On the back of the recovery seen in the economy in the last one year, the Central Bank of Nigeria (CBN) said Nigeria’s economy still remains fragile.
Godwin Emefiele, governor, CBN, disclosed this at the opening of the two-day 12th Bankers’ Committee Retreat which began in Lagos on Tuesday.
“The CBN is focused on strengthening the fundamentals of the Nigerian economy, by using mostly innovative and sometimes extraordinary measures to diversify the economy, boost domestic productivity, and reduce our import dependence.
“Though the economy is recovering, growth remains fragile, below potential”, Emefiele said.
In support of the recovery efforts, Emefiele said the bank deployed more than N3.5 trillion, which is about 4.1 percent of Nigeria’s GDP, to support critical sectors including agriculture, manufacturing, healthcare, electricity, and construction.
He said, “Other CBN policy measures that we took to help the economy recover include, a reduction of the monetary policy rate from 13.5 percent to 11.5 percent to spur lending, reduction of the interest rate on all CBN intervention loans from 9 percent to 5 percent and extension of the moratorium on principal repayments for CBN intervention facility to March 2022.
“Others are regulatory forbearance for banks to restructure loans to sectors severely affected by the pandemic, creation of a N400 billion Targeted Credit Facility for households and small and medium enterprises. Of this, nearly N370 billion has been released to over 800,000 beneficiaries and introduction of a N1 trillion facility for local manufacturing and production in critical sectors. So far, 53 manufacturing, 21 agriculture-related, and 13 service projects are being funded from this facility.
“There was also creation of a N200 billion healthcare intervention fund for pharmaceutical companies and healthcare practitioners to expand and strengthen the capacity of our healthcare institutions, mobilization of key stakeholders in the Nigerian economy, under the Private Sector Coalition Against COVID-19 (CACOVID) team that raised N39.65 billion to tackle the scourge”.
He added that these initiatives helped to spur and support the recovery of the economy and re-align general macroeconomic conditions.
“Owing to these policy actions, Nigeria exited the recession in the 4th quarter of 2020 with a growth rate of 0.11 percent, which improved to 0.51 percent in 2021q1. Supported by accommodative measures, growth continued to strengthen in the second quarter of and third quarter of 2021 with robust growth of 5.01 percent and 4.03 percent, respectively. This rebound was fundamentally driven by non-oil activities.“Furthermore, inflation moderated for seven consecutive months, from 18.17 percent in March 2021 to 15.99 percent in October 2021. Our external reserves rose to over $41.5 billion in October 2021, supported by demand management measures, the Eurobond inflow of $4 billion and the IMF’s SDR.
Going forward, Emefiele said continued implementation of efforts to boost credit to productive sectors is required to sustain the recovery, quicken growth, and improve the livelihood of Nigerians.
“With population growth at about 2.7 percent annually, it is important that we continue to deploy measures that will enable our economy to attain faster and balanced growth rates of over 5 percent on an annual basis.
“It is in this regard that the CBN recently undertook the following initiatives to build and strengthen the resilience and self-sufficiency of the Nigerian economy. One of them is the 100 for 100 Initiative. Under this programme, targeted credit of up to N5 billion will be provided to 100 firms every 100 days. Selected firms will be those investing in Greenfield projects, significantly able to create employment opportunities, and use local raw materials. The initiative will also support firms producing goods for the export market.
“The CBN is focused on building a robust payment system in Nigeria which is cheap, fast, efficient, and safe. With the growing pace of digitization globally, we will continue to leverage digital channels in fulfilling this objective. Reflective of the confidence in our payment system, between 2015 and 2020, about $700 million has been invested in firms run by Nigerian founders.”
Another giant stride is the launch of the eNaira. As the first central bank digital currency in Africa and one of the first in the world, the eNaira will foster greater financial inclusion using digital channels, support cross-border payments for businesses and firms, and provide a reliable channel for remittance inflows into the country. The eNaira will ensure that Nigerians in remote areas can conduct financial activities using their digital devices at little or no cost.
With a seed capital of N1 trillion (about US$2.5 billion), the CBN, in partnership with the AFC and the NSIA, set up the Infrastructure Corporation of Nigeria (InfraCorp) to raise over N15 trillion and support critical infrastructure investments.
Lagos State governor, Babajide Sanwo-Olu, who was the special guest at the retreat, said the state is grateful to the CBN and the Bankers’ Committee for their role during the pandemic.
“We are a major beneficiary of the interventions by the CBN and the Bankers’ Committee during the pandemic and the people of Lagos State are grateful. Your help and assistance make the impact of COVID bearable.
“One of the things we learnt during the pandemic was that it opened the eyes of the people in seeing areas where effective diversification can take place. The way to go is that efforts should be placed on economic diversification”, Gov. Sanwo-Olu said.
