The Concerns of The Central Bank of Nigeria

 

The Central Bank of Nigeria is facing a series of challenges. The new tax reforms going into effect next year have generated controversy. Nigerians could find that their bank accounts are going to be subject to more taxation. The wave of tariffs continues to disrupt the economies of various countries. The CBN in April had to sell a total of $200 million to protect the naira. During that month, crude oil prices dropped, which made for a more precarious crisis. Nigeria is reliant on crude oil for foreign exchange. The CBN has not formulated a policy to address tariffs, debts to the IMF, or the decline in oil prices. CBN this year also sold $197.71 million   to banks to secure Nigeria's position in the foreign exchange market. To certain economists, this appears to be a massive transfer of wealth out of  Nigeria. The oil wealth and the CBN's banking system have not translated into financial security for the population. Concerns about liquidity and regulations are growing. The recommendations made were to use commercial papers to manage possible risk. The commercial paper is a temporary debt tool designed to manage future payments. The CBN began using cash stuffing to manage the situation. While budgeting physical cash was the responsible course of action, the result was increased costs on deposits for consumers. The debt to World Bank is estimated to be $18.2 billion. The CBN's biggest concern is the growing debt from international banking institutions.