BEYOND THE DROP IN INTEREST RATE.

Finally the Central Bank of Nigeria has announced reduction in base interest rate in Nigeria from 13% to 11%.
Of course, to some people going down by 2 percentage points is not good enough but that is not the issue. Minus 2% of even one million is something not to talk of as a  discount on one billion and above loan demand.
But then, to expect that with the reduction all should now be well with businesses in Nigeria will amount to living in a fools paradise.  This is because, yes it should reduce the financing cost but if this is not accompanied very quickly by fiscal measures to reinforce the gains and help propel more productive capacity it will turn to be a wasted bullet.
For example, one very high component of cost in Nigeria right now is energy cost. The cost of powering production machines, the mounting and increasingly unpredictable bill for running distribution vehicles and transporting work force to and from work; and cost of keeping in touch via communication channels that depend on generated power.
Where some companies are already connected to gas supply, the cost and reliability of supply remains an issue.
For some companies, even solve all these and you are just beginning because the more crucial demand issue remains unresolved. For many this stems from dumped imports; smuggling; second hand imports; fake products; substandard processes and continued dependence on foreign franchise amidst inadequate or suppressed local innovation.
It all boils down to this: So far since the dawn of the Buhari administration only the Central Bank of Nigeria has taken real hard core decisions.
Every one else has been preoccupied with the war against Boko Haram or war against corruption. Yet, even in those battle fronts we have had more of chest beating grandstanding with eyes fixed on public applause.
Yet, let's face it, even in our homes, we all know that when things are really tough, the best option is not to seek most popular approach but to engender understanding and cooperation while taking the hard core decisions that must be taken about how many square meals a day, which school junior should attend now and indeed, where the whole family should stay to reduce accommodation costs etc.
Hence, one prays that whatever gains that flow from the interest rate reduction do not get check mated by other high cost pressures or lack of demand for locally produced goods and local content.