Cashless Policy
Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN).

Nigeria’s Central Bank Governor Godwin Emefiele is projecting that inflation rate in Nigeria will continue to drop due to the policies of the Central Bank of Nigeria. Mr. Emefiele made this remark in his section of the July notes of members of the monetary policy committee of the Central Bank of Nigeria.

Slow disinflation: Nigeria’s headline inflation rate has moderated from as high as 18.7% in January 2017 to 11.08% in July, the slowest rise in about 43 months. Inflation rate also declined to 11.2%in June 2019 from 11.4% in May 2019. The CBN Governor believes Nigeria’s inflation rate will continue to drop in the coming months but still not below its projected 6-9%.

It’s our policies: A boisterous Godwin Emefiele did not hesitate to attribute the projected drop in the rise in inflation to policies of the Central Bank.

“Near-term inflation outlook suggests continued modest disinflation by end-2019, albeit above the CBN’s 6–9 percent tolerance range. The projected disinflation is attributed to the CBN’s intervention in the agricultural sector, imminent harvest season, and continued stability in the FX market.” Emefiele 

The Central Bank Governor also insisted that to address any supply-side inflation due to factors like electricity, transport bottlenecks and other factors of production. To this, he claims the Apex bank will rely on “local productivity with a view to driving inflation towards target.”

[Read Also: Three reasons why the naira is depreciating]

What this means: The Central Bank’s plethora of policies under Emefiele has often been focused at development economics and forex restrictions. Under development economics, the CBN prefers to channels funds directly into the critical sector of the economy by issuing concessionary loans and grants as well as controlling the supply and utilization of forex. Once again he believes his interventionist policies are actually the reason for the drop in inflation giving him more impetus to double down on the controversial policies.

The Big Picture: Godwin Emefiel’s policy of banning forex for all items on the 41 list including more recently milk, is all geared towards stimulating local production as he insists. But critics believe strongly that this is more about hoarding the forex reserves than actually encouraging local production. The CBN has spent over N6 trillion on extra-budgetary loans to the Federal Government and over N5.8 trillion in debt notes from AMCON (as at May 2019).

1 COMMENT

  1. I think he is right,knowledge is power.if I am correct the cbn also aimed to correct gen babangida STRUCTUAL PROGRAMME ADJUSTMENT,i have read on Gen Babagida how he defended SAP on Nigerian television sometime ago.I wanted to give him a response,now the cbn, is trying to address the defiction of SAP,WHICH ARE MULTIPLE.some of the problems that are caused by it are these,(1)the Govt policied addresses the issue of demand,without addressing the issue of supply.e.g we only uses oil as our sole source of forex utilization (2) the govt did not intervene in any way to balances or corrects the problem which faces the economy,the greediness and lust e.g anybody that have any power must maximum his bases and do not cares about anybody(3) easy money,govt started to have deficit in annual budget,easy money is they had tried to uses secured money in financing their annual budget,the rate of inflation will not be on what it is,and even create specialized employment.i.e the sophication or engineering of Nigerian money market,some Igbo money market operator might called their bond Biafra bond or ogbunigwe bond ,PRODUCTION IS NOT MARCHING THE SUPPLY OF MONEY.
    I do not wishes to go into the detail of the cbn actions done since this year,i was hoping that nairametric will enlightens their fellows Nigeria.HOWEVER THE SUMMARY OF THE CBN ACTION ON WHAT IT MEANS FOR NIGERIA AND FOR NIGERIANS.they aimed to reaches the part of the economy or for some Nigerian or their banks participate in some sector of the economy,that will not give immediate result,and will also give some support in some risker business venture.it will also clears the economy more,and I think the ministry of finance will also intervene more than any finance minister.THEY HAVE MERGE THE MINISTRY OF FINANCE AND THE MINISTRY OF NATIONAL PLANNING INTO ONE

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