. Consider that we
basically do not have power (electiricity) as at now!

baumolina:

Mr Sanusi is a human being like us,

Sanusi is a human being Wow when did that happen . I thought he was God and other bank cheifs and the rest of us Nigerians were Ignoramuses and Criminals fit for the Death Sentence.

Where was his human nature when his fellow human beings were being summarilly tried and disgraced, there is kerosence scarcity cos foreign banks wont accept naija letter of credit anymore, pilgrims started fighting in Mecca cos their travellers checks were labelled fraudulent

A man travels to the 88th floor of a building from the ground floor every day . He may have done this for the past 20 years but age and other factors will dictate that a lift is installed otherwise the man will eventually quench on one of his journeys to the 88th floor !!!! In the same respect deregulation , even if we think we have 'managed' without it,  is totally and absolutely unavoidable if we want to be an industrialised nation. It is lack of deregulation that ensures non of our refineries work efficiently and we then have to refine our oil abroad. It is lack of deregulation that ensure we miss out on billions of dollars from the sale of refined derivatives of crude oil !!!!

Let us then not even begin to talk about the various cartels and mafias making illegal money , to the detriment of average Nigerians, from the fuel subsidy racket , insider oil bloc allocation, crude oil bunkering , etc.  Noteworthy , for example,  that crude oil bunkering and piracy would be vastly diminished if we reduce significantly the quantity of crude oil sent outside Nigeria !!! Deregulation is vital . It is down to the FG to devise strategies to mitigate the harsh short term effects . The wastage, innefficiency and corruption engendered by the lack of deregulation in the downstream sector must be halted if we want to become even a moderately developed nation.