By Ify Onye InvestAdvocate

Lagos INVESTADVOCATE)- Dr. (Mrs) Omolara Akanji, former Director, Trade & Exchange Department of the Central Bank of Nigeria (CBN) Wednesday advised the Nigeria’s Central Bank to account for the Informal Sector in its Monetary policies.

Dr. (Mrs.) Omolara gave this advice at the Zenith Bank Plc’s sponsored Bi-monthly Policy discourse for Financial Institution Correspondents Association of Nigeria (FICAN) titled “An Overview of Monetary Policy Transmission Mechanism in Nigeria” held at the CBN’s office in Lagos Nigeria.

While reacting to a question on the paucity of data on the Informal Sector after her lecture, she affirmed that the Nigerian economy is very large with an equally large Informal Sector; therefore either the CBN or the National Bureau of Statistics (NBS) cannot be blamed for this.

“On the paucity of data, it is not an indictment on the CBN or NBS. This economy is very large and equally has a large informal sector which is not regulated and they don’t have reason to send their end of day sales to the CBN. The only place you can capture them is still the Financial Market”

Where they would be able to say the money that enters the Banks Balance Sheet or leaves by way of withdrawal is by the Informal Sector; because they have to deposit and withdraw” she said.

According to her, in terms of the activities of the Informal Sector, they are not yet captured and therefore needs financial inclusion.

“But in terms of their activities, it is not yet been captured, and that’s why I said by the time we get financial inclusion, the Informal Sector will also have a point of service as we have in the United Kingdom; where we can take a credit card to a corner shop and buy whatever we want to buy with it and it’s registered. And it goes straight to your Bank and the quantity of what you have brought goes straight to the Bureau of Statistics and that is captured until we have that financial inclusion, it is   the structure of our economy that makes it looks so”.

On the percentage of the Informal Sector that makes up the Nigerian Economy, Dr. (Mrs.) Akanji put the figure at between 45 to 50 percent (45.50%) in the review period.

“From my studies I had put the Informal Sector between 45 to 50 percent. It may not be because my study was not being comprehensive; it was a Sector study. For the period I did the study, why did it go down, it’s because some people are putting it at a higher figure. However, I was able to capture that the currency in circulation had reduced tremendously; which is a proxy measure of informal sector; currency in circulation compared with total money supplied. In the early 80’s it was over 80 to 90 percent; but now it has come down to over 40%” Dr. (Mrs.) Akanji said.

This is coming on the heels of the decisions taken at the Monetary Policy Committee (MPC) meeting held Monday 21 November 2011 in Abuja Nigeria.

Other decisions reached include the retaining of its Lending Rate at 12 percent (12%) by the Nigeria’s Central Bank to help boost the Naira and control price pressures in its economy.

Also on the decision is maintaining the current symmetric corridor of +/-200 basis points around the MPR and the Cash Reserve Ratio (CRR) maintained at 8.0%.

It was agreed that the mid-point of target official exchange rate should be adjusted from N150.00/US$1.00 to N155.00/US$1.00 and maintain the band of +/-3.0%.

This means that the Naira should float roughly within a range of N150.00/US$1.00–N160.00/US$1.00, unless extraordinary shocks necessitate a change in stance.

Another decision at the MPC meeting was to encourage the CBN to continue to seek convergence between wDAS and interbank rates to reduce arbitrage opportunities, avoid speculative attacks, and the emergence of a multiple-exchange rate environment.