Nigeria’s Monetary Policy Alone Can’t fix its Economy

The Chief Executive Officer at Eczellon Capital Diekola Onaolapo, in an extensive chat with one of Nigeria’s leading national newspapers – THISDAY, analyzed the state of the economy, Nigeria’s monetary policy, and continental trade in Africa.

The Nigerian economy has been on a gradual recovery and growth trajectory after it exited recession. The growth is still weak. The general macro environment is relatively positive, with inflation on an eighteenth consecutive month-on-month decline – and currently at 11.14 per cent; relatively stable foreign exchange (FX) and converging FX markets. Even the Purchasing Managers’ Index (PMI) is back in the green at 51 per cent. Generally, the outlook is positive. The positive activities in the global commodities market as crude oil price has been on a positive momentum, presently hovering over $70 per barrel and expected to hold, with current circumstances of global tension and extension of production cut period by OPEC and Russia.

This has helped the accretion of Nigeria’s reserves – currently above $46 billion – and by extension, boost in the country’s capacity to fund external trade and maintain price stability. Also, policies of the economic management team in recent periods have helped – the Naira/Yuan swap deal will further support the naira against the dollar; and also, monetary policies have been proactive in face of global economic headwinds that may cause shocks to the local Nigerian economy. Given the supportive macro-economic fundamentals and the medium-term economic plans of the government in its Economic Recovery and Growth Plan, we foresee the economy trending along its growth path despite the short-term negative effects of the political activities on the nation’s financial markets.

Read the insightful interview in full here