Monetary Policy and Inclusive Growth in Nigeria: Theoretical Issues, Challenges and Prospects

摘要

This paper offers a theoretical perspective on how monetary policy can enhance inclusive growth in the economy through the Central Bank of Nigeria (CBN). The ultimate objective of monetary policy is to promote sound economic performance and high living standards of the citizens. This makes monetary policy a key element of macroeconomic management and its effectiveness is crucial to the overall economic performance of Nigeria. The paper constructed a theoretical model for inclusive growth in Nigeria and provides the drivers of inclusive growth in the economy. It also identified and discussed major challenges to the conduct and implementation of monetary policy in Nigeria which undermine the effectiveness of monetary policy to include non-monetized Nigerian rural sector, underdeveloped money and capital markets, and large quantity of money outside the banking system. Others include poor data quality, proliferation of illegal financial houses, and poor banking habits in the economy. The paper however notes that monetary policy when developed and conducted efficiently has the capacity to influence the real sectors of the economy and positively influences all the key drivers of inclusive growth in Nigeria. To make monetary policy more effective and responsive to inclusive growth in Nigeria, the study, recommended that the government must play a central role in coordination between banks and others to expand efforts to support key industries; it should also pursue further improvements in areas such as health care, education, infrastructure and access to capital; embark on greater harmonization of monetary and fiscal policy so as to have internal consistency necessary for all the policies to achieve the desired impact on the real productive sectors; strengthen its machinery for providing timely and reliable data for efficient planning in the system; and monetary policy should be complemented by growth-oriented and job creating fiscal, industrial and labour policies. The paper submitted however that although monetary policy can contribute to inclusive and sustainable growth when developed and employed efficiently, there is the need to recognize the limitations of monetary policy and hence acknowledge that other macroeconomic policies, policy makers and stakeholders also have an important and significant role to play in achieving both inclusive and sustainable growth in Nigeria.