The economy is central to citizens’ lives, necessitating that governments be visionary, implement appropriate policy measures, and ensure proper governance, eschewing all forms of corruption in their institutions, systems, and processes to engender a healthy economy and prosperity for citizens.
A healthy economy is a source of joy for citizens, and vice versa. The major macroeconomic variables for measuring an economy’s health include the inflation rate, exchange rate, interest rate, unemployment, imports and exports, and consumer confidence.
In a previous article titled “CBN and Nigeria’s Economic Challenges,” which was published in Vanguard newspaper on February 27, 2025, I noted that an unhealthy economy is one with a high rate of unemployment, fast-rising inflation, which erodes income power, a decline in GDP, and an imbalance in imports and exports.
A healthy economy is synonymous with prosperity and sustainability, featuring relatively low inflation and stable prices, low unemployment, high employment so that those who want a job can easily find one, high consumer confidence, and GDP growth.
Major factors for long-term economic growth are human resources, natural resources, capital formation and technological developments.
And the key drivers of economic growth are low interest rates (but not so low as to trigger inflation and the ‘animal spirits’ in the economy, which could create a bubble), exchange rates, consumer spending (aggregate demand), and employment.
Others are innovations and start-ups, manufacturing, and foreign capital inflows, with greater emphasis on foreign direct investment and strategic immigration reforms that attract skilled immigrants and foster entrepreneurship and innovation.
Some of the fundamental problems of the economy include being a factor-driven, mono-product economy largely driven by oil, with more than 80 per cent of federal revenue derived from oil, which exposes the economy to external shocks.
Other fundamental challenges include import dependence, an infrastructure deficit, particularly in power supply, a minimal manufacturing and export base, insecurity, unpatriotism, and sabotage.
These fundamental challenges tend to limit the economy’s potential and, as a result, it can only satisfice rather than maximise.
Recently, there have been increasingly negative views from some interest groups on the state of the economy, stemming from a lack of understanding of the economy’s fundamental challenges, historical trajectory, the data physiognomy of macroeconomic variables, and its crest-and-trough dynamics.
One particular interest group led by the respected Cardinal Onaiyekan seems not to be well apprised of the impacts of the policy measures of both the fiscal and monetary authorities, which some high-calibre experts have commended.
The experts who have commended the economic reforms include the former Minister of Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala; former CBN Governor, Sanusi Lamido Sanusi (now Emir of Kano); CEO, Financial Derivatives Company, Bismarck Rewane (Analyst extraordinaire); and some international institutions like the IMF and World Bank.
These high-calibre experts are well apprised of the economy’s data, physiognomy, dynamics, and prospects, and are also not unaware of the challenges.
Dr Ngozi Okonjo-Iweala had given credit to President Tinubu for stabilising the economy. Sanusi Lamido Sanusi had noted that he had only praises for the Central Bank of Nigeria (CBN).
IMF had noted that the economic reforms had significantly strengthened macroeconomic stability and improved the country’s resilience to external shocks. And other experts have objectively analysed and commended the economic reforms.
The respected Cardinal Onaiyekan and other interest groups who hold contrary views are most likely unaware of the economy’s historical trajectory, including the causes of the current challenges, the creative and effective policy measures by both the fiscal and monetary authorities, and the prospects ahead.
They fail to understand that President Tinubu and the CBN Governor, Olayemi Cardoso, are on a rescue mission and deserve commendation and not vilification.
They have failed to appreciate that President Tinubu and CBN Governor Olayemi Cardoso have implemented creative and appropriate policy measures that are pulling the economy out of the depths of the trough.
They don’t seem to understand and appreciate the fact that the President and CBN Governor have stabilised the economy, which is basic and very important, and that the economy has also recorded growth at a rate that is even higher than the population growth rate, which is highly commendable.
They failed to realise that there is no magic wand to create immediate prosperity, given how deeply the economy was thrust into the trough by the previous administration’s policies.
They don’t seem to appreciate that the current economic challenges and inflationary pressures began in 2015 due to the faulty policy measures of the previous administration, especially the policy of money printing.
Experts have noted that governments induce inflation when they print money and increase the money supply at a much greater rate than the growth rate of the GDP.
As noted by Sanusi Lamido Sanusi, “Everything we are complaining about today is something that every economist would have told you would happen. Once you print money, you know where you will end up.”
Ways and Means since 2015 stood at N4.7 trillion. In 2017, inflation threatened to accelerate, spiking to 19 per cent and continuing to threaten further, even as the CBN, under the former Governor, continued to raise the Monetary Policy Rate (MPR) to rein it in.
It is believed that the naira redesign policy, also known as demonetisation under the former CBN Governor, was a panic measure aimed at arresting the fast-growing inflation.
Currency redesign or demonetisation is a drastic policy option and a last resort for fighting inflation because it sucks all the money in the economy, including black and underground money, into the banking system, enabling central banks to manage the money supply better.
Demonetisation can reset an economy on a stronger footing if it succeeds, and it can be counterproductive and destabilising if it fails.
Unfortunately, the naira redesign policy failed, throwing the economy into turmoil.
By 2023, the inflation rate rose to 22.40 per cent in March and further to 34.80 per cent in December, before the National Bureau of Statistics (NBS) rebased the Consumer Price Index, which then dropped to 24.40 per cent.
The interest groups, in their mistaken understanding of macroeconomic dynamics, have tended to heap all the blame on President Tinubu because he removed the fuel subsidy, which was gutsy of him and very necessary, inevitable, and commendable.
But they fail to acknowledge and commend the fact that he also implemented policy measures and social safety nets to cushion the effects of the fuel subsidy removal, including direct cash transfers, under which three million vulnerable households have benefited.
There is also the Nigerian Education Loans Fund (NELFUND), which has supported more than 1.058 million students with over N184 billion for tuition and upkeep.
About one million people have accessed support under government credit schemes. The Nigerian Consumer Credit Corporation (Credit Corp) disbursed N37 billion in consumer loans.
These are verifiable facts.
CBN Governor Olayemi Cardoso and his team have also done very well on various strategic fronts, including disinflating the economy to a reasonable extent.
Cardoso and his team embarked on a ‘Paul Volcker’s mission’ and fought inflation aggressively and with visible results.
CBN has been able to mop up excess money supply in the economy through a consistent contractionary monetary policy, thereby contributing to disinflation.
Though it may not have effectively percolated down to prices, this is because we have cost-push inflation, which demands boosting the supply side of the economy, also known as the trickle-down economy or Reaganomics. The fiscal authority is implementing the necessary policy measures in that regard.
The Monetary Policy Committee (MPC) of the CBN has managed the Monetary Policy Rate (MPR) very well. It has struck a good balance by disinflating the economy to a reasonable extent while spurring growth.
CBN has also done well in managing the exchange rate. The choice of the exchange rate is crucial to preserving the value of the domestic currency and maintaining a favourable external reserves position.
Cardoso had noted: “I am pleased to report meaningful progress on all three fronts, even as we remain fully aware of the work ahead. Our actions continue to reflect the policy direction we articulated from the outset. We said what we would do, and we have done it transparently and consistently.”
President Tinubu and the CBN Governor, Olayemi Cardoso, will most likely finish well and restore prosperity and dignity to the economy. Economic reforms take time, and there is no magic wand that can restore the economy automatically.
Over time, the economy will respond to appropriate policies. Both the President and CBN Governor are on the right track. Together, they have achieved milestones that have been commended by high-calibre experts and international institutions, and the prospects look good.
Nwobu, a Chartered Stockbroker and Policy Analyst, wrote via arizenwobu@yahoo.com.
