Federation Account allocations to
the 36 states in the country have fallen by an average of N2bn per state every
month, following the crash in global oil prices and the consequent economic
challenges, the Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, has
This made the 36 states to record
N864bn fall in federal allocations in the last one year.
Emefiele stated this in his keynote
address at the 2016 Annual Bankers Night organised by the Chartered Institute
of Bankers of Nigeria in Lagos on Friday.
He said Nigeria was facing “a
classical case of economic stagflation” occasioned by external shocks.
In his speech entitled, ‘Policy
options for reversing Nigeria’s economic downturn’, the CBN governor said the
global crash in oil prices had also made foreign exchange inflows into the CBN
to drop by an average of $2.3bn in the past 26 months.
He said, “In reality, Nigeria’s
economy is currently facing a classical case of ‘stagflation’. This situation
largely occurs when a country’s Gross Domestic Product is falling or stagnant,
while unemployment and inflation are rising, all simultaneously.
“Given the sharp drop in oil
prices, Federation Account allocations to states have dropped by an average of
about N2bn monthly per state, which partly explains their inability to meet
some basic recurrent expenditures, including payment of workers’ salaries.
“Similarly, average inflows of
foreign exchange into the CBN have fallen by over $2.3bn every month over the
last 26 months.”
Emefiele, who said the country
could have been better prepared for the challenges, said lack of right policies
and proper capital controls threw the country into economic crisis.
In response to recent calls for the
CBN to reduce the high lending rates, he said, “The CBN would be abjectly
failing on one of its cardinal objectives if it cuts interest rates at this
time. He added,
Meanwhile, Urban Express
Authoritatively gathered that the value of banking stocks quoted on the
floor of the Nigerian Stock Exchange crashed by N2.27bn last week.
As of the last day of trading,
616.999 million shares of banks valued at N2.667bn were traded in 6,142 deals.