Governor of Edo State, Godwin Obaseki, has expressed some concerns about some of the monetary policies recently introduced by the Central Bank of Nigeria (CBN) based on what he considered as the potential detrimental impacts of the implementation on the nation’s economy.
It would be recalled that the apex bank had last week, through its Monetary Policy Committee (MPC), jerked up the monetary policy rate (MPR), the benchmark lending rate, by 400 basis points to 22.75 per cent from 18.75 per cent.
Also, the committee adjusted the asymmetric corridor around the MPR to +100 -700 basis points from + 100 -300 basis points, and increased the Cash Reserve Ratio (CRR) from 32.5% to 45%, while the Liquidity Ratio was retained at 30%.
Commenting on the revised MPR and other rates by the committee, Obaseki pointed out that that the recent policies of the apex bank would not support the growth of the economy.
The Edo State Governor, who shared his views as the Special Guest of Honour at the annual dinner of Edo Zone Bankers’ Committee in Benin, the state capital, maintained that small borrowers and small businesses needed to access credit at a low interest rates to grow their businesses and challenge of job creation, particularly for the teeming Nigerian youths remained daunting.
While urging the Federal Government to focus on the fundamentals by increasing production and making sure citizens produce the goods and services consumed in the country and depend less on imports, Obaseki maintained that the nation’s economic policies and monetary policies should not be primarily determined by exchange rates but that other micro and macroeconomic indices should be considered.
He advocated: “The policies rolled out by the Central Bank unfortunately will not support growth in our economy. Interest rates are already very high and jacking it up further, clearly will not allow small borrowers and small businesses access to credit at a price to help them grow their businesses.
“When an economy is in this state, it needs all the support and push it can. I understand the monetary rationale for increasing MPR but fundamentally and fiscally, it is not going to lead to growth in our economy.
“We must focus on the fundamentals, which is increasing production, making sure our citizens produce the goods and services we consume and depend less on imports. Our economic policies and monetary policies cannot be determined by exchange rates alone.
“So, this whole issue of increasing cash reserves in the bid to tighten liquidity is going to be detrimental to our economy. I understand the challenge the monetary authority is faced but unfortunately you cannot clap with one hand.
“The economy is about fiscal and monetary policies; both must work hand in hand. When they don’t as they don’t in Nigeria, you have a crisis. So, we should focus on fiscal issues so that we can grow our economy out of the challenges we have,” Obaseki stressed.
On the current FX crisis, the former banker advised the Federal Government not to panic too much because of foreign exchange but rather must focus on how to do things within the domestic economy to boost productivity and earn more foreign exchange.
The governor said he believed that creating jobs for young people should be more of a priority for us as a people at this critical time of developing the country.
