23rd September, 2014
Having spent his first one hundred days in office, Godwin Emefiele, Governor of the Cental Bank of Nigeria, CBN, has left no one in doubt about his conservative nature, which is a departure from the character of his predecessor, Sanusi Lamido Sanusi, currently the Emir of Kano. And the CBN governor has so far succeeded in keeping the financial sector stable, with consequent decrease in capital flight due largely to the rise in the confidence of investors in Nigeria’s economy.
Although some economists and financial experts agree that Emefiele’s performance is not below par, it has also been suggested in some quarters that the CBN governor must brace up to promptly address other issues that will lead to a better economy that should translate to the total wellbeing of Nigerians. Basically, the CBN governor should review his policies and embrace those that could strengthen the naira.
While it may be convenient for him to maintain an average measure of success by merely playing by the books in accordance with his conservative nature, what the Nigerian economy requires is a radical approach that will ensure a total rescue from further slide. Variables that determine the strength of the naira must be harnessed to ensure that its value rises.
The contentious issue of interest rates must also be addressed. And this will require a more decisive approach from the CBN governor. The real sector, and virtually all other sectors of the economy, have been brought to their knees for a long time due to unrealistically high interest rates. Industries and businesses must have access to loans with low interest rates not above the single digit.
Although interest rates are also linked to other economic issues and fundamentals, it must still be brought down for Small and Medium Enterprises, SMEs to survive and even thrive. The CBN must realise that there is no magic to economic development and job creation other than the emergence of more SMEs.
Low interest rates and access to loans ensure the revival of small businesses that find it difficult to stay afloat at the initial stage. Such businesses eventually grow to create more jobs, with the consequent reduction in crime and insecurity. Apart from mandating banks to provide funds at low interest rates, the issue of collateral, which banks normally raise to deny business owners access to funds, should be relaxed.
The CBN should also ensure that there is a significant reduction in inter-bank charges. Such costs have a way of bouncing back on the economy by gradually stifling transactions. In order to attain the level of economic development Nigerians desire, the CBN governor should realise that banking policies that have no positive impact on the lives of common Nigerians are utterly useless. And most importantly, to achieve the level of economic develoment that countries like China, India and the Asian tigers now boast of, the CBN should concentrate more on acting as the financial catalyst targeting predetermined sectors that would create jobs on mass scale while reducing the country’s embarrassingly unacceptable import dependence with the attendant huge bills.