Experts have continued to applaud the economic blue-print unveiled by the new Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, particularly his decision to cut lending rates and reduce unemployment.
Reacting, on Friday, Tola Odukoya, a research analyst and chief executive of Lagos-based Dunn Loren Merrifield Asset Management Limited told Saturday Independent on phone, Friday that for moving to reduce rates alone, Emefiele "has won 50 per cent of my support... (because) he has decided to be pro-growth."
He said the Dunn Loren Merrifield group consistently criticised the immediate past CBN Governor, Lamido Sanusi, high rates which has left the Nigerian economy worse off.
"What Nigeria needs, which Emefiele has gotten right," he continued, are policies that support domestic growth and job creation, which can only come from the small and medium scale enterprises which require cheap funds to blossom, because the big players can always negotiate their lending rates with the banks or even get money at single digit from abroad, a luxury not open to the small players that create the mass of jobs.
Odukoya said the median age of the Nigerian population is 19, which means the bulk of the population are under 40 years of age, hence the need to create more jobs and products that would cater for and engage the youthful population.
Analysts at FBN Capital Limited, in a report on Friday, noted that Emefiele's assertion that Nigeria's lending rates are the highest, apart from that of Brazil, among the leading emerging markets.
They argued that Nigeria's rates are high "for several good reasons including the need for portfolio inflows to underpin the naira exchange rate and the high cost base of the banks.
"Our published forecasts already show token cuts in the monetary policy rate of 50bps both this year and next. We are cautious as to the impact of such cuts on lending rates for the real economy."
They see "continuity in monetary policy, which is consistent with his earlier remarks at his confirmation hearings at the Senate."
One factor common to Emefiele and his predecessor, they think, is the developmental agenda, recalling Sanusi's N300 billion power and aviation fund, and the N200 credit guarantee scheme for SMEs, both dating from 2010, only that it may be more systematic this time around, because of the desire "to target predetermined" sectors for the impact of its measures on job creation and import reduction."
Also, economic and financial experts in interviews on Friday also told the News Agency of Nigeria (NAN) that the new policy shift would positively impact on various sectors of the economy if implemented.
Sehinde Adenagbe, managing director, Standard Union Investment Limited, says a gradual reduction of interest rates would increase activities in the Nigerian Stock Exchange (NSE), as it would lead to a redirection of funds into the market, which offers higher returns.
Vocal economist and columnist, Henry Boyo, expressed reservations on the full implementation of the blueprint, noting that Emefiele might mean well for Nigerians, but may find it difficult to implement policies that would affect his constituency as a banker.
He told NAN that banks had enjoyed growth and sustainability in the past, based on the apex bank's wrong economic policies, even as he argued that lower interest rates could not be achieved without a reduction in the Monetary Policy Rate (MPR) and the cash reserve ratio (CRR)
He said that the CBN needed to address the excess liquidity in the system, to achieve economic growth and ensure lending to the real sector.
However, a negative reaction to the blueprint of the CBN Governor is that since it was announced on Thursday, the Naira and bond market rates have been the worse for it.
On Friday, according to Reuters, the Naira weakened to more than two month low of N164.46/$, lower than N163.85/$ it closed the previous day. The currency was last seen at this level on March 28, when it closed at 164.95 to the dollar.
Bloomberg reported that the naira fell to its lowest level since April, depreciating 0.9 percent to 164.40 per dollar by 5:15 p.m. in Lagos, the weakest on a closing basis since April 1. The naira has fallen for the past two days, extending this year's decline to 2.5 percent.
"The naira could come under pressure as demand for the currency declines while its supply rises," Chris Becker and Catherine Bennett, Johannesburg-based analysts at ETM Analytics, said in an e-mailed note Friday.