Reappointed governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has said Nigeria may slide back into another serious economic crisis if measures were not taken to tackle the high rate of unemployment in the country.
Emefiele gave the warning yesterday when he delivered a lecture titled: “Beyond the Global Financial Crisis: Monetary Policy Under Global Uncertainty” at the University of Benin (UNIBEN).
He had earlier on Tuesday said that there was a link between the level of unemployment, improved economy and the level of insecurity in the country, stressing that “we all have to work together.”
In the lecture, the CBN boss emphasised the need for all stakeholders to think about how to improve the level of employment and reduce unemployment in the country.
Emefiele said that the country had made progress in the year under review but more efforts must be made to reduce the country’s unemployment rate.
“…Whether you like it or not, there is global uncertainty that will unfortunately most certainly, lead to another crisis. The question could be, how are we as Nigerians, particularly our leaders, I am talking of Monetary and Fiscal Policy authorities, how are we preparing our country for the next set of crisis?
“We have seen reserves moving up but unfortunately, we still have issues and those issues bother around unemployment rate and those issues bother around how do we prepare our country?” he stated in a response to questions from journalists in Benin.
Emefele said that despite the apparent state of improvement in the exchange rate, foreign reserves and other economic indices, Nigeria still has to contend with issues of increased unemployment rate, insecurity that threatens farming activities by farmers to boost food production in various parts of the country.
He said: “There is global uncertainty that would unfortunately trigger another global crisis, the question therefore will be how are we as Nigerians particularly our leaders; here I am talking of monetary and fiscal policy authorities preparing the country to handle the next possible crisis?
“Luckily we have exited recession, we have inflation trending downward from 18.72 per cent in 2017 to 11.37 per cent today, we have seen our reserves moving up, we have seen exchange rate stabilising but unfortunately, we still have issues and those issues bother around unemployment rate… let me repeat myself because I have said it in another forum, we were at the International Monetary Fund (IMF) meeting in April just last month and in parts of the reports that were reviewed by governors of central banks and ministers of finances across the world, we were told that Nigeria will be third largest populated country in the world by the year 2050 after China and India and overtaking USA,” he said.
He, therefore, urged actors in the public and private sectors to look inward in developing the Nigerian economy, noting that there was much potential within the Nigerian economy to make it as developed as other countries, which were its peers at independence but had gone ahead to become more developed.
The CBN governor, who noted that the lecture was part of the bank’s efforts at promoting research and collaboration with universities towards developing policies and programmes that will enhance the economic well-being of all Nigerians, highlighted how the crisis had helped to reshape monetary policy tools used by Central Banks to address dips in their economies.
Giving an overview of how central banks across different economic blocs responded to the global financial crisis, he noted that while the impact of the global financial crisis had little effect on the Nigerian economy, the drop-in commodity prices between 2014 and 2016, brought to the fore the limitation of conventional monetary policy tools.
According to him, “the 60 per cent drop in crude oil prices between 2014 and 2016 along with normalisation of monetary policy by the United States Federal Reserve Bank in 2014, imposed severe constraints on the Nigerian economy, given our reliance on crude oil for over 90 per cent of our export earnings and 60 per cent of government revenue.”
He explained that the CBN and the fiscal authorities, in an effort to contain the crisis, decided to deploy both conventional and unconventional tools in a bid to support continued growth of the economy. This is even as he noted that a simple focus on the Monetary Policy Rate (MRR) would not have been sufficient to get the Nigerian economy out of the recession.
He further said that the CBN, in employing unconventional monetary policy measures, decided to intervene in critical sectors, such as agriculture and manufacturing in order to promote growth and boost employment opportunities as well as address the stability of the financial system and provide support against external pressures.
Emefiele reiterated the need to promote sustainable growth through the increase of policy buffers and a further diversification of the Nigerian economy away from oil, to other non-oil produce. He equally stressed the need for huge investment in infrastructure in order to enhance economic growth and provide cheap financing to boost the local production of priority goods in critical sectors of the Nigerian economy in order to reduce reliance on foreign imports.
Emefiele, who will commence his second and final term as CBN governor in June 2019, pledged that the bank would continue to take a proactive approach in easing the likely adverse effects that may emanate from external pressures. He said the apex bank will promote policies that will enhance domestic production of goods along with measures that improve the stability of the financial system.
… US, China Trade War Threatens Global Recession
Similarly, Emefiele lamented that the ongoing trade war between the United States of America and China could throw the world into another recession.
“The ongoing trade war between the United States and China has resulted in the imposition of tariffs of goods emanating from both countries. If the trade war is not curtailed, it is likely to result in a slowdown in global growth given the sizeable weight of these two economies. Global supply chains as well as the demand for commodities could be affected if the trade war results in a slowdown in growth in China and the United States,” he added.
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