The Central Bank of Nigeria (CBN) has asked the Federal Government to aggressively pursue the Ethiopian model of industrialisation to build the nation’s foreign exchange reserves.
In 2013/14, Ethiopia’s economy grew by 10.3 percent, making the country one of Africa’s top performing economies, and this strong growth is expected to continue in 2015 and 2016.
Supported by a slowdown in global commodity prices, the Government of Ethiopia succeeded in containing annual consumer price inflation to 7.1 percent in December 2014 (down from 39.2% in 2011) by pursuing a tight monetary policy and using base money as its nominal anchor.
Moses Tule, director, monetary policy department, CBN, who spoke on the ‘Impact of Crude Oil Prices on External Reserves and Exchange Rate Management in Nigeria’ at the 20th seminar for Finance Correspondent and Business Editors in Calabar, said fiscal policy focuses on strengthening domestic resource mobilisation with the goal of maintaining macroeconomic stability.
According to him, the monetary and fiscal policies are suppose to be complementary in order to avoid crisis in the economy.
He was concerned that the from January till date, the Federal Government has not been able to implement capital project which he said implies no future for the country.
He added that Nigeria has focused more on consumption rather than savings and investment, urging the government to be more fiscal disciplined.
Tule said the nation is not generating enough revenue to build up the external reserves because lack of genuine demand for foreign exchange.
The situation he said was worse because of influx of foreigners into the county to demand foreign exchange due to the believe that the nation has easy access to it.
However, he believe that the nation’s worth is undervalued because the informal sectorwere not captured in the last Gross Domestic product (GDP) rebasing exercise, attributing it to the inability of the country to determine the face value of those services.
HOPE MOSES-ASHIKE & ONYINYE NWACHUKWU
