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EXPERTS BACK CENTRAL BANK OF NIGERIA ON REDUCING INTEREST RATE

By Emeka Chiakwelu

The new governor of Nigerian apex bank, Mr. Sansui Lamido and Central Bank of Nigeria are receiving a glowing reaction and compliment from Afripol organization, a public policy based institution headquartered in USA on the cutting of benchmark interest rate. The monetary policy rate was reduced from 8 percent to 6 percent. This will stimulate economic growth by improving liquity of banks, encouraging banks to make more loans avaliable to the business community. Comparing the interest rate of Nigeria at 6 percent to that of the lower industrialized nations may not be realistic. But Nigeria has lower interest than Egypt and South Africa with interest rate hovering between 9-10 percent. This is a good sign from Sansui Lambido's CBN.

Reacting to interest rate drop in Nigeria during Afripol quarterly round table conference, Mr. Vincent Ogboi, Economic and financial analyst on African affairs at Afripol organization said: "Nigeria's Central bank Governor, Sanusi Lamido's economic foresight and political will to slash the Central bank to bank lending rate is refreshing and a positive development and of course a great shot in the arm for Africa's largest oil based economy." Commending Sanusi Lamibo, the expert further stressed, "Sanusi'squick action as a new but experienced banker shows his thinking is in line with the Global economies of the world and also compliments the efforts of the world's largest economies led by the USA to prevent further decline into the global recession and ward off any possible hyper-inflation. By this effort Africa's second largest economy after South Africa can ease the pain and uncertainties of the current Global recession."

Mr. Emeka Chiakwelu, Principal Policy Strategist at Afripol Organization praised the new chief, Mr. Sanusi Lamibo on the latest development: "I always know that Sansui Lamibo is the right person for this job, his endavour and commitment as the chairman of First Bank is a testament to his pro-business and pro-growth principle. His methodology of governance is to encourage the healthy growth of private sector with mutual benefit to the banking sector and the marketers. The cutting of interest rate will spur a steady economic growth at the private sector which for sometime was starved of fund for investment and wealth creation. The growth of private sector is necessary at this juncture in our country because the global economic melt down must be slowed down before it completely annihilates the private sector in Nigeria. A steady economic growth can ease the problem of unemployment among our youths especially our graduates from institutions of higher learning."

Afripol organization monitors economic growth in Africa in general and Nigeria in particular. The World Bank is forecasting a slow economic growth in 2009, a robustful economic growth for Nigeria was dampened by the global economic meltdown. According to World Bank econometric analysis the world economy shrinked by 1.7 percent at third quarter compared to 1.9 percent growth at the previous year. Nigerian economy is growing at the margin of 4-5 percent with a reasonable economic output and with this adjustment on the interest rate the growth can be sustainable. With this steady and firm hand at CBN, Nigeria can continue to turn around to brighter economic prospects in near future. Depressed naira notwithstanding, the fundamentals of the economy can be said to be relatively sound. Nigeria must improve her infrastructures especially the supply of electricity, although it is the beyond the sphere of control of CBN chief, he must have to make the case to the appropriate channel. Adequate electric energy is a major key to economic development and growth.

Nigeria must encourage the state governments to lower the tax burdens on private businesses in order to consolidate economic growth and discourage capital flight. Central Bank must be a watchdog on inflation and the continue deterioration of Naira. A bulwark around the currency naira must be initiated and sustained to deter further water down of naira. The Wall Street Journal's piece, 'Collapse of Naira: Nigeria strategic blunder' written by Afripol's Emeka Chiakwelu categorically stated how to salvage naira from the nosedive.

The CBN implemented policy that instructed banks to do more business transactions with private sector than with the public sector will booster free enterprise and capitalism. All these developments spell a good beginning and better things to come from Sansui Lambido's CBN.

Africa Political and EconomicStrategicCenter (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, human rights, conflict resolutions, transparency and probity in Africa.

By Emeka Chiakwelu [email protected] www.afripol.org