The African Development Bank, AfDB, has promised to help Nigeria out of its economic recession, but wants the country to adopt more people-friendly monetary policies, and lower interest rate.
President of the bank and former minister of agriculture, Akinwumi Adesina, said this in an interview in London, adding that “Nigeria is too big to fail”, but noting that the country’s current interest rate was “way too high”.
“The African Development Bank will rally strongly around Nigeria to overcome its recession,” Adesina said.
“They (Nigeria) have a liquidity problem. We (AfDB) want to make sure Nigeria gets resilient.”
He added that the government of Nigeria should lift hard currency curbs imposed by the central bank, adding that such a move would end the pressure on the naira.
The AfDB president said, “In our view it would be better to have gradual (customs) tariffs as opposed to (Forex) restrictions.
“Attracting investment was the only way for the central bank to lower its interest rates. The interest rate is way too high.
“You cannot drag the economy out of recession with those interest rates.”
Adesina noted that Nigeria had agreed on several reforms such as increasing its value-added and corporation taxes to make up for the shortfall in oil revenues, pointing out that Nigeria’s present tax-to-GDP ratio was four to five per cent, less than other countries in the region at around 15 per cent.
Nigeria revenue generation has dipped in recent times, no thanks to the decline in the global price of crude oil, as well as renewed attacks on oil and gas infrastructure in the Niger Delta region.
Last month, the Monetary Policy Committee of the Central Bank of Nigeria, CBN, voted unanimously to retain its benchmark of 14 per cent interest rate, despite calls from different sectors of the economy for a downward review.
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