Nigeria’s central bank will pull back from direct fiscal interventions and take “more limited advisory roles” in support of the government’s economic growth agenda, governor Olayemi Cardoso said on Tuesday.

The bank’s current approach blurred the lines between monetary and fiscal policy, undermining its ability to effectively manage inflation and foreign reserves, Cardoso said in an emailed speech.

The central bank, under former governor Godwin Emefiele who was ousted in June, had kept the naira artificially strong and pursued unorthodox monetary policy by providing liquidity to money markets through interventions.

“There is need to pull the central bank back from direct development finance interventions into more limited advisory roles that support economic growth,” Cardoso said.

The governor’s speech comes amid double-digit inflation, a depreciating currency, and record debt in Africa’s largest economy.

The central bank “does not have a magic wand that can be waved at the current economic challenges,” Cardoso said.

However, he suggested the central bank could support growth in a variety of ways, including by catalyzing institutions and financial products to support emerging sectors of the economy, expanding financial inclusion and bringing together multilateral stakeholders to support government and private sector initiatives.

President Bola Tinubu has embarked on Nigeria’s boldest reforms in decades, including ending a costly petrol subsidy and removing restrictions on foreign exchange trading. He has been under pressure to revive the ailing economy.

Cardoso, who took office in September, said the bank would move to strengthen its corporate governance, restore confidence, and refocus on its core functions to rebuild its credibility.

REUTERS