The Central Bank of Nigeria increased its lending rate from 12% to 14%. Thanks to President Buhari.
The principal reason behind this is to lure foreign investors and prop up the naira.
The ministry of finance had stated that Nigeria is “Technically under recession.” The CBN is working to prevent this from happening.
Oweing to shortages in crude production and fluctuating oil prizes, the Buhari administration refocused the nation’s revenue stream.
President Muhammadu Buhari plans to decrease Nigeria’s dependency on crude oil by any means possible.
Two strategies that seem to be working is attraction of foreign investors and increasing the nation’s internally generated revenue.
One of these seem to working.
Before President Muhammadu Buhari took over, crude oil contributed to 85% of our national revenue.
As at today, that value has dropped to a miserly 30%.
Last month, 70% of N559.03 billion, representing N391 Billion, shared by the federation came from non-oil revenue sources.
This is happening for the first time since the civil war.
After the President reorganized the Federal Internal Revenue, FIRS, over 700,000 new corporate accounts have been added to their database.
The plan is to register a minimum of 10 million additional taxpayers by December 2016.
If this is happens, the revenue generated this month from non-oil sources would be doubled.
This will be enough to fund the 2016 budget with zero input from crude oil sales.
Now this is a feat and the Buhari’s administration seem poised to accomplish this.
The good news is this: Nigeria will be completely independent on oil revenue for the first time after the era of groundnut pyramids.
This is going to be game changer and signifies a very bright future for Nigerians.
Buhari’s second strategy is to lure soft investors so as to increase FOREX.
To this, the Monetary Policy Committee within CBN, increased the key lending rate to 14.
The committee “Noted that the negative real interest rates did not support the recent flexible foreign-exchange market.
“We observed this since foreign investors’ attitude remained lukewarm, showing unwillingness in bringing in new capital,” CBN governor said.
“The only reason why the Buhari administration is doing this is to attract foreign portfolio investors.
“This will give the Nigerian market some credibility and allow a takeoff of our FOREX market.
This will boost the economy and further release more cash to fund the budget,” Bloomberg reports.
“The liquidity levels there are very low, so it would be good to have those foreign investors back.”
“I think the interest rate decision will be supportive of foreign-exchange inflow.
“That indirectly could support growth. Whether it will work immediately, that is another thing,” Bloomberg says.
By and large, President Muhammadu has achieved a feat. If this steam continues, Nigeria will be out of the woods in no distant time.