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MC Nwankwo: Monetary Policy Rigmarole

NairaJust yesterday, the CBN came up with a new Monetary Policy Rate (MPR), reviewing it upward from 12% to 14%. As a sociologist, I may not have requisite academic expertise to speak on core economic issues. However, my 6 years career in the banking industry exposed me to some elementary professional knowledge and experience in both micro and macro economics. That also played a great role in my choice of Sociology of Development as an area of specialization in M.Sc. program. In all these my cut and join knowledge and experience, I cannot understand the rationale behind the upward review of the MPR.

In an economy that is experiencing recession, with lots of job loss, unemployment, investors pulling out, unpaid workers salary and general high cost of doing business; the last thing any serious government should do is increase the cost of funds(credit). An economy that’s already down, both current and prospective investors need all the encouragement, supports and incentives to invest and revamp the ailing economy. One would have expected that by now, government would have taken the diversification mantra beyond mere word of mouth to action. Specific sectors of the economy like agriculture, mining, manufacturing, transport etc should have been identified with a clear cut plans on how to stimulate them. Major players in these sectors should be identified and possibly low cost funds avail to them to boost investments and gradually move away from our over reliance on oil.

It contradicts every economic, commerce, business principle, common sense and natural logic to increase the lending rate in an economy that is seriously begging for investment. Where lies the motivation and incentive to the SMEs, bearing in mind that they also provide their own infrastructure- power, security, etc.

If the Federal Government is committed to reviving the economy, they need stop the blame game. We all know that the previous administration didn’t do well and it is on that premise that majority of Nigerians voted for change. So, the continues blame on Goodluck Jonathan’s administration is to me an acceptance of helplessness and lack of preparedness to govern. I suggest an immediate reconstitution of the economic team to include well trained economists to guide the country through this difficult path.

 

MC Nwankwo is a sociologist and political commentator, whose love for his home state of Abia is as deep as it is infectious.

Follow up on his musings at https://www.facebook.com/mc.nwankwo.7

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