By ROSEMARY ONUOHA

Dr. Omolara Akanji, former Director, Trade & Exchange Department, CBN, has called for enhanced financial inclusion stating that a significant portion of transactions in the informal sector is yet to be captured by the banking system data base.

Akanji who disclosed this on Wednesday at the Finance Correspondents Association of Nigeria (FICAN) Bi_monthly Discourse sponsored by Zenith International Bank in Lagos regretted that banks don’t readily make transactions with the informal sector available to the CBN for data collection.

According to her, the integration of transactions in the informal sector into the financial system will enhance monetary policy decisions, and create greater value for the economy.

Speaking on the theme: ‘Overview of Monetary Policy Transmission Mechanism in Nigeria’, Akanji said capturing transactions in informal sector of the economy into monetary policy decisions will increase the volume of currency in circulation and banks’ cash reserves, which would be channelled into lending to the real sector.

According to her, it is only when the funds are captured, can they be given out as loans, and added to data used in monetary policy decisions.

She said large volume of transactions still go on in the informal sector and that taking banking to the grassroots through mobile banking and cashless banking would integrate such unaccounted funds into the financial system. According to her, the CBN can monitor and systematically include the sector into the economy.

Akanbi said that cashless banking initiative being championed by the apex bank is also a viable tool of achieving the objective as more funds will have to pass through the financial system.

She explained that the informal sector is dominated by small-scale producers, largely employs indigenous technology, and sometimes, is involved in the apprenticeship system.

“A serious analysis of the monetary policy transmission mechanism must take into account, the existence of informal markets as well as other structural features that distinguish the Nigerian economy from the text-book industrial-country case,” she said.

Akanbi explained that monetary policy often conflicts hence, most Central Banks focus on their area of influence _ price stability, which sometimes changes, depending on the mandate of the central banks.

For instance, in Nigeria, the apex bank is concerned with a dual mandate of ensuring price stability and sustainable growth/development. But to be successful, the policy requires its independence, policy transparency, effective communication system, financial system stability and proper coordination with other macroeconomic policies such as fiscal policy. The country is also a mono-product economy relying heavily on commodity export particularly, crude oil, which forms an average of about 90 per cent total merchandise receipts.