The Central Bank Nigeria Needs

It is safe to say that given the current state of the Nigerian economy, it would be stretching the truth thinly to say that the Central Bank has performed optimally. This is further evidenced by the biggest leap in activities in the Nigerian Stock Market since 2008, just days after Mr. Godwin Emiefele’s suspension from office. The suspension of the erstwhile Central Bank Governor also brings to question the independence of the Central Bank which is crucial in ensuring financial stability and monetary policy credibility. There has been a precedent of the suspension of past Central Bank Governors, indicating a fundamental concern as to whether the current structure of the Central bank allows it to make decisions based on economic fundamentals or political pressure and interference.

The Central Bank of Nigeria is the regulator of the financial sector; however, its mandate affects the entire economy. The availability of both local and foreign legal tender currency, safeguarding of the international value of our legal tender, maintaining stable financial systems and monetary policies are strategic to promoting a productive economy. If there is uncertainty about the Central Bank’s ability to effectively carry out its mandate, then we should not anticipate any significant production of goods and services across communities, industries and sectors.

The Nigerian economy in the last 11 years, has experienced increasing inflation rates, interest rates in the double digits which are only accessible to a select few, the growth and dominance of the parallel foreign exchange market that has left us with dizzy spells in trying to keep up with the extreme volatility in the supply and rate of foreign exchange and the increasing inability of foreign investors to repatriate their funds.

In spite of the Central Bank’s direct involvement in the Nigerian agricultural sector via the Anchor Borrower’s Scheme, the average agricultural output growth has over the last ten years slowed down to 1.8% in 2022 according to the National Bureau of Statistics. For a sector that contributes about 25% of the nation’s GDP, this does not bode well. Nigeria already has a non-complex economy, relying heavily on oil revenues. If other sectors such as mining and agriculture do not experience significant growth of at least 5% year on year, then we will linger longer in the financial predicament we currently find ourselves in.

Going forward, a more independent, transparent and accountable Central Bank is what Nigeria needs. One that is willing to engage key stakeholders in not just the financial sector but the economy as a whole when developing monetary policies which have a direct impact of the ability of Nigerians to produce goods and services that the people of the world want. A Central Bank that not only is transparent as regards its activities and their impact on the economy but will be held accountable for the decisions made in the fulfillment of its mandate.