Stories by Ayobami Adedinni
In spite of the banking sub-sector’s resilience, the weak macro-economic environment has continued to impact negatively on the stability of the sub-sector, members of the Monetary Policy Committee, (MPC) of the Central Bank Of Nigeria,(CBN) have said.
Speaking at the end of its Monetary Policy Committee (MPC) Meeting in September, the Committee reiterated its call on the CBN to sustain its surveillance of deposit money banks (DMBs) activities for t he purpose of prompt identification and mitigation of potential vulnerabilities.
The Committee also called on the DMBs to support the quest to move the economy forward by extending reasonably low priced credit to the private sector.
In a communiqué signed by the CBN governor Mr Godwin Emefiele, the committee said tightening of the rates might result in the deposit money banks repricing their assets and loans, thus raising the cost of borrowing and therefore heightening the already weak investment climate and non-performing loans.
With respect to loosening, the Committee said it believes that although while it would make it more attractive for Nigerians to acquire assets at cheaper prices, thus increasing their net wealth, and therefore stimulate spending as confidence rises, it nevertheless, felt constrained that loosening at this time would exacerbate inflationary pressures and worsen the exchange rate and inflationary conditions.
It said “The Committee also felt that loosening will further pull the real rate deeper into negative territory as the gap between the nominal interest rate and inflation widens.
“On the argument to hold, the Committee believed that the effects of fiscal policy actions towards stimulating the economy have begun to manifest as evident in the exit of the economy from the fifteen month recession.
“Although still fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decisions to strengthen the recovery.
“Secondly, the Committee was of the view that economic activity would become clearer between now and the first quarter of 2018, when growth is expected to have sufficiently strengthened and gains in receding inflation, very obvious.
The Committee welcomed the steady implementation of the 2017 Budget, especially, the capital component of the budget, and urged increased momentum in expenditure directed at the growth stimulating sectors of the economy in order to reduce youth unemployment and restiveness.
Regarding the tepid turnaround in economic activities in the second quarter of 2017, the Committee emphasized that the employment gains of recovery were still minimal, noting that a number of important job elastic sub-sectors were still weak and may require more fiscal support to regain traction.
In his view, Balami Dahiru Hassan said unemployment is an important area that requires sound policies both from the monetary and fiscal authorities, to reduce the level of unemployment, which would help spur growth in the economy.
The CBN has a responsibility to assist in reversing the situation through putting in policies that would facilitate or support economic growth.
In his words, “What can we do to increase employment and livelihood among the youths?
“As monetary authorities, there is need to intervene in the various sectors of the economy that have a high propensity of employment generation such as: agriculture, small and medium scale entrepreneurship, establishing Silicon Valley centres etc.
“Credits should also be extended to those who have participated in the various centres for entrepreneurship development, in the country. This should be in the form of seed money.
“The largest employer of labour in Nigeria is in the private sector, and as such, should be supported. The government should provide an environment for the private sector to thrive, so as to create job opportunities.
” It is true that graduates do not see themselves going to the farm, and as such, the private sector should be supported to provide employment for our teeming graduates,” he stated.