7 January 2013


As the Federal Government, through the Ministry of Information, presented its score card for 2012 economic year, expectations are high on what government will do to revamp the economy for greater growth in 2013. Government revealed  new strategies to increase crude oil production to about 4million  barrels per day and ensures speedy passage of the Petroleum Industry Bill (PIB) that has been in the National Assembly since 2008. It also spoke on the  initiative to involve the private sector in power generation, transmission and distribution, the efforts to complete 10 new thermal power plants to boost electricity generation, the proposal on power and gas financing package including government guarantees, proposed infrastructure bonds of about $1 billion and  $150   million external funding from the African Development Bank  (ADB) to  enhance sufficient gas   supply to the power plants across the country, and increase in electricity supply outputs from the current 4,502 megawatts to 7,000mw at the end of 2013 fiscal year.  Government also restated its commitment to continue in developing oil and gas local content,  designed to create over 300,000 jobs, as well as the public works targeting over 1,010,000 jobs within three years. While many economists criticised government for what they described as the slow pace of development in 2012, others said there are prospects for the economy in 2013.   Olu Ajakaiye, a professor of economics and one-time Director General, Nigeria Institute for Social and Economic Research (NISER), speaks on the banking reforms and the need for government to ensure transformation in all sectors of the economy to enhance holistic growth.

As an economic expert, how will you describe the reforms in various sectors in 2012?
First of all, I want us to look at the banking sector, which is very crucial for economic growth and development. The sector, through the monetary policies formulated by the Central Bank of Nigeria (CBN), experienced reforms in different stages. The CBN should be commended for carrying out the reforms in such a manner that depositors funds were intact.

Also, if you look at the industry critically, you will realise that aside from internal control mechanism on commercial banks by the CBN, the monetary authority is regularly strengthening the apex bank through intensive capacity building programmes to ensure efficiency in monetary policies formulation and implementation strategies. The management of CBN often prepares new staff coming into the bank by training them to understand the workings of the economy and  how monetary policies as well as other relevant policies of the CBN affect the entire economy.

Are you saying that capacity building plays a major role in the financial sector reforms?
Absolutely, good capacity building programmes equipped and guided the CBN officials on formulating relevant monetary policies suitable for our peculiar financial system to ensure effective and smooth transformation of the industry. In that capacity, the apex bank was able to restore confidence in the banking system such that you can put money in the bank with the assurance that your money will be intact and you can get it whenever the need arises.

For instance, the West African Institute for Financial and Economic Management, which is a very important body in Nigeria and the entire West African sub-region, is known globally as an  expert in capacity building. Since the institute was established on July 22, 1996 by the Governors of the Central Banks of   Gambia , Ghana , Liberia , Nigeria and Sierra Leone , it has covered over 400 programmes and most beneficiaries of these programmes are the staff of the CBN. They have been exposed to the programmes developed on sustainable basis, competencies in the fields of macroeconomic, debt and financial sector management by the institute, which enabled them to bring their experience to bear in tackling financial sector challenges.  This implies that they have been exposed to training with broad spectrum on how theories of monetary policies work, and how practice influences theory and implementation.

How do  you rate 2012 fiscal year?
Generally, Nigeria is not doing badly but we can do better. We have to be positive-minded and I believe there are  prospects  for Nigeria ’s economy. Though the country may be facing some challenges at the moment. The reality is that, President Goodluck Jonathan as an individual, cannot transform the  economy alone because governance requires collective responsibility. So, all of us must support the efforts and programmes of government to move the country forward.

With high level of poverty and unemployment, where does Nigeria stand in the scheme of things in terms of economic growth and development?
As at now, Nigeria is the second largest economy in Africa after South Africa. When you look at the structure of Nigeria ’s economy, you will discover that it is still very rudimentary and we still face challenges. For example, South Africa ’s economy is the most advanced in the continent in terms of unique inter-connected production system that generates employment and income for the welfare of the people. Notwithstanding, they have their own challenge, which is historical. A typical example is the issue of apathy and they still face that challenge. But as a country, South Africa is among the most articulated economies in the continent.

What will you advise government to do, in order to fast track economic development in 2013?
Nigeria must not be too far from South Africa and should follow the example of South Africa in developing its production system to create jobs and generate revenue for government.  This means we must be ready to use monetary policies to influence the process of re-acticulation and encourage the interaction among various sectors of our economy to create the number of jobs needed to achieve relative full employment. Also, we should generate more income to ensure rapid development and improve the standard of living of the people. In that case, we will gradually transit from becoming heavily dependent on oil to more varied sources of income in manufacturing and sophisticated services.

Jonathan and Okonjo-Iweala Jonathan and Okonjo-Iweala

Are you saying that the services we have now are not good enough?
The services we have right now are not sophisticated enough to support and enhance a knowledge- driven economy, especially to achieve the Vision 20:2020 target.

In practical terms, what can government do to enable Nigeria ’s economy function optimally like the advanced countries?
If you look at the banking industry I mentioned earlier, you can see that the sector is doing well in terms of monetary policies formulation and implementation. The truth is that CBN will do its own aspect but other sectors of the economy must be developed as well for us to achieve holistic development. From the look of things now, we have  CBN that is prepared to balance and ensure monetary stability, but development is not the work of the Central Bank anywhere in the world. Government should device the means to develop all sectors of the economy to work in synergy, while the apex bank designs monetary policies to complement the effort of government.

Since the CBN is involved in banking reforms, which department of government is responsible for mapping out strategies for holistic growth of different sectors of the economy?
The departments responsible for holistic development are the line ministries, in particular,  ministries of agriculture, industry and infrastructure. We should put more efforts in developing the power sector in order to tackle the challenges associated with erratic power supply. At present, agriculture has recorded tremendous improvement made possible through the Ministry of Agriculture. The current Minister has been working hard to ensure increase in the value addition of agriculture. He must do more to ensure transformation of raw materials into finished goods and not to leave them at the raw state. When this is done, the monetary policies of CBN will have the desirable impact not just in banking but the entire economy.

For example, there should be collaboration between the CBN, Ministries of Agriculture, Industry and other agencies of government to ensure rapid development. Farmers must know about  interest rate and monitor activities in the stock market like what obtains in developed countries, not what we have now, where only people in Lagos state monitor the stock market, while farmers watch the sun.

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