Nigeria’s inability to diversify its economy and its reliance on petroleum as a major driver of the economy is said to be responsible for Nigeria’s present economic crisis.
The acting Director Corporate Communication, Central Bank of Nigeria (CBN), Mr. Isaac Okorafor, disclosed this over the weekend in Lagos at the 2017 Biennial Convention of the Nigeria Guild Editors (NGE) with theme: ‘A Nation in Recession: Whither the Nigeria Media’
“We depend on the foreign sources for our income and at the same time depend on foreign sources on the items we spend our incomes on. We depend on the price of oil for much of what we spend and when we spend, we also spend on things that we import, no economy can grow in that manner and no nation has ever developed along that path.”
He said as soon as the price of oil began to decline, Nigeria ran into an economic crisis that gave birth to a recession. “We recall that in September 2015, the CBN monetary policy communiqué indicated that the country might sleep into recession in 2016 if nothing is done. It got to a stage where it got to the end of monetary policy.”
Okoroafor remarked that while monetary policy stabilises the prices, fiscal policy on the other hand is creative policy which powers the economy into production, stating that the impact of the economy crisis was too much on the nation because of structural issues.
Reacting to the CBN’s response to the recession, he said when the apex bank noticed a severe foreign exchange crunch, it ensured that it tap into the sources of foreign exchange such that they would be in flow.
Okorafor said that the second response was to consider how much forex the economy was spending, on what items, how the bank was to allocate to those items, and ensure that some of the items that which are produced and used in the country, the rate of foreign exchange expenditure on them is limited.
He added that the CBN also tried to introduce the inter-bank foreign exchange market, and also did some intelligence on the black market to find how the black market was getting its power, the CBN can influence that market and divert its activities to the inter-bank market.