Nigeria must focus on policies that would grow the economy at least 15 percent year-on-year over a long time, and this should be driven by fiscal and monetary policies geared towards economic growth, said Mustapha Chike-Obi, managing director/chief executive of the Asset Management Corporation of Nigeria (AMCON).
“Why are we so upset with tight monetary policies? The CBN is tightening because fiscal policy is loose. We must have a policy geared towards economic growth”, said Chike-Obi, while delivering a lecture on “Emerging Market Challenges and the Imperatives of Economic Reforms” organised by Hallmark Newspapers, in Lagos. He identified the generic challenges of emerging markets as capital, competence and culture.
He advocated that the Cash Reserve Requirement (CRR) on private sector deposits should be reviewed to 6 percent, from the current 12 percent, adding that this would encourage banks to lend to the real sector which lack adequate capital for production.
Analysts said yesterday that Chike-Obi’s recommendations further add to the debate over the direction which Godwin Emiefele, the new Central Bank of Nigeria (CBN) governor designate should go, come June this year.
Chike-Obi further said, “Nigeria must focus on policies that must grow the economy by 15 percent a year, for a long time. Nigeria must borrow massively for specific projects and the leadership must convince the people that those borrowings are being used for purposes that will make their lives better.
“We must grow for growth and manage inflation.We must not grow for inflation and manage growth, and that means we must tolerate higher inflation as long as it is manageable but we must have the growth. That is the first thing I recommend.
“The second thing is I think private sector CRR should drop to six percent because unless the CRR in private sector deposits drops, banks cannot lend much money. We must address the issue of private sector CRR, I will vote for downward”, Chike-Obi added.
The AMCON CEO said Nigeria needs about $20 billion to build 4,000 functional kilometres of railway tracks and about $10 billion to fix transmission lines, adding that the nation’s problem in terms of power would not be solved until “we get a modern transmission grid”.
By: HOPE MOSES-ASHIKE
