By Emek Chiakwelu email@example.com
Without doubt the monetary policy coming from Sanusi’s Central Bank of Nigeria (CBN) has a positive outlook on the economy which has been growing at the rate 7.3% and attracting investments mostly in petroleum sector. The “revised estimate for real Gross Domestic Product (GDP) by the National Bureau of Statistics (NBS) indicates that the economy grew by 7.23 percent first quarter of 2010 as against 6.7 percent it had earlier projected for the quarter.” This is impressive compares to the world economy that has been expected to be growing at the rate 3.9 % in 2010 as result of the global recession.
Nigerian economy “dip from 7.44 percent recorded in the fourth quarter of 2009, however, it is an increase from 4.50 percent in the corresponding quarter of last year. NBS attributes the 2.73 percentage point increase in Real GDP to expansion in oil production following relative peace in the Niger Delta region, although the non-oil sector remained key driver of growth. The Bureau in the latest report on GDP estimates that the economy on nominal basis expanded to N6, 399,716.09 first quarter of 2010 up from N5, 004,850.00 recorded during the corresponding quarter of 2009, indicating an increase of N994, 866.09.” Nigerian government can greatly strengthen the impressive growth by provision of social infrastructures particularly social security and steady electric power.
The economy growing at 7.3% in the second quarter of the year is beyond the projected expectation from the Nigerian reserve bank and economic forecasters. The experts did not anticipate the economy to be growing at a a fast pace with the lingering effects of the credit crunch and failed banks. Sanusi’s Central Bank of Nigeria (CBN) easing of the credit crunch by lowering the interest rate benchmark was a pragmatic move that ameliorated the dryness of the credits; together with recapitalization of financial market with over $3.9 billion that refurbished the failed banks. The confidence generated by the CBN policy was apparent for it strengthened the confidence of the lenders and borrowers in the financial market. The infusion of fund and lower interest rate were impressive which brought about the stimulating of the economy and became the turning point for the economy.
CBN was not worried about the danger of over liquefying the capital market with cheap money and by the lowering of the interest rate benchmark which could trigger higher inflation. Executive Governor Lamido Sanusi of Central Bank of
The structural imbalance of
The executive arm of the government must work hard to rectify the inability to successfully implement the federal budget as it was written. As a result of shortfalls from oil revenue,
President Jonathan reaffirmed the deficit issue on the letter he wrote to the lawmakers: "Specifically, recent revenue developments indicate significant shortfalls in both oil and non-oil revenue which may well continue for the rest of the fiscal year with adverse implications for the financing of the budget. Consequently, given the recent drop in international oil prices from over US$80 per barrel to under US$70 per barrel; it is prudent to revise the oil bench mark price to a more realistic level." He further states that, “The 2010 budget was predicated on a revenue benchmark of $67 per barrel of crude oil. But in his letter to the Senate, President Jonathan asked it to "revise downwards the aggregate level of expenditure from the N4.608billion approved in the 2010 Appropriation Act and adjust the budget details accordingly."
Daily Trust editorial, added: “In a bid to balance the budget, the federal government has also resolved to borrow from domestic and foreign sources. The 2010 budget will receive $500 million USD (N75 billion) from international bonds and has projected to borrow N897.3 billion from an already ailing domestic financial system. Several banks in the country have for several months survived on life line provided by the Central Bank of Nigeria (CBN) but the federal government still expects to suck such huge amount to finance the budget deficit.”
The greatest threat to
The manufacturing sector recorded a lower output from “7.03 percent in 2009 to 6.43 percent in 2010” due to lack of electric power and paucity of credit. Nigerian manufacturers do import a reasonable amount of raw materials from abroad and foreign exchange becomes an impediment to free flow of raw materials coupled with the government higher tariffs.
Emeka Chiakwelu is the Principal Policy Strategist at Afripol Organization. Africa Political and