Helping the CBN to help the economy

AS  Nigerians across different cities of the country eagerly look up to the APC-led federal government of President Muhammad Buhari to revamp the country’s economy and stimulate growth, there is no doubt that the government would require more time if we will tell ourselves the honest truth. But more importantly, a number of efforts would also have to be put in place in bringing about the much-needed turn-aroundwe all hope to see in the dwindling economy.

But the current state of the economy is not helped by the fact that oil prices crumbled and forex inflow went south as a result. Indeed, while monthly forex inflow into the country hovers around $1 billion, the monthly forex demand by Nigerians and businesses in the country, according to figures from the Central Bank of Nigeria (CBN), is around $3.6 bn. This puts enormous pressure on Nigeria’s foreign reserves, which have depleted by 25% in the last 18 months.

Of course, the gravity of the situation we have in our hands is illustrated by the fact that we risk complete depletion and total disappearance of the country’s Forex reserves if things are not well-managed. That we have for long been an import-dependent country only made the situation further complicated. Here in lies the sense in the CBN’s decision to stop forex supply for the importation of some items, 41 of them,  which it believes can be locally produced by Nigerian companies. Some of these items include soap and cosmetics, rice, Indian incense and toothpicks, tomatoes/tomato pastes, wheelbarrows, head pans, and roofing sheets, among others.

Although the apex bank did not create the present Forex challenge since the factors driving the crunch are outside of the it remit and control, however, it has, in line with its statutory responsibilities, been battling to stabilise the Naira and Nigeria’s foreign reserves. It is a difficult battle and there are no easy or painless ways out.  Like some other public analysts have said, this really is not the best of time to be a CBN Governor. And that is why I seriously pity the Governor, Godwin Emefiele. If you ask me, I think he is a very strong man to have absolved some of the insults that have been hauled at him by angry Nigerians.

But quite frankly, some of the measures put in place by CBN have also come at some costs to some stakeholders, a number of whom have complained that their business operations are being hurt. But I believe doing nothing couldn’t have been an option. At the same time, some of the alternative policy options being prescribed by critics of the bank, such as devaluation, are not cost-free and do not necessarily address what is essentially a supply problem.

Meanwhile, for those who may not understand, the CBN couldn’t have waited until the cabinet was sworn in last October by President Buhari before doing what it ought to do in the best interest of the country. The apex bank, with the statutory responsibility of managing the key rates – forex, inflation, and interest – had to act fast especially in the absence of fiscal policy support to address the imbalance in the country’s international trade. And this was even aside its efforts at providing forex to Nigerian manufacturers who need to import machinery and intermediate goods to remain in business. This was basically to encourage “Made-in-Nigeria” products and services, a campaign which is already catching on well among the populace and gaining traction.

However, despite the CBN’s seeming good intentions to revamp the economy, I doubt if this can achieve the desired result for the economy if not complemented by other initiatives. Frankly, I think what we currently have on our hands can be likened to the case of a student who has an examination to write before he graduates but chooses to focus all his attention and energies on one particular course only while neglecting the others. Even if he scores an ‘A’ in it, he will still most likely come out a failure since he had a poor preparation for the ot