Monetary Policy In Nigeria Case Study

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Macroeconomics refer to the study of the overall performance of a nation. The federal government using various polices tries to influence the general performance of the economy through various policies such as the fiscal, monetary policy as well as exchange rate. For the purpose of this study, we shall narrow our minds to one of the policies; monetary policy. Monetary policy plays an important role in the determination of the output, growth rate and price inflation. Monetary policy is the process by which the monetary authorities control the stock of money, often directed at interest or inflation rate to guarantee price stability and general confidence in the country .Put in another way, monetary policy includes a number of policies by which…show more content…
The federal government of Nigeria using the C.B.N tries to influence the performance of the national economy through various policies such as changing the level of taxation, government spending, or the supply of money available in the country. Changing macroeconomic policies affect national income, prices, interest rates and exchange rates all of which influence the agricultural economy. To start with, interest rate structure has been employed principally to direct ‘cheap’ credit to specific sectors such as agricultural sector, [i.e. the interest rate on agricultural production as at date is pegged at 14%( this rate is between 2007- 2017) which is aimed at reducing the cost of agricultural products, machineries, etc.]. This was done by consistently stipulating relatively lower interest rates for loans and advances in the sector. In spite of the efforts of the Nigerian government in boosting agricultural production, the sector seems not to be witnessing substantial developmental growth. Since there are changes and fluctuations in the monetary policies of Nigeria, it therefore becomes necessary…show more content…
However, with oil discovery and boom of the 1970s, the agricultural sector suffered neglect with the sector’s contribution to GDP declining to 35% in 2014 from 65.7% in 1957 leading to food insecurity and increased level of poverty in the country with the poverty level standing at 33.1% in 2013 (NBS 2014). However, the share of agriculture's contribution to GDP declined from 42.20% in 2007 to 40% in 2010 and to a more worsening rate of 35% in 2013 (CBN 2013) and about 24.68% in 2016(NBS 2016).This is not necessarily due to a strong industrial sector dislodging agriculture but also as a result of low productivity and neglect of the agricultural sector by both the government and its citizens. There is the need to correct the existing structural bends in the Nigerian agricultural sector and placing the economy on the path of sustainable growth is therefore enthralling. However, there have been several attempts by the government of Nigeria using several macroeconomic policies and programs to promote economic growth and development of the agricultural sector. Such programs include SAP (1986-1991), seven point agenda by the ex- President Goodluck Jonathan (2007), etc. This raises the question of what monetary policy monetary authorities should adopt in order to achieve sustainable growth rate of the

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