Governor Central Bank of Nigeria Mr. Godwin Emefiele has said that there is near consensus on the potential of digital finance in boosting growth performance by facilitating the interconnectedness of agents in economic activities, access to a diverse range of financial products and credit facilities for individuals and small, medium, and large enterprises. He said that digital financial services are reputed to have created 95 million job opportunities and boosted the GDP of emerging economies by 6%.
Speaking at a retreat organised for Members of the apex bank Monetary Policy Committee in Lagos, he said “Digital finance supports greater financial inclusion by making possible the extension of financial services to non-financial sectors, and to individuals with minimal access to smart electronic devices. The central banking and monetary policy relevance in the digital ecosystem is sometime challenged as the regulatory oversight functions are largely eroded or weakened by impotency of traditional tools in carrying out those functions. In order to ensure the relevance of monetary policy and the role of monetary authorities in the new digital world, MPC members must embrace themselves with advance level understanding of the interplay of digitalisation with monetary policy objectives, targets and tools. In this regard, I encourage us all to actively participate in these discussions and come up with new ideas and tools to aid monetary policy implementation for optimal macroeconomic outcomes. Members, distinguished ladies and gentlemen, on this note, I wish to formally declare the retreat open and wish us all a very fruitful deliberation.
He said “we have witnessed very difficult times, unprecedented in global and Nigeria history – from the global financial crisis, to Ebola, to oil price war, to cryptocurrencies, to COVID-19 pandemic to Russia-Ukraine war, and to rising global inflation, with all the severe consequences for macroeconomic stability and growth. While the Nigerian economy has been engulfed with many crisis, just like many other countries of the world, we have been able to relatively withstand the storm and have performed far better than many of our pairs, courtesy of our bespoke and ingenious approach of adopting well thought out and home-grown policy measures to address our macroeconomic challenges. Monetary policy has been severely challenged, as its policy space narrowed significantly, in some cases, paradoxically and necessitating the need to rethink monetary policy in the context of emerging challenges and economic transformation. I therefore commend our choice of the theme of this retreat ‘Monetary Policy Implementation in a Digitally evolving Developing Economy’. The evolution of FinTechs, Cryptocurrencies, Digital Payments, Artificial Intelligence and Machine Learning, have changed the functioning of the financial and banking sectors, both globally and domestically. Therefore the urgent call for the need to rethink financial system regulation, supervision and monetary policy implementation.
“While the innovations come with lot of risks and uncertainties for the sectors, they also have many benefits for positive economic transformation and particularly, financial inclusion which has been the principal catalyst for inclusive growth, poverty reduction and employment generation. The Central Bank of Nigeria has championed the financial inclusion principle to achieve the SDGs, including the recent launch of the eNaira (CBDC) to capture the large unbanked populace into the formal sectors and also improve monetary policy efficiency and positive impact on the better standard of living for the population. I am aware that global experts and colleague Governors from other central banks, would speak to us at this retreat, including the IMF, BIS, Bank of Kenya and private sector players. Members would also share their experiences and thoughts on these emerging issues with the objective of collating some well thought-out and implementable measures to address the impacts of digitilisation on the Nigeria economy.
“Indeed, while post-COVID growth recovery in Nigeria can be adjudged to be moderate and stable, we have seen a major change in the key sectoral drivers of that stable growth phenomenon, including the services sector, modernised agriculture, and manufacturing, suggesting that technology and innovation is playing a major role in output growth and economic development in Nigeria. Hence the need to explore new ways of adapting monetary policy tools to improving the contribution of technology and innovations to the growth equation. For instance, the increasing prominence of digital finance, particularly accelerated by the outbreak of the COVID-19 pandemic and the unprecedented challenges it posed to the global economy, has rendered it the subject of intense discussions by policymakers and scholars”.
