…Some of the fundamental problems of the economy include that it is a factor-driven and monoproduct economy which is largely driven by oil
By Arize Nwobu
TUE AUG 11 2026-theGBJournal| Economy is central in the lives of citizens and which necessitates that governments should be visionary and implement appropriate policy measures and ensure proper governance which will eschew all forms of corruptions in their institutions, systems and processes to engender and healthy economy and prosperity for citizens.
A healthy economy is the joy of citizens and vice versa and the major macroeconomic variables for measuring the health of an economy are, inflation rate, exchange rate, interest rate, unemployment, imports and exports, consumer confidence etc.
In a previous article titled “CBN And Nigeria’s Economic Challenges”, which was published in Vanguard newspaper in February 27, 2025, I noted that an unhealthy economy is one with high rate of unemployment, fast rising inflation which erodes income power, decline in GDP, imbalance in imports and exports.
A healthy economy is synonymous with prosperity and sustainability and it features a relatively low inflation and steady prices, low unemployment, high employment so that those who want a job can easily find one, high consumer confidence and growth in GDP.
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 rate(but not too low to trigger inflation and the ‘animal spirits ‘ in the economy which could create a bubble), exchange rate, consumer spending( aggregate demand) and employment
Others are innovations and start-ups, manufacturing, foreign capital inflows, with more emphasis on foreign direct investments, strategic immigration reforms which attracts skilled immigrants and helps entrepreneurship and innovations.
Some of the fundamental problems of the economy include that it is a factor-driven and monoproduct economy which is largely driven by oil and with more than eighty percent of federal revenue derived from oil and which exposes the economy to external shocks.
Other fundamental challenges include import-dependency, infrastructure deficit with particular emphasis on power supply, minimal manufacturing and export base, insecurity, unpatriotism and sabotage etc.
These fundamental challenges tend to limit the potential of the economy and as a result of which it can only satisfice and not maximise.
Recently, there have been trending and negative views by some interest groups on the state of the economy and which is as a result of their lack of understanding of the fundamental challenges of the economy, the historical trajectory, the data physiognomy of macroeconomic variables and the crest and trough dynamics of the economy.
One particular interest group led by the respected Cardinal Onaiyekan seems not to be well apprised with the impacts of the policy measures of both the fiscal and monetary authorities, and which have been commended by some high calibre experts.
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, Bismark Rewane( Analyst extraordinaire) and some international institutions like the IMF and World Bank.
These high calibre experts are well apprised with the data physiognomy and dynamics and prospects of the economy while they 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 there are other experts who have objectively analysed and commended the economic reforms.
The respected Cardinal Onaiyekan and other interest groups who hold contrary views are most probably unaware of the historical trajectory of the economy starting from 2015, the causes of the current challenges, the creative and effective policy measures of 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 evolved creative and appropriate policy measures that are pulling the economy out from 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 that can be used to create immediate prosperity considering how deep the economy was thrust into the depths of the trough by the policies of the previous administration.
They don’t seem to appreciate the fact that the current challenges and inflationary pressure in the economy started in 2015 because of 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 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 and in 2017,i nflation threatened aggressively and spiked to 19 percent and continued to threaten further even as CBN under the former Governor continued to increase 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 which aimed to arrest the fast growing inflation.
Currency redesign or demonetisation is a drastic policy option and a last resort for fighting inflation because it sucks in all the money in the economy, including black and underground money into the banking system and which enables a better management of money supply by central banks.
Demonetisation can reset an economy on a better pedestal if it is successful and it can be counterproductive and destabilising if it fails.
Unfortunately the naira redesign policy failed and threw the economy into turbulence.
By 2023 inflation rate rose to 22.40 percent in March and further to 34.80 percent in December before the Consumer Price Index was rebased by the National Bureau of Statistics ( NBS) and it dropped to 24.40 percent.
The interest groups in their wrong understanding of the macroeconomic dynamics have tended to heap all the blame on President Tinubu because he removed 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 that aims to cushion the effects of the fuel subsidy removal including the direct cash transfers under which three million vulnerable households have benefitted from.
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 in different 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 the excess money supply in the economy with a consistent contractionary monetary policy and which has contributed to disinflating the economy.
Though it may not have effectively percolated down to prices, it is because we have a cost-push inflation and which demands the boosting of the supply side of the economy also known as the trickle-down economy or Reaganomics and the fiscal authority is implementing the necessary policy measures in that regard.
The Monetary Policy Committee( MPC) of CBN has managed the Monetary Policy Rate( MPR) very well and has created good balance by disinflating the economy to reasonable extent and spurring growth.
CBN has also done well in managing the exchange rate. The choice of exchange rate is very crucial in preserving the value of the domestic currency and in 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 onset. 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 of economy. Economic reforms takes time and there is no magic wand that can restore the economy automatically.
Progressively, the economy will be responding to appropriate policies. Both the President and CBN Governor are on the right track and 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 Tel 08033021230
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