Economists Call For CBN Policy Review

Economists have urged the Central Bank of Nigeria (CBN) should consider a policy reset to unify the country’s currency exchange rate.

The economists said this at the recently held First American Business Council (ABC) Economic Update themed: Nigeria’s Debt Overhang and Strategies to Create Economic Growth, hosted by the American Business Council in Lagos.

Dapo Olagunju, MD, JP Morgan West Africa, said the CBN needs to be more orthodox in its approach to monetary policies as the apex bank currently has too many objectives it is following, hence, things are muddled up.

“There should be a reset at the CBN. One key way will be the unification of exchange rates", he said.

Speaking further, he said international investors don’t mind whether the rate is N400 or N700 to the dollar because there are specialists who know how to manage market risks daily.

“What is always difficult to model is government’s interference and ambiguity of monetary policy – if the policies are clear and open the dollars will flow in – it does not matter the exchange rate,” he said.

Also speaking,  the chief economist and partner, KPMG, and former statistician general, National Bureau of Statistics, Dr Yemi Kale, said that 62 per cent of the Nigerian economy relies on the oil industry which has been producing sub-optimally due to the activities of oil thieves in the Niger Delta, which had reduced foreign investments into the country over the last decade.

“In reality, 62% of the economy depends on whatever happens in the oil sector, and that is why we keep remaining in that challenging situation.

“The 38% of the economy that has little or no dependence on the oil industry includes telecommunications, Nollywood, and other services.

“That is the most important sector of the economy, but it’s very small, and it is the reason the Nigerian economy has been growing by an average of 1% since 2015, although the population has been growing by 3%. 

“Between 2015 and now there has been a 49% drop in per capita income and because of this dysfunctional sector, we have been unable to take off.

“When you go through a recession and get out of it and get your positive growth, then you start to recover, and after that, you take off but we can’t take off because 38% of the economy is actually what is driving the economy", he said.