With the challenges of increased operating costs on businesses, experts have predicted that several businesses in the transportation, hospitality, as well as food and beverage sector, would be going into extinction before year-end.
They predicted that these would cut across the public and private sectors, as well as businesses in the local and multinational space.
Academic Director, Senior Management Programme, Lagos Business School (LBS), Dr. Nkemdilim Iheanachor, said this yesterday, during this year’s public lecture of the Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN), held at Lead City University, Ibadan, where he spoke on ‘The Dynamics of Leadership in Fiscal and Monetary Policies: The Central Bank of Nigeria in Perspective.’
He lamented that businesses’ profit margins have significantly reduced, thus, creating a huge burden to keep both the employees and the business operational.
Differentiating between the fiscal and monetary policy, Iheanachor, analysed an economic snapshot of the economy from 1986 to 2023, stating that despite previous reforms taken when the economy faced myriad challenges, it had always been in shambles.
Citing variables when Gross Domestic Product (GDP) was 0.061 per cent in 1986 and 2.31 per cent in 2023; inflation at 5.72 per cent then and 22.31 per cent in 2023; unemployment at 5.31 per cent in 1986 and over 35.5 in 2023; among others, he said nothing has changed as the nation had continued to face higher and rising inflation.
Analysing some of the documented structural problems, the don said the economy has been characterised by crony capitalism and rent-seeking challenges; anaemic growth and misallocation of resources; productivity hobbled by structural bottlenecks and high cost of living as inflation spirals out of control.
To address the socioeconomic challenges bedevilling the nation, Iheanachor said policy changes are not enough.
He said there is a need for institutional reforms with penalties attached, a need for addressing social defects and liberation from state capture.
He stressed that reform of key institutions was crucial for the effective implementation of economic and policy reforms.
He said economic reforms must be accompanied by social safety nets and targeted support for vulnerable populations to mitigate the negative social consequences that may erupt from policy changes.
The don affirmed that change in market structure without alteration in forex supply will keep the market in disequilibrium.
On steps that should be urgently taken, he said the government should tighten monetary conditions, eliminate forex restrictions (ban on 43 items on the I &E window), move effective interest rates towards the rate of inflation and eliminate structural bottlenecks that constrain production and export activities.
The discussant, Prof. Godwin Oyedokun of Lead City University, who noted the vital role the CBN plays in providing leadership in fiscal and monetary policies, recommended that the apex bank should embrace transparency, accountability, collaboration and innovation to navigate the dynamics of leadership in the policies.
He urged that the government should influence the performance of the economy by using combinations of both policies.
President and Chairman of Governing Council, ICSAN, Funmi Ekundayo, said with the statutory duties of the CBN, the apex bank must be well-oriented and properly guided to be able to operate a sound financial system for the economy.
She said the relevance of the theme is also underscored by the nation’s recent experience in CBN’s implementation of some important macroeconomic policies.
“Our grappling experience with the change of the national currency with its attendant multifarious hiccups together with a cashless policy are recent cases in point.
“These inferences, coupled with CBN’s conventional interventions such as the control of the Monetary Policy Rate (MPR), which is the baseline interest rate, in tandem with the rate of inflation, shows the reality of the control the apex bank exercises on the nation’s economy.
“As a governance institute, we should be concerned about how the CBN conceives and implements its monetary policies because of its far-reaching consequences for the nation’s growth and development,” she said.
