Olajide Oyadeyi’s Post

🌟 Excited to share my latest research titled 'The Velocity of Money and Lessons for Monetary Policy in Nigeria: An Application of the Quantile ARDL Approach'! 🌟 My recent study explores the dynamics of the Central Bank of Nigeria's (CBN) monetary policy and its impact on inflation. The findings suggest that the unpredictable and unstable velocity of money in Nigeria plays a significant role in the effectiveness of these policies. This instability causes monetary policy measures to have asymmetric effects, making it tough to combat persistent inflation. In essence, relying solely on traditional policy instruments like interest rates or money supply targeting isn’t enough. My paper strongly advocates for an inflation-targeting strategy, providing compelling evidence to support this approach. I invite you to explore the introduction, analysis, and concluding sections for a deeper understanding of the findings. This research initially formed my master’s thesis in 2016 but has since been significantly updated with new analysis and data, making it highly relevant in today’s Nigeria. Let’s rethink our approach to tackling inflation and strive for a more stable economic future! 📈 https://lnkd.in/eTkDH9na #CentralBankofNigeria #InflationTargeting #MonetaryTargeting #CentralBanks #Springer #JournaloftheKnowledgeEconomy #OpenAccess #VelocityofMoney #MoneyDemand #MonetaryPolicy

🌍 The Greed Economy: Navigating Nigeria's Economic Crossroads. I'm thrilled to announce the publication of my latest article in the renowned The Market for Ideas Journal! 🔎 Key Highlights: - A deep dive into Nigeria's economic struggles, where systemic exploitation drives challenges like inflation, inequality, and poverty. - Here are insights into the naira's alarming depreciation—from ₦150 per USD in 2014 to over ₦1,700 in 2024—and the rise of currency arbitrage. - Analysis of the subsidy removal's impact, with petrol prices hitting ₦1,200 per liter, leading to soaring food inflation and increased hardship for millions. 💡 The article explores actionable strategies to curb exploitation and promote sustainable economic reforms, offering policymakers and stakeholders a framework to address these pressing issues. 📖 Read the full article in the below Link. I look forward to hearing your thoughts, insights, and perspectives on how we can collectively build a more equitable and stable economy for Nigeria. Let’s connect and discuss! #GreedEconomy #EconomicInsights #NigeriaEconomy #TheMarketForIdeas #PolicyReforms #InflationImpact #SustainableGrowth

✨ Thrilled to Announce a New Publication! 📚 After over two years of dedicated work and rigorous peer review, I am excited to share the publication of my latest research titled "The Macroeconomic Determinants of Exchange Rate Volatility and the Impact of Currency Volatility on the Performance of the Nigerian Economy". This study dives deep into the drivers of exchange rate volatility in Nigeria and its ripple effects on macroeconomic stability, offering insights that are both academic and highly practical. Using advanced statistical and econometric techniques like Autoregressive Conditional Heteroscedasticity, nonlinear Generalised Autoregressive Conditional Heteroscedasticity, and the novel dynamic ARDL models, we uncovered critical factors that influence exchange rate swings, including monetary policy rate, lending rates, oil prices, government spending, and financial development. 📊 Key Takeaways: 1. Exchange rate volatility significantly impacts Nigeria's macroeconomy. 2. Stability and predictability in exchange rates are crucial for managing inflation and ensuring economic resilience, especially given Nigeria's import-dependent economy. 3. The findings underscore the need for robust policy measures to manage exchange rate fluctuations effectively. Given Nigeria's recent exchange rate challenges, this research feels particularly timely and relevant. It provides actionable recommendations for monetary and fiscal authorities to implement policies that ensure a manageable range of fluctuations, fostering a more stable economic environment. 💡 Your thoughts? I'd love to hear how you think these findings could contribute to addressing Nigeria's current exchange rate challenges or broader economic policy discussions. The paper is published on Foreign Trade Review and the links to the paper can be found here: https://lnkd.in/eczTh2gj #ResearchPublication #Economics #ExchangeRateVolatility #Nigeria #PolicyRecommendations #CurrencyVolatility #ExchangeRateFluctuations #CurrentAccount #Output #EconomicProductivity #Inflation

Rethinking Monetary Policy: Nigeria's Inflation Case. The Central Bank of Nigeria (CBN) made a significant move today, raising its Monetary Policy Rate (MPR) to 22.50 percent in an attempt to curb the country's soaring inflation rates. This decision underscores the pivotal role monetary policy plays in addressing economic challenges. However, the effectiveness of this approach warrants scrutiny, particularly in the context of Nigeria's unique economic landscape. At the heart of Nigeria's inflationary pressures lies a fundamental paradox: while traditional economic theory suggests that excessive money supply fuels inflation, Nigeria's inflationary woes stem from cost-push factors rather than monetary expansion. Consequently, the conventional wisdom of tightening monetary policy to reduce borrowing and spending may not yield the desired outcomes. A closer examination reveals that Nigeria's inflation is primarily driven by supply-side constraints, such as rising production costs, supply chain disruptions, and currency depreciation. These factors exert upward pressure on prices, making it a challenge for monetary policy alone to tame inflationary pressures. Instead, policymakers should adopt a multifaceted approach that addresses the root causes of inflation while promoting sustainable economic growth. One such avenue is to prioritize domestic manufacturing and production over reliance on imports and consumption. By increasing domestic production capabilities, Nigeria can reduce its dependence on foreign goods, mitigate supply chain vulnerabilities, and stimulate job creation. This strategic shift not only helps alleviate inflationary pressures but also fosters long-term economic resilience and self-sufficiency. Indeed, Nigeria stands at a crossroads where traditional economic principles must be reevaluated in light of its unique challenges. Rather than blindly adhering to textbook solutions, policymakers must embrace innovative strategies that align with Nigeria's economic realities. By embracing a holistic approach that combines monetary policy adjustments with proactive measures to enhance domestic production, Nigeria can navigate its inflation and chart a path towards sustainable economic prosperity. Forget the English sha even garri don cost 😞 My stake!

IMF Warns Zambia Against Dedollarization, Calls Plan Counterproductive An International Monetary Fund representative has cautioned that Zambia’s proposed dedollarization initiative may inadvertently undermine efforts to contain inflation. The representative expressed concern that the prevailing economic conditions in Zambia are not conducive for the country to proceed with the de-dollarization proposals. Zambia Not Ideally Placed to Dedollarize The International Monetary Fund (IMF)’s Zambian representative, Eric Lautier, has expressed concerns about Zambia’s dedollarization proposals. According to Lautier, these measures could inadvertently undermine efforts to contain inflation. He argues that successful dedollarization requires an economic environment characterized by low and stable inflation rates, as well as limited external pressures—conditions that Zambia currently lacks. The IMF representative’s remarks were made shortly after the Bank of Zambia announced proposals that promote local currency use. Notably, the central bank’s guidelines propose severe penalties, including up to 10 years in jail, for Zambian businesses that demand U.S. dollars for local transactions. source: Bitcoin.com News

#ICYMI: Early April, Uganda's government proposed tax changes impacting consumer spending and business activity with the country's inflation remaining a key focus. To help us unpack the impact this has on the economy as well as weakening of the Kenyan shilling and its impact on upcoming Eurobond repayment as well as other East African market movements, CNBC Africa is joined by Daisy Nitwe, Country Lead, Derivatives & Structured Solutions at Stanbic Bank Uganda https://brnw.ch/21wJqr5. #GlobalMarkets #MarketUpdate

NIGERIA'S ECONOMIC CONUNDRUM Yesterday, the Monetary Policy Committee held its 295th meeting. The outcome was a 150-basis-point increase in the Monetary Policy Rate (MPR) to 26.25%, up from 24.75% in April. The corridor rate, Cash Reserve Requirement (CRR), and the liquidity ratio remained unchanged. This marks the third substantial hike since February, totaling a 750-basis-point increase from 18.75% in December 2023. The Central Bank’s aggressive monetary tightening aims to stabilize the Naira and curb surging inflation. However, recent data show these measures have yet to yield the desired effects. The Consumer Price Index (CPI) hit 33.69% in April 2024, the highest since March 1996. Although the month-on-month inflation rate saw a slight decrease of 0.7% to 2.29%, the overall trend remains worrisome. Concurrently, the Naira, which approached #1000/$1 last month, has further depreciated, trading the greenback at #1,468 as of May 20th. This volatility could be attributed to seasonal FX demand reflecting the dynamics of demand and supply, especially the supply deficiency of the Dollar, this emphasized the need for increased FX inflow. Balancing MPR, Exchange Rate, and Inflation: The Need for "Naijanomics" In Nigeria, MPR hikes have paradoxically been accompanied by rising inflation, creating a self-perpetuating cycle of monetary tightening. While increasing the MPR is theoretically sound and might help in attracting foreign investors and boosting FX liquidity, it must be part of a broader strategy. Nigeria faces a triad of economic challenges: high MPR, soaring inflation, and a weak Naira. Each of these variables is interdependent. Stabilizing the exchange rate requires increased FX inflows, which in turn necessitates a higher MPR to attract foreign investment. However, continually raising the MPR risks economic stagnation and a heightened inflation rate as the hike in MPR adversely affects output and makes funds more expensive for businesses to access. A stable and strong Naira, coupled with foreign investment, is important—but not solely sufficient—to curb inflation. Nigeria’s inflation is driven by factors beyond increased demand, including supply chain disruptions, regional insecurity, rising energy prices, high input costs, and FX rate instability. These factors limit the effectiveness of traditional monetary policy, necessitating a unique and out-of-textbooks approach, "Naijanomics," that considers Nigeria's specific economic conditions in combating macroeconomic problems. Economic Outlook Headline inflation is expected to rise further in May, driven by the Naira's unprecedented depreciation and a recent energy shortage which led to petrol price increases that caused an upward surge in transportation costs. The Central Bank is most likely to continue its monetary tightening at a moderate level to address exchange rate instability and curb inflation. However, a balanced approach is essential to avoid deepening the economic quagmire.

#Nigeria's Central Bank Implements Monetary Supply Benchmarks to Tame Inflation and Promote Economic Growth *Position Paper:* *Title:* Implementing Monetary Supply Benchmarks in Nigeria: A Roadmap to Economic Stability and Growth *Executive Summary:* The Central Bank of Nigeria (CBN) has successfully implemented monetary supply benchmarks to reduce inflation and promote economic growth. This position paper outlines the CBN's strategy and provides a roadmap for sustaining economic stability and growth. *Introduction:* In 2024, the CBN implemented a series of monetary policies to reduce inflation and promote economic growth. The policies included inflation targeting, reserve requirements, open market operations, interest rate management, and macroprudential policy. These policies have been successful in reducing inflation and promoting economic growth. *Justification:* The CBN's policies have been successful in reducing inflation from 33.4% in FY 2024 to a single digit. The policies have also promoted economic growth, with Nigeria's GDP growing by 3.5% in 2024. *International Standards:* The CBN's policies are aligned with international standards, including those set by the International Monetary Fund (IMF) and the Bank for International Settlements (BIS). *Strategic line action To sustain economic stability and growth, the CBN should: 1. Continue to implement inflation targeting to maintain price stability. 2. Monitor and adjust reserve requirements to manage liquidity and credit growth. 3. Conduct regular open market operations to manage the monetary base and inflation. 4. Use interest rates to manage inflation and promote economic growth. 5. Implement macroprudential policies to mitigate systemic risk and promote financial stability. *Conclusion:* The CBN's implementation of monetary supply benchmarks has been successful in reducing inflation and promoting economic growth. To sustain economic stability and growth, the CBN should continue to implement these policies and align them with international standards.

Dive into the April macroeconomic report for a comprehensive look at Nigeria's current economic landscape. From exchange rate volatility to inflation concerns and dwindling reserves, we analyze the intricate forces at play. Explore the Central Bank of Nigeria's strategies to combat inflation and the associated costs. Delve deeper into the seismic shift in the banking sector, assessing recent downturns and the allure for foreign investors. Highlighting the urgent need for reforms, we paint a vivid picture of the sector's trajectory with a blend of historical context and current insights. The Nigerian Stock Exchange (NGX) faced a significant setback in April, with the All-Share Index (ASI) dropping by 6.06%, notably impacting the Banking sector with a 24.8% decline. Does this signal a looming storm or just a fleeting setback post Q1's stellar performance? The bearish sentiment in the Sub-Saharan Africa (SSA) euro bond space reflects uncertainty, influenced by expectations of prolonged contractionary US monetary policy. This downturn underscores the importance of economic stability in the region. Amidst the drama of battling inflation, the CBN navigates a delicate balance between curbing inflation and fostering economic growth. Our monthly report offers insights into these complexities, serving as a roadmap through Nigeria's evolving economic landscape. Regards.

Explainer Series| Meristem Nigeria: Nigeria 2024 Half-Year Outlook In the first half of the year, the global economy witnessed better-than-expected growth amid tight monetary policy for most of the period. Notably, inflationary pressure eased across major economies, spurring a positive growth outlook for the global economy. In the same vein, Sub-Saharan Africa showed signs of a gradual economic rebound, marked by declining inflation and improvements in the oil sector. However, debt sustainability remained a major concern as countries engaged in debt restructuring arrangements with creditors. On the domestic front, Nigeria's economy continued its growth momentum, driven by the recovery of the oil sector and the exceptional performance of the financial services sector. However, this growth was moderated by factors such as tighter monetary policies and inflationary pressures, which had a dampening effect on the non-oil sector. In our 2024 half-year outlook report, we explore the macroeconomic and financial markets environment for H1:2024, while providing guidance on strategies for investment positioning in H2:2024. Kindly find attached the full report. #growth #finance #wealthmanagement #assetmanagement #investing #bonds #stocks #cash #commodities #marketreport #marketreview #financialmarket #nigeria #usa #globaleconomy #globalequities #stockmarket #chinaeconomy #macro #markets #investmentbank #finance #education #trading #investing #economy #southafrica #inflation #market #eurozone #hike #quality #macroeconomics #economicgrowth #investment #investments #infrastructure #bank #future #investmentbanking #strategy #nigeriaeconomy #monetarypolicy #currency