Central Bank Governor, Godwin Emefiele has acknowledged the fact that Monetary Policy Members have supported the overall objective of sustaining and improving the standard of living of the Nigerian people through their steadfastness, resilience and commitment to effective policies.
Emefiele noted that Nigeria, like most other countries of the world, have witnessed unprecedented difficult times, occasioned by both local and global drivers, but that the country was able to relatively withstand the storm and have performed far better than many of her pairs.
This, he attributed to ingenious approach of adopting well thought out and home-grown policy measures to addressing the challenges.
In his key note address at the ongoing 2022 retreat of the Monetary Policy Committee (MPC) in Lagos, Emefiele admitted that tackling such problems which had brought some level of stability and growth into the economy, had also brought about major changes in key sectors like the services, modernised agriculture, and manufacturing.
This, he believes is the manifestation that technology and innovation is playing major role in bringing about growth and development.
However, he further observed that the increasing prominence of digital finance, occasioned by world pandemic may have posed unprecedented challenges to the global economy and the relevance of digital financing that would connect all drivers for the much needed growth.
According to him, digital financing supports not only in the area of employment generation but also greater financial inclusion by making possible the extension of financial services to non-financial sectors and to individuals.
“Before we start the self appraisal exercise, let me commend us all for our steadfastness, resilience and commitment to ensuring that monetary policy supports the overall objective of sustaining and improving the standard of living of the Nigerian people. We have witnessed very difficult times, unprecedented in global and Nigeria history – from the global financial crisis, to Ebola, to oil price war, to cryptocurrencies, to COVID-19 pandemic to Russia-Ukraine war, and to rising global inflation, with all the severe consequences for macroeconomic stability and growth.
While the Nigerian economy has been engulfed with many crises, just like many other countries of the world, we have been able to relatively withstand the storm and have performed far better than many of our pairs, courtesy of our bespoke and ingenious approach of adopting well thought out and home-grown policy measures to address our macroeconomic challenges.
Monetary policy has been severely challenged, as its policy space narrowed significantly, in some cases, paradoxically and necessitating the need to rethink monetary policy in the context of emerging challenges and economic transformation.
I therefore commend our choice of the theme of this retreat ‘Monetary Policy Implementation in a Digitally evolving Developing Economy’. The evolution of FinTechs, Cryptocurrencies, Digital Payments, Artificial Intelligence and Machine Learning, have changed the functioning of the financial and banking sectors, both globally and domestically.
Therefore, the urgent call for the need to rethink financial system regulation, supervision and monetary policy implementation.
While the innovations come with lot of risks and uncertainties for the sectors, they also have many benefits for positive economic transformation and particularly, financial inclusion which has been the principal catalyst for inclusive growth, poverty reduction and employment generation.”
Indeed, while post-COVID growth recovery in Nigeria can be adjudged to be moderate and stable, we have seen a major change in the key sectoral drivers of that stable growth phenomenon, including the services sector, modernised agriculture, and manufacturing, suggesting that technology and innovation is playing a major role in output growth and economic development in Nigeria. Hence the need to explore new ways of adapting monetary policy tools to improving the contribution of technology and innovations to the growth equation.
Speaking further, the governor said, “For instance, the increasing prominence of digital finance, particularly accelerated by the outbreak of the COVID-19 pandemic and the unprecedented challenges it posed to the global economy, has rendered it the subject of intense discussions by policymakers and scholars.
There is near consensus on the potential of digital finance in boosting growth performance by facilitating the interconnectedness of agents in economic activities, access to a diverse range of financial products and credit facilities for individuals and small, medium, and large enterprises.
Digital financial services are reputed to have created 95 million job opportunities and boosted the GDP of emerging economies by 6%. Digital finance supports greater financial inclusion by making possible the extension of financial services to non-financial sectors, and to individuals with minimal access to smart electronic devices.
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The central banking and monetary policy relevance in the digital ecosystem is sometime challenged as the regulatory oversight functions are largely eroded or weakened by impotency of traditional tools in carrying out those functions.
In order to ensure the relevance of monetary policy and the role of monetary authorities in the new digital world, MPC members must embrace themselves with advance level understanding of the interplay of digitalisation with monetary policy objectives, targets and tools.”