The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has the real sector of the economy is undergoing investment shortage triggers by monetary policy reforms being undertaken by the Central Bank of Nigeria (CBN).
According to him, the reforms seem to be penalizing the real sector of the economy as they make they make investment in financial instruments more attractive to investors.
Yusuf said this in a presentation at the 2024 Treasury360 Conference & Exhibition Organised by the Association of Corporate Treasurers of Nigeria (ACTN) held in Lagos last week.
He however noted that the reforms present great opportunities for import substitution across various sectors.
Speaking on “Monetary Policy Orthodoxy: Implications for Private Sector and Corporate Treasury”, he compared the unorthodox central banking model adopted by Godwin Emefiele with the orthodox approach under Yemi Cardoso, and posited that this is not the time to be fixated on any particular model, but what works for the good of the country.
His words: “There is a need to avoid fixations on the capacity of markets to deliver desired outcomes.
“Monetary policy authorities should continuously evaluates what works and what doesn’t. State intervention is imperative to correct market failures in a developing economy.
“Economic inclusion is very critical, so that you don’t leave too many people behind in the process of reforms.
“With the continuous rise in the cost of funds, increasingly, we are having a banking system that is disconnected from economic development.
“The ongoing reforms, in a way, have practically penalized the real sector of the economy, because it is now more profitable and preferable to invest in financial instruments that are virtually risk-free, rather than invest in the real sector.”
Yusuf however noted that there is a silver lining in the current situation.
“There are incredible opportunities for import substitution across all sectors – education, medical, vacations abroad, industrial raw materials, consumption of local foods, fabrications of spare parts.
“There are greater opportunities for export business. $1 million is now about N1.7 billion. And there are opportunities for diaspora Nigerians to invest at home, and opportunities for export of services,” he added.
In his welcome address, President of ACTN, Adeyinka Ogunnubi, said the theme of the conference, “Policy Implications & Building Sustainable Treasury Strategies: Nigerian Perspectives on Tackling Inflation and Interest Rate Uncertainty”, mirrors the current challenges and opportunities within Nigeria’s ever-evolving economic landscape.
“This conference will showcase actionable insights and strategies for aligning treasury operations with Nigeria’s larger economic and environmental goals, proving that profitability and sustainability can indeed go hand in hand,” he stated.
