As CHANGE happens, how do you prepare your personal economy? What of that company’s operations? Still a good time for fixed income investment as inflation picks up due to (partly) rising energy prices and a floated forex regime? And what of those interest rates the central bank has been raising in Nigeria? Why are they not working for years in Nigeria to curtail inflation?
I have always noted that raising interest rates to fight inflation in Nigeria makes minimal sense because you cannot use interest rates to shape consumer spending at large in Nigeria. In other words, if the bulk of the consumers do not have access to credits, when you raise rates, you are simply influencing corporate spending since only companies majorly have access to credit.
And if that is the case, the implication is that you are reducing capital and investment which are actually needed to boost supply towards moving the demand-supply equilibrium to a new point where prices can come down, and reduce inflation. (In places like the US where consumer credit is huge, raising interest rates will affect demand and can reduce inflation through lower consumer spending, ceteris paribus on supply).
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And of course, even if you raise interest rates on Nigerian companies, what happens when you continue to pump and fund the federal government deficits through Ways and Means lending? Simply, you are canceling out any impact you expect from the interest rate hike because you are pumping funds via government to the economy unhinged. Nigeria’s former central bank team did not study AO Lawal’s “O” Level Economics of West Africa which I read in SS1, and which was really easy to understand.
People, join me and one of the best in the industry, Azeez Lawal, Managing Director of Trustbanc Capital as we examine recent economic policies in Nigeria. We will explain how they will affect your PERSONAL economy and your business or where you work. I am coming with my banking experience cap; come with your questions!
This is Tekedia Institute Mini-MBA; this is practical education. I will anchor the first 30 minutes; our faculty will manage the last 60 mins. Zoom link in the class board
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