Etim EtimAt an event at London School of Economics recently, CBN Governor Yemi Cardoso announced that the bank has integrated AI into its monetary policy framework for macroeconomic forecasting and decision-making. The CBN has therefore joined other central banks like the European Central Bank, Bank of Cananda, Bank of Indonesia, etc in adopting this cutting-edge technology in its core operations. The fireside discussions at LSE, moderated by Professor of Economics, Helen Ray, provided Cardoso an opportunity to speak on inflation, interest rate, recapitalization in the banking industry, cryptocurrency, bond market and whole range of other issues. The governor said the bank will soon issue a statement on the operations of cryptocurrency in the country and acknowledged its importance to young Nigerians.
On interest rates, he acknowledged it’s still uncomfortably too high, but noted that moderation would soon set in and lending rates will begin to slide south; and with the disappearance of arbitrage in the FX market, the banks should begin to fund the real sectors. There are five months left to the March deadline on recapitalization. Cardoso said many banks have already met the threshold (N500 billion for international banks; N200 billion for national and N50 billion for regional), but those that are unable to achieve the target within deadline should be prepared to downgrade their license or merge with others.
Join our WhatsApp ChannelBut it was the governor’s announcement on the CBN’s use of AI in managing monetary policy that captivated attention most because such applications undoubtedly has far-reaching implications. The CBN has always grappled with myriads of challenges like inflation volatility; external shocks due to fluctuations in commodity prices; exchange rate volatility; disconnect between policy rates and lending rates; fiscal challenges; security challenges and limited institutional capacity in managing its monetary policy. By adopting AI, the CBN hopes to address these problems and achieve a lot more, notably in accuracy and timeliness of its monetary policy forecast. The bank should also be able to process vast amounts of data like texts, images and statistics to provide a more comprehensive understanding of economic trends. AI algorithms is capable of identifying complex patterns and relationships in data, thus enabling the CBN to make more accurate predictions about inflation, growth, and other key economic indicators.
The CBN will also process real-time analysis of economic indicators like unemployment, GDP, balance of trade, purchasing managers’ index, allowing central banks to respond quickly to changes in the market. The Tinubu administration has often spoken of its determination to achieve a GDP of $1 trillion by 2031. Many analysts have debated the feasibility of this goal. With AI, the CBN should be in a position to advise the government on the practicability and possibility of building a trillion dollar economy in just under six years. There should be a limit to political sophistry. The technology can easily provide current estimates of GDP growth and inflation and help identify potential risks and vulnerabilities in the financial system.
Coups rumours and uncertainties
Last week, Nigeria’s military authorities announced that some senior military officers have been arrested and were under investigation for gross indiscipline and violation of military ethics. The cryptic announcement set off a chain of speculations in the media, with some reporting that the officers were arrested for a coup that was set to take place on October 1. The Defence Headquarters soon dismissed the reports, insisting that its earlier announcement did not mention a coup. While the DHQ is busy denying, some newspapers are digging into the story. Premium Times and Sahara Reporters were the first to boldly report that the officers are investigated for an alleged coup plot. Daily Trust of October 20 went further to report that ‘’a former governor from one of the Southern States is said to be under investigation for his alleged connection to the army officers detained over an alleged coup plot’’. The paper says the former governor had allegedly financed the plot which was scheduled to take place on October 25. I have since compiled a list of all former governors from the 17 Southern states. Many of them are too old – some in their late 80s.
Nigerians are waiting anxiously for details of this story and the earlier the military announces its findings, the better it is for for the polity and the health of our democracy. Rumours of coups create uncertainties and anxieties and are capable of weakening the polity. This is why it’s not healthy for the authorities to keep the nation in suspense for long. During the Second Republic, the Shagari administration promptly announced arrests of certain military officers and civilians for complicity in alleged coup plot. They were subsequently tried and jailed by the Federal High Court in Lagos (not military tribunal). During the military rule between 1984 and 1999, several coups and coup plots were announced. But last week’s statement by the Defence Headquarters would be the first indication of such a plot since the return to democracy in 1999. The revelations of the identities of the individuals implicated in the latest attempt and the details of their plot will make an interesting reading this yearend.
Etim Etim
ETIM ETIM is a journalist, banker and author. He has been a member of the Editorial Board of The Guardian, a Regional Manager in Access Bank and is currently a Columnist in Prime Business Africa, The Cable and Businessday newspapers.
He is also the Chief Executive of Stein Meyer Communications, a major media consultancy and the author of the best-selling book, "Akwa Ibom Heroes: Inside Story of the Fight for Abrogation of Onshore-Offshore Oil Dichotomy" and co-author of another book, "Osinbajo Strides: Defining Moments of an Innovative Leader".
