Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has raised the alarm that the country might slide back to recession except urgent measures are taken to address the high rate of unemployment.
He said the country has made progress in the year under review but more efforts were needed to reduce the staggering unemployment rate.
“From some of my concluding remarks, you may have observed 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’m talking of monetary and fiscal policy authority, preparing our country for the next set of crisis?
“We have luckily exited recession, we have seen recession pending downward to about 18.72 percent in 2017 to about 11. 37 percent today.
“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 said.
He expressed his concerns when he delivered the Eminent Persons’ Lecture Series with the theme: “Beyond the global financial crisis: Monetary policy under global uncertainty” at the University of Benin, yesterday.
The warning came exactly a week after he alerted Nigerians to expect tough and rough years.
“The road ahead is tough and rough. I want to appeal to our people to respect the policies of the country. We always put good policies in place, but implementation is a problem, he stated when he appeared before the Senate Committee on Banking, Insurance and other Financial Institutions, as part of his reconfirmation hearing, blamed part of the country’s woes on disrespect for the rule of law.
Emefiele, who explained how the CBN led the country out of recession, however, warned that going forward, saboteurs and others who flout economic policies of the government will be prosecuted. He said despite the policies put in place by the Federal Government, implementation was always a challenge.
He also warned against the nation’s growing population and explained that if not properly managed, it will become a liability.
“We just returned from IMF programme. Nigeria is estimated to be over 420 population by 2050. It means we will be more than the United States in terms of population. We need to provide employment and opportunities for our rural population. We need to prepare for this boom,” he said.
Speaking in the Edo State capital, yesterday, he outlined effort made by the CBN to stabilise the nation’s economy, including introduction of the Investors and Exporters Window, which has helped in shoring up the country’s external reserves.
He said the turnover in the I&E FX Window has reached over $48 billion since the inception of the Window while the foreign exchange reserves rose to $45 billion in April 2019 from $23 billion in October 2016.
He said with the improved availability of foreign exchange, the exchange rate at I&E FX Window has remained stable over the past 24 months at an average of N360/$, and the parallel market exchange rate has appreciated from N525/$ in February 2017 to N360/$ today.
He assured that the apex bank would continue to take a proactive approach in mitigating the likely adverse effects that may emanate from external headwinds.
Besides, he said policies that would enhance domestic production of goods that can be produced in Nigeria along with measures that improve the stability of the financial system would continue to be employed.
He added that the CBN would ensure increased coordination between fiscal and monetary policies in deploying measures that will support economic growth and reduce unemployment in the country.
The apex bank chief also called for concerted efforts to insulate the Nigeria’s economy from the potential effects of a slow down in global growth or a decline in commodity prices.
The warning, he said, became necessary in the face of ongoing trade war between the United States of America and China, two largest world economies, which has resulted in the imposition of tariffs on goods emanating from both countries.
Emefiele listed other current global uncertainties as normalisation of monetary policy by the US Federal Reserve System, which could lead to acute capital flow reversals and increase financial fragilities in emerging markets; the crude oil market like the US sanctions on crude oil import on Iran and Venezuela, along with output cuts by OPEC members which is helping to shape outcomes in the crude oil market.
The other, he mentioned, is weak and fragile global growth. He explained that with global output growth downgraded to 3.5 percent in 2019 from 3.7 percent in 2018, there were suggestions that the expected economic downturn may be much more than initially estimated, especially with significant uncertainties brewing around the advanced economies that are expected to lead this growth.
He, however, suggested measures that both the fiscal and monetary authorities could carry out to overcome any of these uncertainties.
This include the need to strengthen Nigeria fiscal buffers in order to improve its ability to address potential downturns in the economy as a result of a slowdown in global growth.
Besides, he said efforts should be intensified at supporting targeted interventions in agriculture and manufacturing sectors.
He also recommended continued restriction on the importation of items that could be produced in Nigeria and stepping up efforts to curtain smuggling of restricted items into the country. Such astion, he said, would help support domestic production of goods in the country.
He said experience has shown global cycles have the potential of amplifying business cycles in emerging and developing markets which are capable of posing significant challenges to monetary policy.
But he warned that “strong macroeconomic fundamentals may not be enough to insulate the real economy from the effect of vagaries of the uncertainties in the global economic and contagion of poor financial conditions in other emerging economies”.
In the CBN Governor’s view, “a wider response incorporating a mix of conventional and unconventional monetary policy measures is needed to combat the multi-dimensional headwinds emanating from external shocks and global uncertainties.”
Vice Chancellor, University of Benin, Prof. Friday Orumwense, said as the world becomes increasingly global, new ways must be being explored, hence the lecture series serves as a means to connect and to continue to rub minds together and brainstorm on how to improve on capacity building of the staff. He urged the university staff and the students to take the lecture series seriously.