‘CBN’s policy will boost foreign investment’

Economist, Prof. Ken Ife, has said aggressive monetary policy tightening adopted by the Central Bank of Nigeria (CBN) will attract foreign portfolio investments to the country.

Ife, who is the Lead Consultant on Private Sector Development to the ECOWAS Commission, said this in an interview with the News Agency of Nigeria (NAN), yesterday, in Abuja. He said the apex bank’s monetary policy decisions would also attract the needed dollar liquidity and stabilise the foreign exchange market.

According to Ife, such an aggressive increase of the MPR makes the economy attractive to foreign portfolio investment.

“The higher you go, the more interested investors will be in investing in your economy.

“Aggressive tightening is the most appropriate response to the size of the challenge that we face right now,” he said. He said that such tightening was also a panacea for the various inflationary trends that the Nigerian economy was experiencing.

“We are facing various types of inflation, like the demand-pull inflation, the cost-push inflation, forex-related imported inflation.

“Inflation is mainly as a result of excess liquidity in the system; too much money chasing fewer goods. There is so much money in circulation, money supply is estimated to be about N98 trillion.

“When the CBN tightens the rates, it sucks out the excess liquidity by offering treasury bills. This will go a long way to steming inflation,” he said.