LBS EXECUTIVE BREAKFAST SESSION – JUNE 2019 (Re: Differentiating between regulatory enforcement & official tyranny)

Dear Subscriber,

Regulatory enforcement could easily be misconstrued as official tyranny if due process is compromised. Tyranny is defined as the cruel and arbitrary use of power.

The recent targets of regulatory enforcement in Nigeria – Oando, MTN, DAAR, have sought judicial remedies. Also, the revocation of mining licenses in the upstream petroleum sector by the DPR has raised eyebrows. Whilst some citizens and investors alike have (mis) judged the regulators to be unfair and the revocation of OML licenses as biased, others are of the view that if there was no wrongdoing there would be no sanctions. Nevertheless, investor protection remains the primary responsibility of capital market regulators.

According to Lawrence Summers (Harvard economist) and Alberto Alesina, ‘monetary discipline associated with central bank independence reduces the level and variability of inflation’. Therefore, Trump’s misguided tweets in the interest rate decision of the Fed as well as South African parliament’s decision to broaden the central bank’s mandate to encroach on fiscal roles could have unintended consequences in the long run. Central Banks must dispel any questions raised as to their independence and autonomy from both the executive arm of government and crony capitalist meddling.

Any interference in the mandate of the CBN and other regulators could have significant macroeconomic consequences and dampen investor sentiment.

As the new administration kicks off in the midst of global and domestic uncertainties, Bismarck Rewane and the FDC Think Tank address these economic and political issues in this month’s LBS Breakfast session, while attempting to make some forecasts which could impact your business, portfolio and strategy.