To ordinary citizens of this country, the days of recession was painful in the sense that both the haves and the have-nots experienced excruciating economic squeeze largely blamed on either the “inefficiency” of government or the famous Treasury Single Account (TSA).
The TSA, for example, is fingered for taking away the regular liquidity that characterized an economy buoyed via bank accounts owned by Ministries, Departments and Agencies (MDAs) and unaccounted revenues from crude oil and the non-oil sector.
However, when the federal government decided on the blacksmiths manner of shaping the red-hot iron into shape or to re-inject discipline and re-order the system towards productivity, the long-time absence of basic infrastructure and the real sector suddenly manifested the fallacy Nigerians were living in.
By 2015, when the price of crude oil per barrel dropped drastically from about $100 to as low as $30, the toll was devastating on national reserve and Naira value at a time when savings were extinct.
Central Bank Governor, Godwin Emefiele explained the gory situation to Nigerians recently noting that by January 2017, “inflation had risen 18.72 percent and by December 2017, as a result of the pressure on the foreign exchange market, reserves have dropped to about $23 billion and by that same month, even what was accruing into Central Bank had dropped to about $500 million from as high as over $3 billion sometime in August 2013/2014.
“Exchange rate as a result of the pressure had accelerated to as high as N525 to a dollar.
Despite the hurdles, we are highly pleased that for the first time in more than two years, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) adjusted interest rate downwards to 13.5 per cent.
This is expected promote strong growth by way of encouraging credit flow to the productive sectors of the economy as well as “ manage the sentiments in the capital flow market owing to the wider spread in yields in the emerging markets and the developing economies relative to the advanced economies”, Emefiele said.
The policy is coming at a time when the inflation dropped to 11.3 per cent, foreign reserves at close to $45 billion and exchange rate to the dollar converging in all the markets at between N358 to N360.
Emefiele noted that “having been on this part, particularly the MPR at about 14 per cent since July 2016, and with the relative stability we have seen in the macroeconomic variables over the last two and a half years, we just think that this should be the next phase where we begin to think about consolidating growth. This should be the next phase where you should be talking about how do we create more jobs and reduce the level of unemployment in our country for people”.
More encouraging is the growth projection of 2.7 per cent by the CBN, in the last five to six quarters with an average GDP growth of about 1.9 per cent from 2017 into 2018.
While it’s our candid view that the new MPR is a right response to the declining inflationary pressure and the relative stability in exchange rate, we must not rest on our oars in ensuring more diversification of the economy without lowering the levers on the fight against corruption of any kind. .
In this regard, the ninth National Assembly must rise to the occasion in assisting the executive with the right legal environment and appropriate oversight to the get the job done.