By Dele Sobowale

“It never rains roses; if you want more roses, you have to plant more roses.”

George Elliot, 1819-1880.

After several months of trial and error, the Central Bank of Nigeria, CBN, is finally on the right track. Exchange rate is stabilising; the gap between official and parallel market rates has been closed. For the first time in years, Nigeria is close to having a relatively stable exchange rate which will make planning possible. But, as Bismarck Rewane has, rightly, pointed out, the CBN has been supporting the Naira without saying so. It is unclear how long the CBN will be able to continue the support – without which the gains made so far might be temporary and the rates start moving up again.

Monetary policy alone, however sound, cannot sustain any economy. Just as sound fiscal policies must complement it for the gains made to be consolidated.

Central to fiscal policy is productivity growth. For the country’s Gross Domestic Product, GDP, to grow, Nigeria needs higher real productivity – not rebasing or other gimmicks which have now taken centre stage.

Four key areas requiring more output are: petroleum sector (upstream and downstream), agriculture, manufacturing and essential services – particularly, telecommunications, transportation, education, hospitality and health. Failure to significantly increase productivity in all these sectors will roll back the gains made by the CBN.

Lately, officials in the crude oil sector have been announcing that Nigeria now has the capacity to produce up to 2.24 million barrels per day, mbpd. That is political declaration not a realistic estimate. Potential is different from actual. Nigeria has had the capacity for this quantum of output in the past without achieving it. Even now, January 2025 output was far less than that; and it is unlikely that February production will reach 2mbpd. Cumulatively, the production for the first two months will record negative variance which might not be corrected this year.

At any rate, there is OPEC quota to consider – in addition to global demand for crude. The Organisation of Petroleum Exporting Countries has pegged Nigeria’s quota at 1.7mbpd – excluding condensates. Nigeria as the weakest member of the organisation cannot exceed the quota without inviting backlash which will drive down the price of crude. Global demand for crude is unstable at the moment; but, the long term trend is not favourable to producers. The world is literally driving away from fossil fuels; leaving Nigerian alone still clinging to crude oil for its economic survival. It is a defective economic model in the long term.

Agriculture appears promising. The FG and some states have increased spending on agriculture. Unfortunately, the responses have been traditional; not imaginative. Tractors from Belarus have arrived; but, not in numbers large enough to make a significant impact. Furthermore, tractors from foreign lands have always arrived in Nigeria; and the results have always been the same. Without trained operators and spare parts, each tractor is only useful until its first breakdown for any reason. Then it is abandoned, sometimes, in a farm far from the nearest town. The Nigerian landscape is littered with thousands of tractors which are now being cannibalised by scrap iron dealers.

Other inputs might create problems. From reliable sources close to farms, the cost of fertiliser has gone up; and farm workers are hard to find. Bandits have made farming perilous business. Still, there is hope.





https://www.vanguardngr.com/2025/03/cbn-monetary-policies-working-but/