The response of Nigeria's cental bank to the coronavirus pandemic shows the scale of the problem has not yet been grasped.
Between the global coronavirus pandemic and the oversupply of oil by Saudi Arabia and Russia, Nigeria’s economy is taking a battering.
As the price of crude oil went below $30, the naira was hit by more selling.
The central bank announced six policy responses.
- Extension of moratorium on loans.
- Reduction of interest rates from 9% to 5%
- Creation of a N50bn [130m euro] fund to support the economy.
- Credit support for the healthcare sector.
- Regulatory forbearance.
- Strengthening of the loan-to-deposit rate policy.
But economists and policy experts believe the CBN fails to address the more essential problems of the economy.
The Nigerian economy has many fundamental problems, and it is feared that the interventions announced by CBN will do nothing to fix them in the long term. The announced policy intervention does nothing to allay fears, particularly with regards to the naira.
According to Adedayo Bakare, an economist and investment researcher at Afrinvest, the CBN is not addressing issues in the foreign exchange markets or the problems local industries currently have in accessing forex to go about their business.
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