CHANGES at the Central Bank of Nigeria since Godwin Emefiele resumed as Governor have sent signals that he intends to accomplish his vision of “the model Central Bank delivering price and financial system stability and promoting sustainable economic development”’.
The vision is inspired by an understanding of the multiple mandates of CBN to pursue price and financial system stability and provide complementary developmental functions by creating opportunities for Nigerians to live better and more fulfiled lives, through policies that enhance job creation.
Rather than being competing goals, as some may argue, they are complementary. In fact, price stability can rarely be adjudged a goal in itself without the ultimate objective of improvement in the quality of life.
CBN Monetary Policy Committee tended to focus on price stability to the neglect of job creation and the general welfare of the Nigerians. In its pursuit of low inflation, CBN, for three years, starved the economy of loanable funds by its tight monetary policy.
The continuous withdrawal of funds from the system jacked up interest rates and made credit inaccessible to small and medium enterprises, which ordinarily should be the hub for economic growth. Nigeria’s monetary policy rate is currently 12 per cent.
It is the barometer for bank lending rates that range between 18-24 per cent. The real sector cannot borrow from banks at these rates.