• Main News
  • About Us
  • Contact
Premium Times Opinion
Sunday, January 29, 2023
  • Home
  • Democracy and Governance
    • Bámidélé Upfront
    • Jibrin Ibrahim
    • Okey Ndibe
  • Economy
    • Ifeanyi Uddin
  • Issues of the Day
    • Adeolu Ademoyo
    • Aribisala on Tuesday
    • Dele Agekameh
    • Pius Adesanmi
  • Politics
    • Ebeneezer Obadare
    • Femi Fani-Kayode
    • Garba Shehu
    • Hannatu Musawa
    • Zainab Suleiman Okino
  • Guest Columns
  • Faith
    • Article of Faith
    • Sunday Ogidigbo
    • Friday Sermon
    • Elevated Sight
  • Home
  • Democracy and Governance
    • Bámidélé Upfront
    • Jibrin Ibrahim
    • Okey Ndibe
  • Economy
    • Ifeanyi Uddin
  • Issues of the Day
    • Adeolu Ademoyo
    • Aribisala on Tuesday
    • Dele Agekameh
    • Pius Adesanmi
  • Politics
    • Ebeneezer Obadare
    • Femi Fani-Kayode
    • Garba Shehu
    • Hannatu Musawa
    • Zainab Suleiman Okino
  • Guest Columns
  • Faith
    • Article of Faith
    • Sunday Ogidigbo
    • Friday Sermon
    • Elevated Sight
No Result
View All Result
Premium Times Opinion

Domestic Policy Choices — Between a Rock and a Hard Place, By Uddin Ifeanyi

by Premium Times
July 18, 2016
Reading Time: 4 mins read
0

Money

Thus, any which way, our pain points are set to multiply in the days ahead. These new burdens would make sense if the gains arising therefrom are sustainable. But successfully driving through the changes that we must undergo to right the economy would require both conceptual clarity, and a singularity of purpose. Two attributes that have, thus far, remained scarce in our policy planning spaces.


A fondness for bolting the stable doors days after the horses have fled has long been a local shortcoming. The Buhari administration has, however, elevated this national penchant to statecraft.

Or how else does one explain the 18 months it took the Central Bank of Nigeria (CBN) to abandon its managed exchange rate, even when it was obvious that the policy was burning a huge hole in the apex bank’s pocket? Or the decision, once finally it abandoned the failed policy response, to try putting a lid on price movement in what was originally advertised as a free market?

The echo chambers linked to the financial services markets would reverberate for a while yet, discussing the immediate or remote influences on the CBN’s decision, last week, to remove “perceived or implied” restrictions on activities in the interbank foreign exchange market, thus allowing anyone with foreign exchange to sell directly to the banks on a “willing seller, willing buyer” basis.

But whether it really took the “white man’s” counsel (the CBN’s governor was reportedly recently on a roadshow, where foreign investors let it be known that the chances of them directing funds into the domestic market was slim on the back of the administered prices in the new interbank market), or the almost nil balance on the gross external reserves, to persuade the apex bank to free the market (twice in as many months), the truth is that we are in a worse situation today, than we were at the beginning of the year.

Our current circumstance places a huge burden on the design and implementation of appropriate policy responses over the three years that remain of the Buhari administration.

With the apex bank’s rate-setting committee scheduled to meet next week, the conversation around monetary policy responses was at the fore and centre of a meeting of policy wonks that I was privileged to be in last week. The lead presenter defined the current state of the economy as one of “stagflation” — stagnant output growth, and rising domestic prices. He thus did not see a lit candle’s chance in Hell of the CBN’s Monetary Policy Committee (MPC) agreeing to raise rates to dampen inflationary pressure. Because any such rate rise would worsen general economic conditions.

Ordinarily hurdles of this magnitude before monetary policy makers should kick the can for fashioning an appropriate policy response down to the fiscal policy side. However, anyone who has followed the debate around our public finances (how much crude oil are we really producing, for instance?) would understand how constrained that space is.


Of course, the consensus was that output growth this year is going to be negative. We are never going to do enough in the second half of the year to reverse the contraction in the first half, especially in an economy that goes to bed in November.

Worse was to come though. For we were reminded that, in truth, the economy today faces a worse fate than stagflation. Indeed, domestic prices are up. But output growth is down. For this perspective, then, the current challenge before monetary policy is not so much that the MPC ought to do no harm by not tightening monetary conditions. But that any attempt to reflate the economy in our present conditions would simply push local currency liquidity up, and put downward pressure on the naira’s exchange rate. So the MPC can likewise do no good.

Ordinarily hurdles of this magnitude before monetary policy makers should kick the can for fashioning an appropriate policy response down to the fiscal policy side. However, anyone who has followed the debate around our public finances (how much crude oil are we really producing, for instance?) would understand how constrained that space is. Nonetheless, a low tax take does mean that some space is open for boosting non-oil revenue.

How to proceed with this? Raising tax rates today will simply increase the burden on a small and shrinking tax base. It would, inevitably lead to further business closures. Broadening the base, a more attractive option in the circumstances has proved beyond the ken of successive administrations. But it also holds out the prospects of further attenuating domestic economic activity. If not of heating up the polity, as civil society organises to resist the new impositions.

Thus, any which way, our pain points are set to multiply in the days ahead. These new burdens would make sense if the gains arising therefrom are sustainable. But successfully driving through the changes that we must undergo to right the economy would require both conceptual clarity, and a singularity of purpose. Two attributes that have, thus far, remained scarce in our policy planning spaces.

Ifeanyi Uddin, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.

Share this:

  • Tweet
  • Email
  • Print
  • More
  • Pocket
  • Share on Tumblr

Related

Previous Post

Africa and the International Criminal Court — Cutting Through the Noise, By Africa Group for Justice and Accountability

Next Post

The Clash Between the Nigerian Army and the Islamic Movement in Nigeria, By Jibrin Ibrahim

Related Posts

Trust and Confidence Building As Conditions of Good Governance, By Uddin Ifeanyi
Columns

The Policy Implications of 2021’s Low Growth Projections, By Uddin Ifeanyi

February 1, 2021
Akinwunmi Adesina: Africa’s Spotless Son, By Wole Olaoye
Columns

Iron Woman of Berlin, By Wole Olaoye

January 31, 2021
Rethinking Heroism and the Nigerian Civil Service, By Festus Adedayo
Columns

Aliko Dangote’s Costly Mess of the Libido, By Festus Adedayo

January 31, 2021
Why Lai Mohammed Must Be Fired Immediately, By Femi Aribisala
Article of Faith

Is God Invisible?, By Femi Aribisala

January 31, 2021
Religion As Africa’s Trojan Horse, By Osmund Agbo
Columns

South-East Governors: Preparing For a Post-oil and Restructured Nigeria, By Osmund Agbo

January 30, 2021
People Deserve The Coach They Hire, By Owei Lakemfa
Columns

Again, Entombed Humans Triumph Over Death, By Owei Lakemfa

January 30, 2021
Next Post
Sanusi II and the Prospects of Radical Emirship, By Jibrin Ibrahim

The Clash Between the Nigerian Army and the Islamic Movement in Nigeria, By Jibrin Ibrahim

The Recruitment Corruption President Buhari Is Refusing To Fight, By Inibehe Effiong

Dear President Buhari, Nigerian Lives Also Matter, By Inibehe Effiong

Editorial

  • EDITORIAL: The Urgency of Tackling Nigeria’s Second Wave of COVID-19

    EDITORIAL: The Urgency of Tackling Nigeria’s Second Wave of COVID-19

  • EDITORIAL: Unearthing the Cogent Lessons In the NESG-CBN Economic Policy Imbroglio

    EDITORIAL: Unearthing the Cogent Lessons In the NESG-CBN Economic Policy Imbroglio

  • EDITORIAL: COVID-19: Calling On Nigeria’s Billionaires and Religious Leaders To Step Up

    EDITORIAL: COVID-19: Calling On Nigeria’s Billionaires and Religious Leaders To Step Up

  • EDITORIAL: Bichi Must Go; Buhari Must Halt Slide Into Despotism

    EDITORIAL: Bichi Must Go; Buhari Must Halt Slide Into Despotism

  • EDITORIAL: The Flaws In Governor Emefiele’s Five-Year Plan For Central Bank of Nigeria

    EDITORIAL: The Flaws In Governor Emefiele’s Five-Year Plan For Central Bank of Nigeria

Subscribe to our Opinion articles via email

Enter your email address to get notifications of new opinion articles as they are published.

Join 526,545 other subscribers

Most Popular

  • The Bad Consequences and Dangers of Adultery and Fornication (Zina) In Islam, By Murtadha Gusau
    The Bad Consequences and Dangers of Adultery and Fornication (Zina) In Islam, By Murtadha Gusau
  • Islam and the Conditions For Marrying More Than One Wife, By Murtadha Gusau
    Islam and the Conditions For Marrying More Than One Wife, By Murtadha Gusau
  • The Qualities of a Good Leader In Islam, By Murtadha Gusau
    The Qualities of a Good Leader In Islam, By Murtadha Gusau
  • World Teachers Day and The Position of Teachers In Islam, By Murtadha Gusau
    World Teachers Day and The Position of Teachers In Islam, By Murtadha Gusau
  • You Will Be Held Responsible On What Happened To Your Children!, By Murtadha Gusau
    You Will Be Held Responsible On What Happened To Your Children!, By Murtadha Gusau
  • The Women Prohibited For Men To Marry In Islam, By Murtadha Gusau
    The Women Prohibited For Men To Marry In Islam, By Murtadha Gusau
  • The Dangers of Evil and Misguided Clerics/Scholars In Islam, By Murtadha Gusau
    The Dangers of Evil and Misguided Clerics/Scholars In Islam, By Murtadha Gusau

Like us on Facebook

Like us on Facebook

Podcasts

Advertisement

Advertisement

Advertisement

  • Main News
  • About Us
  • Contact

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.

No Result
View All Result
  • Home
  • Democracy and Governance
    • Bámidélé Upfront
    • Jibrin Ibrahim
    • Okey Ndibe
  • Economy
    • Ifeanyi Uddin
  • Issues of the Day
    • Adeolu Ademoyo
    • Aribisala on Tuesday
    • Dele Agekameh
    • Pius Adesanmi
  • Politics
    • Ebeneezer Obadare
    • Femi Fani-Kayode
    • Garba Shehu
    • Hannatu Musawa
    • Zainab Suleiman Okino
  • Guest Columns
  • Faith
    • Article of Faith
    • Sunday Ogidigbo
    • Friday Sermon
    • Elevated Sight

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
 

Loading Comments...