MUST READ| ‘Too many public holidays hurt the economy and the financial system’

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To be honest, I am uncertain how relevant this article applies to a country such as Nigeria. A country that defies all economic theories.  What I am certain of is that too many holidays can’t be good for an economy. In countries such as the United Kingdom and America, they can tell you dates of public holidays in years to come. Everyone plans around the holiday calendar. Not in Nigeria, where holidays are an add-on. Oh, sorry, we had already announced some holidays based on certain elements. However, we got it wrong. We can add one more public holiday, or can’t we? This is how Nigeria is governed. By the way, FG Adds Extra Day, Thursday 7th July As Eid-el Fitr Holiday.’ A report by the Centre for Economics and Business Research in UK suggested that each bank holiday costs the UK economy £2.3bn. Can any government official tell us how much it costs the Nigerian economy? – Jide salu

holiday-jide-saluOn more than one occasion, I have written about our holiday policies. I consider them anachronistic. Too many holidays are disruptive of the economy’s forward progress.

The cost of excessive holidays to the productive base. 

A reasonable set of holidays spread over the year gives the nation’s workers and businesses pause to observe dates of national significance and reverence.

When the holidays exceed this reasonable limit, as will be seen in the note on holidays of 2015 below, the nation’s productivity is likely to be adversely compromised. I have explained this in a reference to holidays and national development.

Untoward effects on the banking and financial system. 

It is also not often understood that intermittent and unplanned holidays can cause damage to the efforts designed to make the country’s financial and capital markets catch up with global trends.

Our financial system handles a large amount of transactions that principally involve all the banks in the country – the commercial banks, thrift/savings banks, rural banks and all quasi-banking institutions.

In turn, these institutions facilitate the transactions of all economic agents like you and me – investors, savers, depositors, consumers, manufacturers, traders etc.

Thus, when holidays are unpredictable, untold havoc is wrought on the clearing of important financial transactions.

Financial settlement as a function akin to a public utility. 

In a truly efficient financial system, settlements should be made in real time.

There are prudential reasons why the central bank might use banking days and hours as helpful breaks in the settlement process to keep the nation’s financial system safer.

But if we are to move forward more boldly into the future, some reality check needs to be exercised. Of course, we make sure the fiscal and monetary authorities do their job of stabilising the country’s macro-economy.

With a reasonable set of holidays and the usual weekends, it might be tolerable to keep pace even if somewhat slowly with modern banking. But in a country with erratic and large numbers of public holidays and non-working holidays, the nation’s financial growth could be stifled.

Extracts culled from PhilStar
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