The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has reiterated the need to develop preemptive measures to guide the country’s economy from global shocks that could impede Nigeria’s growth and lead to another recession.
The preemptive measures, according to Emefiele, would help to create jobs in critical sectors that will, in turn, fuel the economy. He added that low-interest rate regime, stable exchange rate regime, and robust reserve position are some factors needed to ensure a prosperous nation.
Emefiele made this comment while speaking at a consultative roundtable titled “Going for Growth” with some economic stakeholders in Lagos. He advised the stakeholders and policymakers to strengthen their resolve in actualising the goal.
“Although we had hoped to achieve a lower level of interest rate, this became impossible given the normalisation of monetary policy in the United States and the over 60 per cent drop in crude oil prices between 2014 and 2016.
“You will agree with me that the consequence of these unfortunate occurrences was a heightened inflationary pressure on the economy and monetary policy had no option but to embark on a regime of tightening so as to rein inflation.
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“We also deployed measures aimed at supporting improved productivity of the Nigerian economy by restricting access to foreign exchange on 43 items that could be produced in the country.
“We have also strengthened our intervention programmes which helped in restarting the flow of credit to critical sectors of the economy.
“As part of our interventions, we introduced the Anchor Borrowers’ Programme; a programme that helped to improve access to credit to Small Holder Farmers through our intervention programmes such as Commercial Agricultural Credit Scheme and the Real Sector Support Fund.
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“We have enabled large agro-processors and manufacturers to expand their operations, thereby supporting our efforts at improving the domestic production of goods.”
He, however, stated that Nigeria is far from building a stronger economy, as the Gross Domestic Product growth is said to remain fragile, lagging behind the population growth rate of 2.7 per cent.
Why this matters: Recall that Nigeria slipped into recession in 2016 due to its unpreparedness to cope with the recent global oil crash. When the global oil price dropped, it had serious negative effects on the economy.
Therefore, in order to forestall a repeat of such, other sectors are being encouraged to grow in order to reduce the dependence on oil revenue. Note that other oil exporting countries were able to withstand the global oil crash of 2015/2016 because they have other revenue sources.
What you need to know: For other sectors to develop their contribution to the GDP, there’s a need to support their operation by giving them credit facilities. Unfortunately, much of this financial assistance hasn’t been given to them, according to Emefiele.
Gov. Sanwo-Olu to support drive: Meanwhile, the Lagos State Governor, Mr. Babajide Sanwo-Olu, said the government will support Nigerian businesses in order to make it possible for them to compete fairly in the global market space.
While speaking on the contribution of Lagos State to Nigeria’s GDP, which according to him stands at 30%, the Governor said the state and CBN will partner to ensure continued economic growth.
“We are going to do this so that we can become increasingly competitive and innovative. It is important to unleash the potential of the state so as to attract Foreign Direct Investments to the state.”