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Apex Bank Driving Growth in An Inflation Surmounted Nigeria Economy

Nigeria is a country located in the Sub-Saharan region of Africa that is regarded as the most populous African country with huge natural resources like Crude oil, vast agricultural land and various other resources like gold, coal, iron ore and others. The country is often referred to as emerging economy and as such it features a huge informal sector with more contribution to the national output of the economy. With all these abundances of resources, the country still struggles to break into the league of the developed nations with dwindling produce for the past 6 years.
In recent times, there have been various economic challenges for Nigeria as the Gross Domestic Product (GDP) dwindles after getting to the attained peak in year 2014 with economy worth of $547billion. Meanwhile, the inflation rate has been moving in the opposite direction.
The persistence rise of average prices of goods and services in Nigeria has been on 2-digit for the past 6 years which has affected the economy of the nation, weakening purchasing power, high cost of living to mention a few as obtained from the Central Bank of Nigeria (CBN) data. There are several factors contributing to the adverse effects that kept driving the increase on 2-digit. Identifying the factors responsible for the inflation drive will aid process of proffering alternative solutions to control it.
The Central Bank of Nigeria is the apex institution in the financial industry that serves as the government’s bank by formulating policies and regulating activities of other players in the industry while controlling the supply of money in the circulation. Based on these functions, the CBN strives to maintain stability of the economy activities with the monetary policies to create a causal effect on interest rate, exchange rate and money supply. The inflation rate is usually influenced with the efficient use of the monetary policies which reflects the real GDP of the nation.
This research examines the effects of the Central Bank of Nigeria policies implemented between 2014 and 2020 to drive economic growth. It reviews the polices by the apex bank and the impact on the inflation rate and how this affected growth in the financial sector of the economy. Besides, the growth in the informal sector with respect to financial inclusion as a measure of economic growth is also considered as one of the policies of the CBN.
This report reviews various findings of reports and research works conducted to reveal the effect of various monetary policies implemented by Central Bank of Nigeria to drive economic growth in the last three (3) years.
The study conducted by proxied Money Supply (MS), Exchange Rate (ER), Interest Rate (IR), and Liquidity Ratio (LR) with the Economic Growth represented by Gross Domestic Product (income) at constant price. The measures of MS and ER had a positive but fairly insignificant impact on economic growth while IR and LR had a negative but highly significant impact on economic growth to support the assertion that monetary policies are better suited when they are used in targeting inflation rather than in stimulating growth.[1]

According to study which considered data obtained from the World Development Indicators (WDI) and the Central Bank of Nigeria Bulletin, it was revealed that money supply and government total expenditure and revenue has a significant impact on economic growth while the monetary policy has more effectiveness in stimulating economic growth in Nigeria.[2]
Monetary policy has long relationship with economic growth with effective control use in controlling Nigeria economy as obtained in the research by . It revealed a causal effect of the money supply and investment on the economic growth while economic growth causes interest rate in Nigeria.[3]
examined the efficiency of monetary policy in Nigeria using Data Envelopment Analysis (DEA) approach with Treasury bills and Treasury certificates as input variables while interest rate and monetary base were output variables. It showed that monetary policy has not been efficient requiring allowable adjustments for inclusive growth to be attained.[4]
A review of the economic growth of Nigeria in the last 10 years revealed a subsequent decline in the Gross Domestic Product (GDP) with the peak attained in 2014 at $547billion, according to the data extract of GDPs from . Despite the decline, Nigeria still has the largest economy in Africa but still has to sustain the economic and population growth at a reasonable rate to attain economic development. This study will also consider the move by the Central Bank of Nigeria to create a Central Bank Digital Currency (CBDC) with reference to other countries implementation and the effects. The CBN had earlier banned the Commercial banks from getting involved in the cryptocurrency transactions.
1. Ayodeji, A. and Oluwole, A. (2018) Impact of Monetary Policy on Economic Growth in Nigeria. Open Access Library Journal, 5: e4320.
2. Titiloye, Timothy and Ishola, Victor, Effect of Fiscal Policy and Monetary Policy on Economic Growth in Nigeria (1989-2018): A Time Series Analysis (June 6, 2020). Available at SSRN: or
3. Ufoeze, L. O., Odimgbe, S. O., Ezeabasili V. N., and Alajekwu, U. B. (2018) Effect of Monetary Policy on Economic Growth in Nigeria: An Empirical Investigation. Annals of Spiru Haret University Economic Series 18(1):123 DOI:10.26458/1815
4. Olusola, A. T and Oluwatobi, A. A. (2017) Monetary Policy Efficiency and Inclusive Growth in Nigeria: A Dea Approach. Acta Universitatis Danubius. Œconomica, Vol 13, No 6 (2017)
5. The World Bank: World Development Indicators- Economic Policy & Debt: National accounts: US$ at current prices: Aggregate indicators.
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