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How effective are monetary policy tools in the resolution of fiscal problems?

The average growth rate in Q1-Q3 was 2.17%, up from 1.91% in 2018. The increase could be partly attributed to the CBN’s adoption of unorthodox policies to stimulate growth. These policies have resulted in a decline in T/bills rates to an average of 5% from 11%. This is significantly below the inflation rate of 11.85%, thereby leading to a negative real rate of return for investors. In addition, other policy measures such as the hike in VAT and cost-reflective electricity tariffs, will make inflation rise and stay well above the CBN’s target of 6-9% in 2020. The CBN may be left with no alternative but to focus on its primary function of maintaining price stability.

Nigeria’s higher education quandary

The growing disenchantment of aspiring and young Nigerians, with the system that precludes them from upward mobility into the middle class, is one of the underlying factors in the growing social and political unrest in the country. This is partly because of the high level of graduate unemployment which is greater than the national unemployment rate. Nigeria also underperforms other African countries in the level of its investment in the education sector. Nigeria’s investment in education is 0.5% of GDP as against Africa’s average of 4.88%. The underinvestment is also a contributing factor to low education standards.

Corporate focus: Lafarge Plc

The NSE has lost 15.42% year to date while Lafarge Plc has gained 11.65%. The share price appreciation is not necessarily as a result of its financial performance but the shedding of its loss-making South African investments and the rapid growth in the construction sector, which has grown by 2.37% in Q3 with an upside potential. The company reported a revenue of N163.06 billion in its 9M’19 financials relative to N234.30 billion in 9M’18.

In this edition of the FDC bi-monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large.

Enjoy your read!