Central Bank Of Nigeria As A Catalyst To National Economic Policy And Development In Nigeria


Central Bank Of Nigeria As A Catalyst To National Economic Policy And Development In Nigeria

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1.1   Background of the Study

Economic policies are deliberate actions by the authority geared towards influencing total spending, output, income, cost of money, employment and other economic activities in an economy.  Economic development on the other hand is defined as a process whereby the real precipitate income of a country increases over a period of time (I day 2005:52).  Therefore, national economic policy and development is all about plans of action the central bank as regards structural changes that will reflect in the composition and evaluation of aggregate output or national income, the size of the national output on per-capital basis and the equitable distribution of the national output among the populace.

However, before the establishment of the Central Bank of Nigeria, the formation of the national economic policies was left entirely in the hand of the colonial government that promoted the interest mainly to the detriment of the Nigeria populace.

According to Nnanna in Oleka, (2006:186), he stated that conduct of monetary policy in Nigeria under the colonial government was largely dictated by the prevailing economic conditions in Britain.  The instrument of monetary policy at that was the exchange rate, which was fixed between the Nigeria pound and the British pound.  Moreover, since the inception of the Central Bank of Nigeria in 1958, the function of policy formulation has been the sole responsibility of CBN.

According to Oleka (2000:95) section 4 of the 1958 ordinance now section 3 of Central Bank of Nigeria Decree 24 of 1991 stipulate one of the main objective of the CBN to include: promotion of monetary stability and sound financial system in Nigeria.

However, to achieve this means coming up with a number of policies whose implantation will translate into economic development.

Ile, (1999:169) opined that to achieve these objectives of monetary stability and a sound financial system, CBN undertakes certain function, which include: variable discount rate, stabilization securities, special deposits etc.

In this contribution, Anyanwokoro (1999:168) stated that the Central Bank of Nigeria since its inception had various instrument of monetary control at its disposal.

Obasikene, (2006:22) noted that the type of monetary policy control used in Nigeria in 1986 was fired monetary policy control, but in 1986, the Nigeria government came up with an economic reform government (SAP), which was aimed at registering the economy in such a way that a lot of things should be attained by the interplay of the market forces.  Hence, in line with the attainment of national economic objective, the CBN in 1986 introduced indirect monetary policy instruments in Nigeria.

From these periods, a good number of economic policies have been formulated in reaction to the economic exigencies of the period.

In 2002, the CBN adopted a medium term perspective monetary policy, frame work from January 2002 to December 2003.  The two year monetary policy was aimed at saving the economy from the problem of time inconsistency and over-reaction owing to temporary shocks (Obasikene, 2006:127).

Finally, it is in this regard that analysis has been based on the impact of the economic policies of the CBN.

1.2   Statement of the Problem

Over the years, the Central Bank of Nigeria has been out different policies aimed at influencing economic activities in the country.  It has been with the formulation of policies aimed at streamlining economic with the economic objectives of the government so that the desired economic development would be attained.

However, in its (CBN) frantic effort in pursuing these objectives through various economic policies, much has been left to be desired.  The question has been effective with these policies on the economy of Nigeria, because it seems that much changes that usher in hall marks of economic development have not been seen.  They are policies about some observed inconsistencies in the economy but the effect has remained negligible.  The policy lags of the CBN, need to be reconsidered to see if there is need for readjustment so that the period of policy formulation and implementation with the urgency of the observed discrepancies it seeks to correct.

Furthermore, it has been observed that CBN is reactive rather than practice since it has 600 unit problems degenerated into unbearable proportions before applying measures to correct them, it appears that both the guidelines and the instrument of control now in operation are required to be reviewed to adopt them to the changing of financial environment and ensure that they are not kept in operation long after the situation calling for their use disappeared.  Hence, the CBN was supposed to operate free of government interference but since its inception, the bank has often been accused of politician interference and imposing policies, which the political authorities may find expedient from a strictly non-economic perspective.

Therefore, the researchers want to investigate the role of CBN as a catalyst to national economic policy and development in Nigeria.  (A case study of CBN Enugu)

1.3   Objectives of the Study

The main objective of the study is to carryout an empirical study of the impact of the national economic policy of the CBN on the economic development of Nigeria.

Other specific objectives include:

1.          To examine the effectiveness of the economic policies of the CBN on the economic development in Nigeria.

2.          To evaluate the suitability of the economic policies of the CBN to Nigerian economy.

3.          To determine the policy lags of the CBN and its effects of the economic development in Nigeria.

4.          To asses the responsiveness of the CBN policy changes in Nigerian economy.

5.          To ascertain the extent of autonomy granted CBN in evolving economic policies and its effects on economic development in Nigeria

1.4   Significance of the Study

This study will be of immense benefit to the monitory authority (CBN) since it reveals various issues militating against successful translation of major economic policies into development and how those issues can be tackled to achieve meaningful economic development.

Through its analytical precision, various fact about nations economic policy formulations and implementation were brought to bare for possible readjustment.



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