CBN Will Tame Inflation, Interest Rates – Emefiele

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BY CHINYERE OBIORA, AWKA – The Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has assured the CBN will not stop exploring new avenues to ensure current interest rates support Nigeria’s domestic production needs. 

Emefiele said the apex bank will continually fine tune policy measures to guarantee a stable exchange rate regime, noting that on-going recovery efforts were indicative of positive results in economic performance.

Speaking at the 24th Seminar for Finance Correspondents and Business Editors, Mr Emefiele expressed optimism that current efforts were expected to churn out improved outcomes that would tamed inflation, bring down interest rate and guaranteeing exchange rate stability.

Describing the theme of the Seminar; “Import Substitution and the Dynamics of Interest and Exchange Rates in Nigeria” as topical given the recent collaborative efforts to stimulate real sector activities in the country, the Governor said significantly the various CBN’s interventions were mainly to provide cheap financing for critical sectors as well as enhance domestic production. 

Going down memory lane on measures adopted in the past to drive the economy, boost production, reduce inflation, manage and stabilize the exchange rate, Mr. Emefiele said the apex bank is consistently devising ingenious approaches to solve peculiar challenges and will continue to learn from the experiences of other countries, particularly developing nations.

The Governor said realising that high level and widespread dependence on importation to meet domestic consumption needs is no longer sustainable; the federal government has put in place strategies for increased domestic production, especially of basic commodities.

Insisting that the need to increase local production cannot be over-emphasized, Mr Emefiele said that this strategy emerged within policy circles in Nigeria after the tragic events of 1967 – 1970, with the indigenization decree of 1972, marking the beginning of deliberate measures to tailor government spending towards self-sufficiency and industrialization.

According to him, in order to achieve the expected result, government’s attention was focused on key industries that were expected to become the driving force to sustainable development of the Nigerian economy.

Among these industries were the three petrol chemical plants in Nigeria, Ajaokuta steel, Delta steel, Itakpe Iron-ore plants; metal and tools in Oshogbo among others, while State governments where involved in all manner of cottage industries.

He said these measures intensified by the late 1970s when international oil prices began to fluctuate and high importation of basic food commodities became unsustainable, noting that the then government had to institute a programme aimed at boosting domestic agricultural production, boost food sufficiency and curtail imports.

The Governor said government readily recognized that using administrative measures to reduce imports may not be compatible with current trends in economic management that lean towards free markets, adding that fundamentals of the domestic environment need to be promoted to support domestic production and invariably curtail imports.

He stated that within the core limit of formulating and implementing monetary policy; the interest and exchange rates serve as major instruments for CBN’s support for import substitution.

The Governor said at this point of the country’s economic history, the understanding and support of all Nigerians are required to move the nation forward, especially the CBN’s efforts towards aligning its monetary policy objectives with broader economic policy to generate significant domestic industrial activities that support import-substitution industrialization.

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