Prof. Ken Ife, a Development Economist, says the Central Bank of Nigeria’s monetary policy is not working because 80 per cent of the nation’s money is not in circulation.
Ife stated this during the 10th Convocation Lecture of Godfrey Okoye University, Enugu, on Friday, November 18, 2022, with the theme “Nigeria: The State of the Macro-Economy”.
According to him, 40 per cent of the nation’s money is not banked while 40 per cent of citizens are living below the poverty line.
He said that the 80 per cent of money amounting to N2.6trn that ought to have come from the commercial banks to lend to the private sector to create jobs were not there, thereby, strangulating the economy.
“They are denying the economy capacity to create jobs and we do not know how much is in circulation as technology has caught up with us.
“Designing of Naira should be five years something, but for 20 years we have not done it,” he said.
Ife, who is the Lead Consultant of the ECOWAS Commission, noted that counterfeit currency in circulation may be higher than the legitimate money, making it impossible for CBN to know how much is in circulation.
The economist added that the activities of money launderers and ECOWAS policy had also made the Naira to be used in other countries without monitoring.
“All these have made transmission of monetary policy in the country a challenge and forced commercial banks to lend at a higher rate.
“Money laundering, intense speculation on the value of the Naira, frequent demand of ransoms by kidnappers, and Naira serving as the second currency in the 15 ECOWAS countries are making it hard to the quantities of our currency,” said the expert.
Ife explained further that there were structural factors responsible for cost-push inflation in the country such as paucity of power, bad roads, water, rail transport and rising cost of living aggravated by a 300 per cent rise in diesel price.
He said that 68 per cent of manufacturers provide their own power 90 per cent of the time, causing prices of their goods to go up.
“The import dependency of our economy places us on the transmission belt of the global exogenous supply chain with the aggravated inadequate supply of dollar.
“This will help narrow the spread between official and black market exchange rates,” he noted.