The Central Bank of Nigeria and some renowned economists on Monday disagreed over the monetary instruments being used by the authority to manage the economy.
While the CBN maintained the economy was on the right track, the economists pointed out that there was the need to reverse some of the policies in order to move the economy forward.
Speaking at a roundtable organised by the Save Nigeria Group to mark one year anniversary of ‘Occupy Nigeria’, they economists said that no country would prosper under the current inflation rate of 12 per cent.
For instance, a financial analyst, Mr. Henry Boyo, said, “There are a lot of factors why Nigeria will continue to be behind. How can a country that wants to move forward be proud of an inflation rate of 12 per cent? No country develops with such inflation rate.
“Inflation rate should be kept below three per cent for you to develop. We pride ourselves as giving agriculture loans at six per cent while serious minded nations give out agric loans at zero per cent.”
Boyo pointed out that for the naira to be strengthened, CBN’s monopoly over the foreign exchange market should be eliminated.
“I have never seen any serious country where the central bank sells dollars directly to the bureau de change,” he said.
He also said that the government should hands off the running of refineries. “Telling government to manage refineries is like opening an avenue for them to steal money; the ones they are managing, how far have they managed them?”
But the Director of Research, CBN, Mr. Charles Mordi, said the bank had over time insisted that a low interest rate regime was desirable.
He said, “It is wrong for anybody to say that the policies of the CBN had not been helping the economy. Since 1987, the bank has endeavoured that the agriculture sector gets a single digit interest rate. You need to understand the factors that come into play when you are talking of a low interest rate regime. The demand and supply come into play in determining interest rate like any other commodity.”
On inflation, he said the CBN had always been the first to recognise that high inflation was dangerous to the economy.
“We are obsessed about bringing inflation rate down but for a developing nation, it is difficult to have two to three per cent inflation rate. We should know that there is a trade-off between inflation and economic growth. Inflation rate should be addressed gradually in order not to create serious problems in the area of growth.”
But Boyo insisted that it was a faulty monetary framework of the CBN, particularly the substitution of naira for dollar revenue that led to high interest rates, continuously depreciating naira.