CENTRAL BANK OF NIGERIA AS A CATALYST TO NATIONAL ECONOMIC POLICY AND DEVELOPMENT IN NIGERIA
This research work “The Central Bank of Nigeria as a Catalyst to National Economic Policy and Development” was an empirical study carried out to know the impact of the natural economic policy of the CBN on the economic development in Nigeria. The study was a descriptive research and the population covered the entire member of staff of Central Bank of Nigeria (CBN), Enugu zonal headquarters out of which sample sizes of 65 persons were selected randomly. The sources of data came both primary and secondary sources. Primary data were collected through the instrumentality of a well-structured questionnaire to tactfully elicit sincere and reliable responses from the respondents. Data were presented using tables and analysis of data. Findings revealed that the economic policies of the CBN are not effective on the development in Nigeria, the policy lag of the CBN has impacted negatively on the economy of Nigeria, the interference of the government in the policy formulation and implementation of the CBN has had negative effect etc. however, conclusion was made that the economic policy of the CBN has not made the desired impact that can lead to economic development as the findings revealed. Finally productive approach instead of reactive approach mostly adopted by the CBN should be stopped, to make the CBN more alive to the economic realities of the country. More latitude should be allowed the CBN to always come up with policies that are economically relevant, instead of those that address the needs of the political class; she has always been accusing of.
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.
Furthermore, the work is considered to be essential for the Federal Government, it reveals the negative impact of its interference in the economic policy formulation, which has been the most to the national economic objectives.
Finally, future researchers will find this work equally consequential as a source to their secondary data as it discusses extensively the issue of economic consequence, which affect virtually every aspect of national interests.
1.5 Research Questions
1) What institution is behind the economic policy development in Nigeria?
2) What roles does CBN play in the development of Economic policies in Nigeria?
3) Is there any impact made on the national economic policy by the CBN?
4) How does CBN act as a catalyst in Economic policy development in Nigeria?
1.6 Scope of the Study
The scope of the study such as a research work is the limit to which the researcher has to reach so as to get all his or her findings.
In other words, the scope of a study serves as a guide to the researcher showing what and what not to look into throughout the research process. Therefore, in this research we made use Newspapers, journals, interviews, relevant documents from CBN and the internet.
1.7 Limitation of the Study
However, during the course of the research work, some problems were encountered with the limitation of the study, which included the following.
a) INADEQUATE MATERIALS:- Some of the materials required for this project work were not adequately procured. Some respondents were evasive in their responsive. The quality of the work was not invalidated for the materials garnet were able to supply the information required.
b) FINANCIAL CONSTRAINTS:- During the course of this project work, the researcher encountered some financial constraints as the researchers needed enough finance for the logistics required for the procurement of materials for his project work.
Nevertheless, the little finance at the disposal of the researchers was managed efficiently to produce the desired results.
c) TIME CONSTRAINT:- Another problem encountered by the researchers during the course of this project work was time constraints.
Since this work was undertaken during the academic session, the researchers needed to share the available time between the attendance of lectures and saluting of materials for this work.
All these were done efficiently to achieve maximum results.
1.8 Definition of Terms
(a) Economic policy: are series of steps taken by the relevant authorities towards solving economic problem issues, or proposed steps actions to be taken when or why making any economic decision.
(b) Development: the gradual growth of economic system to be more advanced and stronger.
(c) Catalyst:- It facilitate or initiates the economic growth.