Business
Economic Recovery: ‘Monetary Policy Offers Limited Tools’
Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele says monetary policy offers limited tools for dealing with the current economic challenges in the country.
Emefiele said this while delivering a keynote lecture at the 2017 Annual Conference of Nigerian Bar Association (NBA) in Lagos.
The lecture was titled “The Dilemma of Monetary Policy During a Recession: Potential Options for Nigeria”.
Emefiele identified the current challenges facing Nigeria as falling Gross Domestic Products (GDP) growth rate, rising inflation, persistently high interest rates, falling foreign exchange reserves and depreciating exchange rate.
He said the CBN could not tackle these challenges with the tool available to it with the objective of changing the outcomes for the better.
The governor pointed that CBN had always used monetary policy implementation at its disposal in controlling interest rates and money supply to moderate inflation and achieve economic growth.
Emefiele said these problems occurred simultaneously and needed to be dealt with over a short period of time.
According to him, the real dilemma the country is faced with is that there are significant trade-offs in outcomes of economic variables regardless of what specific monetary policy the nation implemented.
“For example, one would expect that given the bank’s core mandate to pursue low inflation, the central bank would implement policies geared towards that.
“In order to tackle high inflation, the correct monetary policy would be to tighten money supply either by increasing the Cash Reserve Requirement (CRR) of banks, mopping up money through increased Open Market Operations or raising the Liquidity Ratio of banks.
“While doing any or a combination of these would help moderate inflationary pressure, it could ensure that interest rates remain high and may even be inimical to restoring economic growth in the short term.
He, therefore, said that bank would need the support and cooperation of the NBA to build synergy towards the achievement of the various policy options enumerated.
According to him, the CBN is leading other stakeholders through the Financial System Strategy 2020 (FSS2020) in order to achieve stability in the financial system.
He said this would help to develop a robust, globally competitive and market friendly legal framework for Nigeria’s financial sector by the year 2020.
“FSS 2020 intends to apply the instrumentality of the law as a vehicle to fast-track the development of Nigeria’s financial system.
“As such, this is one area where the CBN would need the support of the NBA.”
Emefiele said that one of the major lessons learnt from the recent global financial crises was the need to develop adequate frameworks and appropriate tools for managing financial stability.
“In this regard, the Financial Services Regulation Coordinating Committee led by the CBN, is putting together a robust framework that will adequately promote stability of the Nigeria’s financial system.
The governor also said that it was imperative that the NBA should be ready and willing to partner with the CBN in areas like legislative advocacy.
He said this would ensure quick promulgation of robust legislations in support of chosen policy options and vigorous support for establishment of commercial courts to facilitate speedy resolution of commercial disputes.
Others, he said, were provision of constructive inputs for the development of robust financial sector legislative bills and other regulations and checkmating unbridled recourse to the use of interlocutory applications to frustrate legitimate expectations in commercial and financial disputes to contribute.
He urged every Nigerian to contribute his or her quota to national development.
“I am not unaware of the short-term pains we are all going through right now. But gold glitters after it has gone through enormous heat.
“Let us, therefore, use this opportunity to look inwards, diversify our economy, produce locally, and create jobs for our unemployed youths.
“Even when we disagree about the way forward, we should do so in good faith and never lose sight of what is important.
“We should remain resolutely committed to the course and be motivated by the achievability of our desire to strengthen our economic fundamentals.”
The Board stated this in a statement released by its Corporate Communications Directorate to newsmen, recently, during the inauguration of 140 trainees for the Train 7 Project.
The trainees had undergone the Nigerian Content Human Capacity Development (NC-HCD) programme it organised in partnership with the Nigeria Liquefied Natural Gas (NLNG) Limited in Port Harcourt, the Rivers State capital.
The Tide gathered that the training programme was an intensive three-month Advanced NC-HCD Programme for the US$5 billion NLNG Train 7 Project on Bonny Island, Rivers State.
The trainees, The Tide further learnt are graduates in different academic disciplines who have completed a 12-month Basic Training Programme in diverse oil-and-gas-industry-related skill sets and are now set for an on-the-job phase which includes active hands-on participation in operational areas such as Turn Around Maintenance (TAM), Commissioning, and Desktop Programmes.
The Corporate Communications Directorate of the NCDMB told The Tide that in November 2024, a set of 331 trainees under Batch A of the NLNG T7 HCD Training Programme began capacity development in facility management, engineering, Information and Communication Technology (ICT), Health Safety and Environment (HSE), Quality Assurance and Quality Control, as well as welding and fabrication.
According to the Board, additional 77 trainees under Batch B of the same Training Programme began capacity development in data analytics and supply chain management among several other fields relevant to the operations of the oil and gas industry.
While addressing the trainees and trainers who were drawn from the Oil and Gas Trainers Association of Nigeria (OGTAN), Management Personnel of the NCDMB and NLNG, the Executive Secretary of NCDMB, Engr Felix Omatsola Ogbe, said the Advanced NC-HCD training is more than a milestone.
“The NC-HCD training programme is an expression of the collective commitment of the Board and the NLNG to nurturing world-class Nigerian professionals who will shape the future of our oil and gas industry.
“The Board has remained steadfast in its conviction that Human Capital Development is a critical investment in the sustainability and competitiveness of Nigeria’s oil and gas value chain”, the NCDMB boss said.
He said the situation has resulted in widened knowledge gaps and operational challenges.
As a globally regulated sector, he said it was important that stakeholders put measures in place to attract the talents required to move the industry forward.
Keyamo, therefore, called on stakeholders in the industry to be deliberate in identifying, encouraging, nurturing and harvesting young talents to ensure a sustainable supply of manpower to the aviation sector.
Director of Public Affairs and Consumer Protection of the FAAN, Mrs Obiageli Orah, in a release made available to aviation correspondents, noted that the Minister deemed it necessary to attract the right quality of human resources required to move the sector forward.
“As a globally regulated sector, it is important that stakeholders put measures in place to continually attract the right quality and quantity of human resources required to move the industry forward.
“It is important to note that organising training programmes are avenues through which we can breed, nurture, and harvest such human resources.
“One of the critical challenges facing the industry is the ageing and retiring workforce, leading to widened knowledge gaps and operational issues.
“Training programmes, I believe, is among other things designed to make aviation appealing to the younger generation, while encouraging them to develop interest in taking up a career in the industry”, the statement stated.
Meanwhile, some aviation stakeholders have expressed concerns of countless young Nigerians who seek to make their mark in aviation, tourism, and the wider transport ecosystem but often face steep barriers to entry.
According to them, lack of access, limited mentorship, financial constraints, skill mismatches, and systemic gaps, among others, have posed some constraints to them.
The Tide gathered that by the appointment, Ogbe becomes Nigeria’s representative on the Board of the 18-member continental body, which has its headquarters at Brazzaville, Republic of the Congo.
Ogbe was picked for this role by the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, who doubles as the Chairman of the NCDMB Governing Council.
The notice of the Executive Secretary’s appointment was conveyed in a congratulatory letter signed by the Director of Support Services, APPO, Mrs. Philomena Ikoko, on behalf of the Secretary-General of the organisation, Dr. Omar Farouk Ibrahim.
She applauded the NCDMB boss on the confidence reposed in him by the Minister, expressing her belief that he would make immense contributions to the development of the African oil and gas industry.
Mrs Ikoko stated that Ogbe was joining the Executive Board of APPO at a challenging time for the oil and gas industry, especially in Africa.
“Your appointment is a major call to duty for Nigeria and the continent. The secretariat will give you the support you will need to make a success of your assignment”, she said.
According to a statement by the Directorate of Corporate Communications and Zonal Coordination, the NCDMB played key roles in catalysing the operations of APPO and the development of local content in Africa.
The statement added that the board was providing institutional support and mentorship to several oil producing countries in their formulation of local content policies.
“The NCDMB initiated the African Local Content Roundtable (ALCR) and hosted the inaugural edition in Yenagoa, Bayelsa state, in June 2021, and the event was attended by key officials of APPO and other oil industry players.
“The idea for the Africa Energy Bank (AEB) was mooted by NCDMB’s officials at the event, as one of the strategies that would accelerate the growth of the African oil and gas industry and deepen local content.
“The Board also collaborated with APPO to host subsequent editions of the African Local Content Roundtable (ALCR), including the 2023 edition held at Abuja.
“The Africa Energy Bank, which APPO is setting up at Abuja, is aimed at pooling financial resources needed to fund big-ticket oil and gas projects across the continent, and bridge funding challenges currently impeding the development of the sector”, the NCDMB’S said.
Meanwhile, the APPO Secretary-General has said the Africa Energy Bank seeks to fund oil and gas projects across economies in Africa and help to plug critical financing gaps that exist through the continent’s over reliance on financiers from the West.
He added that each APPO member country is expected to raise $83 million with an objective of raising $5 billion capital for the establishment of the Bank.
The Tide learnt that recently Nigeria, Angola and Ghana have contributed their share capital for the African Energy Bank, which represents 44 percent of the trio’s contributions to the minimum capital that is required from oil producing countries in the continent.
It would be recalled that at the Nigerian Oil and Gas Opportunity Fair (NOGOF) held recently, the NCDMB’s Scribe confirmed that the agency was part of key institutions that pooled resources for the formation of the Africa Energy Bank.
Ogbe announced that the Bank will open for business before the end of the 2nd quarter of this year, 2025, expressing hope that it will create more funding availability for local oil and gas projects and companies.
Similarly, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, had stated at the Offshore Technology Conference that Afrexim Bank has already raised $19billion for the take-off of the Africa Energy Bank.
According to him, $14 billion out of the funds represents the bank’s financial exposure on African oil and gas projects, with the additional $5 billion as take-off capital.