Tag: Yemi Kale

The Group Chief Economist & Managing Director, Research and Trade Intelligence, Afreximbank, Dr. Yemi Kale has listed dangers of dollarisation to economic development.

In a dollarized economy, there is extended use of dollars for purchase of durable goods, real estate, capital goods, and carrying out high- value transactions.

In his keynote at the Vanguard Economic Discourse held yesterday in Lagos, Kale, who was the former Statistician General, National Bureau of Statistics (NBS), said hoarding of foreign currency in a high inflation environment like Nigeria is common practice.

He said such currency hoarders are only interested in preserving the value of their funds, but the results of their actions are devastating to the economy.

Kale explained that such practice leads to softening of consumer demand, slow Gross Domestic Product (GDP) growth, decline in private sector investment, rise in unemployment, and poverty becomes more entrenched.

According to Kale, the outcome is unmistakable: hardship—deep, persistent, and widespread— and felt most acutely at the household level.

Read Also: NPA MD urges public to leverage simplified export processes to boost business opportunities

“Businesses, too, adapt defensively in environments characterized by uncertainty and macroeconomic turbulence. Faced with volatile market conditions, unpredictable policy shifts, and elevated costs, firms often adopt a risk-averse posture,” he said.Kale said that hiring plans are deferred, investment pipelines are stalled, and operational expenditures are trimmed to preserve liquidity.

“The emphasis shifts from growth to survival, and from innovation to cost containment. This weakens private sector activity, limits job creation, and suppresses productivity and competitiveness,” he said.

According to Kale, governments, meanwhile, face their own set of constraints in uncertain economic environments.

“Revenue forecasting becomes increasingly unreliable due to volatile commodity prices, exchange rate fluctuations, and inconsistent tax performance,” he added.

“In response, policy often shifts toward reactionary short-term, and often poorly thought out and badly implemented populist interventions—such as expanding public sector employment, increasing cash transfers, or, in more constrained scenarios, resorting to monetary financing to bridge fiscal gaps,” he said.

According to him, while these measures may provide temporary relief or political expediency, they carry significant long-term costs.

“They exacerbate fiscal deficits, undermine macroeconomic stability, and erode the credibility of public institutions. Just as importantly, such reactive policies can crowd out productive investment, distort incentives, and reduce the confidence of both domestic and international investors. In effect, the attempt to manage volatility and curtail economic hardship through short term politically expedient means often ends up entrenching it,” Kale said.

He said that investors react to the environment by seeking safe havens, demanding higher returns for risk, and favoring short-term portfolio investments over long-term Foreign Direct Investment.

“The consequences are familiar and deeply disruptive: capital flight accelerates, asset valuations decline, and renewed pressures mount on the domestic currency. In effect, investor behavior becomes both a reflection of and a reinforcement of underlying fragilities—tightening the feedback loop between macroeconomic instability and constrained investment flows,” he said.

Furthermore, financial institutions tighten lending conditions, raise interest rates, and retreat to low-risk assets. Credit becomes more expensive and less available, weakening financial intermediation and further depressing economic activity.

“As policymakers and business leaders, we must reframe our understanding of economic disruption—not as a technical challenge, but as a social emergency,” he stated.

Also speaking, President of NACCIMA and Chairman of the Organized Private Sector of Nigeria (OPSN), Dele Kelvin Oye, called for the promotion of home-grown industries in Nigeria.

According to Oye, who is chairman of the occasion, the move  is essential for nurturing economic resilience and sustainable growth. By prioritizing local production and supporting small and medium-sized enterprises (SMEs), Nigeria can harness its abundant resources, stimulate job creation, and reduce reliance on imports.

“Encouraging investment in sectors such as agriculture, manufacturing, and technology will not only enhance domestic value chains but also fortify the economy against global market fluctuations,” he said.

“Additionally, government policies that provide incentives for local entrepreneurs, improve access to financing, and invest in infrastructure will create a conducive environment for innovation and competitiveness. Ultimately, nurturing home-grown industries will contribute to a more self-sufficient economy, empower communities, and drive long-term prosperity for all Nigerians,” he said.