By Gboyega Adeoye
The Nigerian apex bank, Central Bank of Nigeria, CBN, has kept its benchmark interest rate at 13.5 per cent.
The Bank also made a 0.5 percentage point cut at its previous meeting.
The bank’s position is coming a day after the National Bureau of Statistics, NBS, said economic growth had slowed in the first quarter of 2019, dropping to 2.01 per cent from 2.38 per cent in the previous quarter as the country’s dominant oil sector shrank.
Central Bank Governor, Godwin Emefiele, said the Bank predicted that growth this year would come in at 2.38 per cent.
At the last interest rate meeting in March, the CBN, made an unexpected cut as part of an attempt to stimulate Nigeria’s economy and signal a “new direction”.
The move was the first rate cut since November 2015 as the rate had been held at 14 per cent since July 2016 to support the naira and curb inflation.
Nigeria emerged from its first recession in 25 years in 2017 and higher oil prices and recent debt sales have helped it accrue billions of dollars in foreign reserves.
However, growth remains fragile and inflation edged up in April to 11.37% from 11.25% a month earlier.
Earlier, 9 out of 11 members of the Monetary Policy Committee (MPC) of the CBN, had voted to retain all key economic parameters.
Consequently, Monetary Policy Rate (MPR) remained 13.5 per cent the asymmetric corridor at +200 and -500 basis point around the MPR, the CRR at 22.5 per cent and retain the liquidity ratio at 30 per cent.
Speaking in Abuja on Tuesday after the MPC meeting, Emefiele, noted that there was much task ahead as the economy growing at 2 per cent is sub-optimal judging from the nation’s high population growth and the need to feed and absorb in the employment belt.
He said: “A lot of work needs to be done. We need to consolidate on the growth that we have right now that is still fragile. The economy growing at 2 percent is sub-optimal if we consider that this country’s population grows at an average of over 2.7 percent per annum. And of the fact that you might have heard me saying it is saddening that we will be the third largest population in the world in 2050, even higher than America but following India and China. It’s not a good story but what if also means is that we have a lot of work to do to be able to feed and provide food to be able to employ the mass of people that will be created as well”.
The CBN Governor thus expressed worry over the rising level of insecurity in the country, especially the incessant farmers-herders clashes that have sacked farmers from their farms and driven them into various internally displaced persons camps, saying the ugly development was deeply injurious to the economy.
He added that to realize the next phase of economic growth, there will be a need for the apex bank to aggressively focus on how to reduce the level of unemployment and increase the level of employment in the country.
He said: “I must confess that there is a relationship between employment level, improved economy and security in the country. We all have to work together. Those who are making life difficult for people to go to their farms, to be able to produce or conduct their farming activities, we use this opportunity to appeal to them to please allow our farmers particularly in the food producing belt of the country who are affected to allow these farmers go to farm.
“When people go to the farm, they get employed and make food available, feed their families and employ other people. And when they do so, ultimately it reduces the level of insecurity in our country.
“At this time, we’ve seen what we can call a relative improvement in the macroeconomic variables in Nigeria; exchange rates being stable, reserves looking good and inflation moderating downward. But it is also important for me to say that there are still challenges ahead.
“If we consider that notwithstanding the improvements in the macroeconomic variables that inflation still has its own pressures arising from issues bothering from prices and supply shortages for food, issues bothering on unemployment and the need for us to think on how to diversify our economy, I will say the challenges ahead are still enormous but we would need your support”, Emefiele solicited
On MPC warning banks against over-reliance government securities, the CBN said the advice came from what the MPC observed.