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Monetary policy is often treated as an abstract technical exercise, discussed in rarefied economic spaces and reduced to charts, percentages, and committee communiqués. Yet, in a country like Nigeria, its true meaning is neither abstract nor distant.
It is felt daily on the streets—in the price of garri and rice, in transport fares, in the survival of small shops, and in the capacity of micro-entrepreneurs to access credit without being strangled by usurious rates.
The current direction of the Central Bank of Nigeria’s (CBN) monetary policy, though still evolving and constrained by deep structural defects, represents a notable operational departure from the practices of previous governments.
It reflects a cautious attempt to restore credibility, discipline, and fairness to a system long distorted by political capture and insider privilege.
Under previous regimes, monetary policy was frequently subordinated to expediency.
Exchange rates were fixed by fiat rather than fundamentals; special windows were created for favored actors; and intervention funds, though well-intentioned on paper, often became pipelines for rent-seeking.
The result was a two-tier economy: one for the connected few who accessed cheap forex and regulatory indulgence, and another for the majority who bore the inflationary consequences.
The present strategy, by contrast, shows greater willingness to accept short-term pain in exchange for long-term stability.
The move toward exchange-rate unification, clearer monetary signaling, tighter liquidity management, and more transparent communication indicates a recognition that artificial controls only defer crisis while enriching insiders.
For the common man’s street economy, this shift is not cosmetic.
Price stability, even when hard-won, protects purchasing power. A more realistic exchange rate discourages arbitrage and hoarding while rewarding genuine productivity.
When markets begin to believe that rules apply uniformly, informal actors—traders, transporters, artisans—can plan with greater certainty. Monetary policy thus becomes not merely a macroeconomic tool but a social stabilizer.
At the microeconomic level, sound monetary policy determines access to credit, cost of borrowing, and survival of small businesses.
Excessively loose policy fuels inflation that wipes out savings; excessively tight policy chokes credit and kills enterprise. At the macroeconomic level, it anchors inflation expectations, stabilizes the currency, and attracts investment.
For a structurally import-dependent economy like Nigeria’s, monetary recklessness quickly translates into food inflation, currency depreciation, and social discontent. This is why the present effort to balance inflation control with gradual growth support—however imperfect—marks a departure from the populist excesses of the past.
Yet, the most formidable obstacle to the success of this policy direction is not technical incompetence but moral sabotage.
Insider trading and prebendalism continue to undermine monetary policy in a devastating way.
When individuals or institutions trade on privileged information—advance knowledge of interest rate changes, forex interventions, or regulatory forbearance—they distort markets and neutralize policy intent. Exchange rates and interest rates cease to reflect fundamentals and instead mirror the anticipatory actions of insiders.
Trust erodes, capital flees, and genuine investors retreat.
Prebendalism compounds this injury. When public office becomes a platform for dispensing economic favors to political allies, select businesses, and entrenched bureaucratic networks, monetary policy becomes selectively enforced. Some actors enjoy permanent access to cheap forex, regulatory waivers, and liquidity support, while the rest of the economy pays the price.
These inglorious shenanigans of favoritism entrench monopolies, suffocate competition, and render policy enforcement asymmetrical.
In such an environment, no monetary framework—however sophisticated—can achieve genuine fruition.
The system itself rebels against reform.
This is why the call to “drain the swamp” within the monetary system is not rhetorical excess but economic necessity.
The CBN Governor must recognize that technical adjustments alone cannot overcome institutional rot. An independent advisory support service, carefully structured, could play a crucial role. Such a body would not usurp the CBN’s mandate but complement it by providing diverse perspectives, independent scenario analysis, and policy stress-testing.
Anchored in reputable research institutions or think tanks, it could enhance transparency, rebuild public trust, and help refine policy responses in complex areas such as fintech regulation, climate risk exposure, and inflation forecasting.
However, safeguards are essential.
Duplication of roles must be avoided, and the advisory body’s scope and authority clearly defined. Its value lies not in bureaucracy but in intellectual independence. Alongside this, strong institutional reforms are imperative: regular audits, open reporting, independent oversight mechanisms, robust enforcement of insider-trading laws, and meaningful whistleblower protections.
Without consequences, rules are mere suggestions.
Monetary policy effectiveness is also inseparable from structural realities. Nigeria’s chronic electricity deficit inflates production costs, suppresses productivity, and feeds inflation.
Reliable power would reduce dependence on generators, lower costs for local manufacturers, and improve competitiveness. This, in turn, would ease pressure on the monetary framework by reducing import dependence and forex demand.
Similarly, Nigeria’s historic reliance on imported refined petroleum products has been a persistent drain on foreign reserves.
Expanding domestic refining capacity—through initiatives like the Dangote Refinery—aligns industrial policy with monetary stability, freeing scarce forex for infrastructure, health, and education.
Another persistent challenge is uneven access to the benefits of monetary policy. Large corporations and well-connected banks often capture the gains, while small businesses and rural populations remain financially excluded.
Although the CBN has launched financial inclusion initiatives and SME-focused interventions, access to affordable credit remains limited.
Bridging this gap requires not just policy announcements but rigorous enforcement, financial literacy, and accountability within financial institutions.
Ultimately, monetary policy must be judged by its human outcomes.
Does it lower the cost of living? Does it create space for honest enterprise? Does it reward productivity over proximity to power? The current CBN strategy suggests an awareness of these questions and a willingness to correct past excesses. But awareness without courage is insufficient.
The Governor of the Central Bank occupies a position whose consequences ripple across every sector of national life.
His success or failure will shape Nigeria’s economic security, social stability, and future prospects.
To succeed, he must confront not only inflation and exchange-rate volatility but also the entrenched interests that profit from disorder.
Draining the swamp within the system is not optional; it is the condition precedent for reform. Only then can monetary policy truly serve the Nigerian people, restore confidence, and reclaim its rightful role as a guardian of national prosperity rather than a playground for privileged insiders.
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