Following the re-appointment of the Central bank of Nigeria (CBN) Governor by Muhammadu Buhari (GCFR) which was subjected to confirmation by the senate, the CBN for his 2019-2024 new term in office. He explicitly stated that his vision for the apex bank. President governor in person of Gov. Godwin Emefiele, CON presented his Monetary Policy roadmap over the next five years is to support growth and development of the economy. Before giving the outline of his vision for the next few years, he made a few comments about the policy made and execution over these last five years
Governor Godwin Emefiele admitted that most of the policy made for the last five years
were not achieved which is partly accountable to the 60% drop in crude oil prices between the year 2014 and 2016. Given Nigeria’s dependency on oil revenue, this drop in prices affected various macroeconomic variable such as a drop in external reserve, rise in inflationary pressures, depreciation of the exchange rate which led to a recession on the second quarter of 2016. There was a recovery from recession on the first quarter of 2017 as a result of the conscious efforts of the Central Bank as most macroeconomic variables became favourable. The CBN Governor therefore encouraged that diversification of the economy to other sectors should be made especially to the agricultural and manufacturing sectors.
For his vision for the next five years, he outlined some policies the CBN hopes to achieve. He believes that these policies will help to insulate the Nigerian economy from potential shocks in the global economy. Although the policy document outlines a number of objectives, the most important ones are discussed.
His first policy is to maintain macroeconomic and financial stability. The specific aims are to have a double digit growth, a single digit inflation rate, a sustained positive interest rate, a stable exchange rate by maintaining the existing exchange-rate policy regime of a managed float.
The second policy is aimed at improving the payment systems infrastructure. This is aimed towards having a ‘cashless society’ and to make every Nigerian access to financial services.
This will increase access to finance for all Nigerians, thereby raising the financial inclusion rate in the country. The policy therefore aims at driving financial inclusion to 95% by 2024.
Also, the CBN aims to make credit facilities easily accessible in order to support the growth of critical sectors of the economy, such as Agriculture, MSMEs and the Real Estate Sector.
This is consistent with diversification of the economy and also MSMEs today constitute over 90 percent of businesses in the country, therefore, credit facilities are highly needed in these sectors.
For the next five years, the central bank of Nigeria is also aiming at the diversification of the economy. Following from the effect of a drop in oil prices in past years, the CBN finds it wise to invest in other sectors of the economy. The Agricultural sector and manufacturing sector received more emphasis. The agricultural sector will be improved on by the provision of seedlings and finance to rural farmers in the agricultural sector across 10 different commodities which include Rice, Maize, Cassava, Cocoa, Tomato, Cotton, Oil-palm, Poultry, Fish, and Livestock/Dairy. These commodities were carefully selected using the amount spent on the importation of these items into the country as a parameter. The CBN also plan to bring in producers of this commodities into Nigeria to install or expand their production capacities in Nigeria.
The CBN’s objective on diversification of government revenue and its objective on a double-digit growth is laudable. Diversification of the economy is great as it will bring about more employment, output, attract foreign direct investment and an increase in the manufacturers purchasing index. However, the Nigeria government gets most of her revenue from the oil sector, and if she should diversify, it’s quite risky. The CBN government need to be sure by how much the non-oil revenue will help in bringing about a double digit growth. The lack of infrastructural facilities, even in the non-oil sectors might limit a double digit growth.
However, we believe that the apex bank is aware of this fact and will be reminded of this in their dealings.
The policy on a cashless society which is aimed to make every Nigerian have access to
financial services is of a great benefit to the Fintech industries and will also provide
employment. However, it should be noted that not all Nigerians have access to digital
devices and if they do, some of them are not digitally literate. If the CBN is running with this policy, arrangements should also be made for this set of people.
In conclusion, the central bank major vision in supporting growth and development of the economy can be achieved. However, the government should bring in more policies that will necessitate development so we won’t have growth without development.
By Oladele Abigail
Oladele Abigail, an economics graduate of Bowen University who applies her passion for writing to her career path.
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