To achieve structural transformation, Africa must look for solutions that originate in the continent and learn from its own experience.
This was the consensus among development experts, policy researchers and senior government officials at the 12th African Economic Conference (AEC), which held in Addis Ababa, Ethiopia, in 2017
The position was canvassed against the backdrop of the rising tide of nationalistic regimes around the world.
Delivering the keynote address at the occasion, Richard Joseph, Professor at North-western University, underscored why bold policy interventions must emanate from Africa. “In Africa, this is the time for relative autonomy in dealing with policy issues,” he said.
It came as no surprise therefore when President Muhammadu Buhari, in his address to the Association of African Central Banks (AACB) symposium, titled ‘Unwinding Unconventional Monetary Policies: Implications for Monetary Policy and Financial Stability in Africa’, in the early days of this administration called for home-grown solutions to tackle the nation’s economic challenges.
The president’s charge came at the back of the Nigerian economy recording 3 consecutive quarters of economic contraction in 2016. The GDP in the third quarter of 2016 continued the downward trend and contracted by 2.24 per cent relative to Q3 2015.
Nigeria’s economic performance worsened in 2016. The economy was severely affected by the plunge in crude oil prices, decline in oil production, and the reduction in non-oil exports, all of which contributed to the acute scarcity of foreign exchange.
All of these crises required some courage and ingenuity by the economic managers especially in deploying non-conventional tools to arrest the situation and stabilise the economy, growth and job creation.
Reviewing the actions of the Central Bank under the leadership of Governor Godwin Emefiele, in line with the mandate of the president and the expectations of the stakeholders, the Head of Research and Strategy at FSDH Merchant Bank Limited, Mr. Ayodele Akinwumi said: “The reality is that the Central Bank governor has done well. Look at the Investors and Exporters’ (I&E) structure for foreign exchange, in April 2017, when that policy was introduced, it changed the dynamics in the equities market and the stock market appreciated by 42 per cent in that year.
“Also, in 2015, when the current president was sworn in, remember that for almost six months, we didn’t have a cabinet. The economy then was managed solely by monetary policy and they ensured that the economy was stable.
And it was because of the initiatives of the CBN Governor and his team that made us not to feel the impact. It is like somebody driving with one leg or a human being walking with one leg. So, the CBN Governor helped in navigating the crisis and in stabilising the economy.”
Speaking further on the restriction on 41 items (now 42 with the inclusion of fertiliser), Akinwumi argued that not many people appreciate it at the time. “But the reality of the matter is that, a country can only support its currency, not by foreign portfolio investments, but by the quantum of foreign earnings that you can generate. So, there were a number of things we were importing that we had the capacity to produce here,” he added.
He said the forex restriction on the official and inter-bank market that was placed on those items, made the companies abroad to come into Nigeria to start operations here. “Rice production has increased substantially and I remember that the CBN Governor said then that a central bank in a developing country like Nigeria, must play development roles in various sectors.”
The CBN under Emefiele’s leadership has established a whole lot of funds to support some strategic sectors in the economy that have the capability to generate employment.
This is in response to the high level of unemployment rate. If almost everything we consume in Nigeria is imported, what it then means is that you are exporting jobs and putting pressure on the forex.
Few weeks ago, we saw that he (Emefiele) was at the Dangote Refinery and he pledged the Central Bank’s support to ensure the completion of the project.
He has been able stabilise the exchange rate, even though we saw some depreciation few years back (which was not caused by him according to Akinwumi), “If we have not diversified the productive base of the economy to generate income and diverse forex, oil price volatility would remain a challenge.”
Akinwumi pointed to the fact that Inflation came down consistently in 2018. “In the banking industry, look at the way they are resolving the problems some banks had. We saw how Polaris Bank took over Skye Bank and no job was lost. He has ensured that no depositor lost his or her deposits and provided stability to ensure that the institution remains sound until they find a buyer.”
He identified and paid special tribute to the kind of engagement the Central Bank has with the banking industry which it regulates, describing it as something that is commendable.
He said they involve the banks in major decisions and when they want to implement a policy, they get the views of the banks about some of the policies.
The impact of the CBN on the activities of the sector is one that also drew the commendation of Africa’s richest man and President of Dangote Group, Alhaji Aliko Dangote.
He immensely contributed to the recovery of the country’s economy from recession. Particularly, he commended the governor of the apex bank, Godwin Emefiele, for his resilience to keep going despite the challenges and criticisms faced by the CBN in recent times.
Speaking at the Zik Awards in Lagos, Dangote said the CBN interventions in the agriculture sector are helping to stabilize food prices in the country.
“The CBN has been very transparent in its policies and we are very grateful for the contributions of the CBN in helping the economy come out of recession,” he said.
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