Nigeria Overcame Recessions with Bespoke Policies, Says Emefiele, as Inflation Hits 5-Year High

The Governor of the Central Bank of Nigeria, Godwin Emefiele, on Friday said with the rising global trend of digital economy, the Monetary Policy Committee is expected to chart a new direction for the Nigerian economy.
He said this in his opening remarks at the 2022 retreat of the MPC held in Lagos, where members convened to discuss “Monetary Policy Implementation in a Digitally-Evolving Developing Economy.”

On the same day, it emerged that the consumer price index (CPI), which measures the rate of change in prices of goods and services, surged to 18.60 per cent in June 2022, up from 17.71 per cent in the previous month, the highest since January 2017.
Emefiele noted that in the last eight and a half years, the CBN had done bespoke monetary policies, which had seen Nigeria overcome recession twice in four years.

He said: “The evolution of FinTechs, cryptocurrencies, digital payments, artificial intelligence and machine learning, have changed the functioning of the financial and banking sectors, both globally and domestically. Therefore, the urgent call for the need to rethink financial system regulation, supervision and monetary policy implementation.

“While the innovations come with a lot of risks and uncertainties for the sectors, they also have many benefits for positive economic transformation and particularly, financial inclusion which has been the principal catalyst for inclusive growth, poverty reduction and employment generation.

“We have seen what is happening in the global economy and we are going to be addressing those issues and see if we can chart a new course and what next we should do in the coming years to see to it that we provide monetary policy direction for the Nigerian economy. So, we would be expecting new ideas, new strategies on monetary policy in a digitised global economy, what we are going to be doing in light of the challenges posed by fintech, cryptocurrencies agents globally and what direction to take.

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“I can assure you that after this meeting, we would see a new improved monetary policy and a new and improved CBN that would provide direction for monetary policy in Nigeria.”

On how Nigeria overcame recession twice in four years, he said: “While the Nigerian economy has been engulfed with many crisis, just like many other countries of the world, we have been able to relatively withstand the storm overcoming two recessions within four years and have performed far better than many of our peers, courtesy of our bespoke, homegrown and ingenious approach of adopting well thought-out and home-grown policy measures aimed at addressing our macroeconomic challenges.

“Monetary policy has been severely challenged, as its policy space narrowed significantly, in some cases, paradoxically and necessitating the need to rethink monetary policy in the context of emerging challenges and economic transformation.”
Furthermore, he noted that digital financial services created 95 million job opportunities and boosted the GDP of emerging economies by 6 per cent and that digital finance supports greater financial inclusion by making possible the extension of financial services to non-financial sectors, and to individuals with minimal access to smart electronic devices.

“The central banking and monetary policy relevance in the digital ecosystem are sometimes challenged as the regulatory oversight functions are largely eroded or weakened by impotency of traditional tools in carrying out those functions.

“In order to ensure the relevance of monetary policy and the role of monetary authorities in the new digital world, MPC members must embrace advanced level understanding of the interplay of digitalisation with monetary policy objectives, targets and tools.”

On his part, Deputy Governor Economic Policy Directorate, Mr. Kingsley Obiora reiterated the importance of policies suitable for the global digital economy.

He said: “A global payment report for 2021 showed that last year was the first-time payments by digital wallets preceded payments by cash worldwide and the data shows that only 13 per cent of payment would now be moved by cash.

“Another trend globally is the explosion of the electronic and digital trends themselves. And lastly, the rise of digital currencies. These trends and movements that we are seeing are the main reasons why it is important for a retreat by the MPC to discuss how we would respond to these changes. We have to respond so we can make policies that would affect economic growth, inflation and all the intermediate macroeconomic factors.

Inflation Hits 5-year High at 18.60%
The consumer price index (CPI), which measures the rate of change in prices of goods and services, surged to 18.60 per cent in June 2022, up from 17.71 per cent in the previous month, the highest since January 2017.
The National Bureau of Statistics (NBS) said this in its consumer price index (CPI) report for June 2022, released yesterday.

The figure is also 0.84 per cent points higher compared to June 2021, which is 17.75 per cent.
The development means that the headline inflation rate increased in June 2022 when compared to the same month in the previous year (June 2021).

According to the report, increases were recorded in all classifications of individual consumption according to purpose (COICOP) divisions that yielded the headline index.
“On a month-on-month basis, the headline inflation rate increased to 1.82 per cent in June 2022, this is 0.03 per cent higher than the rate recorded in May 2022 (1.78 per cent),” reports the NBS.

James Emejo and Nume Ekeghe

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