NBCC Advocates Coherent Monetary Policy Framework for National Development

Mary Nnah

The Nigerian-British Chamber of Commerce (NBCC) has advocated for a coherent monetary policy framework for national development.

The NBCC President and Chairman in Council, Bisi Adeyemi, in her opening speech at a recent virtual roundtable, advocated for the building of a coherent monetary policy framework strategically targeted at improving economic growth and national development.

She highlighted that Nigeria’s economy before now was highly dependent on oil as the major source of government revenue and foreign exchange earnings.

“Over the years, for various reasons, we have witnessed significant depletion of the country’s foreign reserves. But things are changing,” she said.

Two experts Dr. Marco Hernandez, Lead Economist for Nigeria, World Bank, and Dr. Hassan Mahmud, Director, Monetary Policy Department, Central Bank of Nigerian, were specially invited to dissect the issues.

Responding to a question by Toyin Sanni, the Moderator, on how the CBN rates itself against its set objectives, Mahmud explained that the CBN has effectively been managing the country’s interest rate regime, which he said was critical to the real sector and for providing attractive investment environment, and also the foreign exchange regime where significant volatility has been witnessed.

He added that in trying to tackle the exchange rate volatility and manage other CBN functions, they have employed monetary targeting options including open market operations, liquidity forecasts templates, and others with the aim of bringing down inflation.

According to him, though short term measures may be deployed the structure of the economy has a role to play in the effectiveness or otherwise of these measures.

Hernandez, in his contribution posited that Nigeria currently, is at a critical juncture where it must take critical decisions.

He said that Nigerian cannot continue to operate like business as usual, otherwise, “they can only expect the same kind of growth experienced since 2015, which will continue to witness decline in per capita income and limited job creation.”

He added that Indonesia that shares similar characteristics as a country took a different policy trajectory and arrived at a different outcome. “This means that for Nigeria to achieve a more progressive economic growth and development the country must reconsider some of her present monetary policies that will make it possible to achieve the expected growth curve. Nigeria would need to create the necessary environment for investment, halt inflation, and create more jobs. Nigeria should take action to halt the declining economy,” he added.

Hernandez affirmed that inflation affects the purchasing power of Nigerians. “Right now, Nigeria is growing at a slow rate with a high rate of inflation. About 5.6 million Nigerians have been pushed below the poverty line within one year. Inflation is driven by increasing domestic food prices and not imported food prices. Exchange rate reforms are essential to reduce inflation and to boost growth; and inflation follows the movements in the parallel foreign exchange rate.

For Mahmud, “Every economy must have set objectives, and set frameworks to achieve those objectives. Our policies are geared towards making the country export driven rather than import dependent. We should then look inwards to grow the Nigerian economy, to a competitive level to enable it to play at the global stage. We must then play at a global standard. If we do not look inwards, if we do not take our destinies in our hands, we will have ourselves to blame.”

He said that the Nigerian economy must be developed first, before we start talking about addressing the exchange rate.