Monetary policy is an instrument of the Central Bank which determines the speed of the actual flow of money and the creation of wealth through investment activities in both the formal and informal sectors of our modern economy. By this, the Central Bank deserves and attracts serious attention of both those in the private and public sectors.
Because of this seeming inevitable strategic role of the Central Bank in the management of our national economy, the Lagos state House of Assembly recently called on the National Assembly Committee on Banking and Currency to direct the Central Bank of Nigeria (CBN) to adopt immediate measures that could strengthen the monetary policy and adjust interest rate in the country.
This was contained in the resolution of the House at the plenary session, sequel to a motion moved by member representing Eti-Osa Constituency 02, Hon. Gbolahan Yishawu on the need to strengthen and stabilize the imbalance of trade and payment.
The House also called on the CBN to reduce interest rate on treasury bills to discourage banks from taking money to the apex bank.
The lawmakers, while debating the issue, pointed out that it is imperative to adjust the interest rate in a manner that would improve and stabilize banks’ financial resources to enhance credit portfolio to small and medium scale enterprises in order to assist in correcting the imbalance in trade and payment.
Hon. Yishawu, it should be noted, knows where the shoe pinches, as an experienced player in the private sector before he ventured into politics.
He knows the challenges that the private sector faces, especially SMEs. He has remained a strong advocate of support to SMEs whom he sees as the future of an emerging economy like Nigeria.
The House however expressed worry that if the high interest rate is not reversed, small and Medium Scale Enterprises would continue to struggle, thereby worsening the unemployment rate in the country.
The House thus urged the CBN to extend the cashless policy to all parts of the country in 2013, while at the same time directed the Committee on communication operators to provide backup infrastructure to support the cash-less policy. The House supported the cash-less policy of the CBN which it judged as aimed at providing more effective banking services and improving the effectiveness of the monetary policy in managing inflation and economic growth in the country.