Nigeria’s Economic Management: Reflections Through Monthly Interest Rate Movement From 1996 to 2020 and Beyond.

Abstract

Economic management is the rules, policies, procedures and skills deployed to manage the resources, finances, income, and expenditure of a community, business enterprise or a whole country. The major instruments of economic management are the fiscal and economic development policies normally outlined in the countries budget by the President. The failure to achieve the stated objectives in the fiscal and monetary policies are the major challenges faced by less developed and developing countries of the world. This is because of frequent fluctuations in macro-prices particularly interest, wage and exchange rates. The resultant effects of the movement of these prices are reflected in the inflation and the GDP growth rates which adversely affects agribusiness activities. In this study, the trend of the movement of monthly inflation rate between 1996 and 2020 in Nigeria was investigated. The data, which were obtained from the records of the Central bank of Nigeria, National Bureau of Statistics as well as the World Bank’s World Development Indicators, were analyzed using descriptive statistics as well as cubic, spline and smoothing methods. The results, which showed Nigeria’s average inflation for the period under study to be 12.42%, was better managed during civilian administrations (with a mean of 11.8%) but was higher than most countries of the world. Among the smoothing methods, Holt-Winters predicted (1996-2020) and forecast (2020-2042) Nigerian inflation better than other methods with a mean forecast of 11.25. Among the presidents, the Goodluck Jonathan era witnessed the most stable inflation regime with a mean of 10.2%. The results further reveal that a stable inflation is capable of increasing agriculture GDP by 1.0885% yearly although only short-run dynamics is apparent. It is recommended that more technical skills rather than guesswork policies should be deployed by the government to better manage the inflationary trend so that Nigeria could return to single-digit inflation regime that was once achieved.