The interventions of the Central Bank of Nigeria (CBN) from the onset are intended to address noticeable challenges in the economy and its key productive sectors.This initiative has assumed a greater dimension with COVID-19 pandemic, reports Group Business Editor Simeon Ebulu
The COVID-19 pandemic was not in view when the Central Bank of Nigeria (CBN) initiated and vigorously implemented its intervention programmes across the various sectors of the nation’s economy.
Somehow, after over five years since the interventions commenced, the policy has, by coincidence, turned out as about the only safeguard, or hedge the nation can point to against the ravaging twin catastrophes of the economic collapse and health challenges induced by the global coronavirus spread.
The interventions were intended to revamp and propel the productive capacities of the economy in its various facets, ranging from agriculture to manufacturing, aviation, rejuvenate the Micro Small and Medium Enterprises (MSMEs) growth resulting in the establishment of various start-up schemes, fashion and design, mining and entertainment and hospitality, among others, with the aim of refocusing the economy from its dependence on revenue (over 90 per cent) from crude oil exports and other related petroleum products.
The CBN, by the intervention policy, conceived a scenario where as much foreign exchange earnings would be derived from mining and export of primary, processed and semi-finished goods, just as is the case with crude oil, especially in areas where Nigeria has strategic comparative advantage.This policy was also designed to fill the obvious noticeable void in the fiscal space.
Some critics have, however, tagged this an unwarranted shift of the apex bank from its core statutory function of monetary and interest rate management.
That, however, is not the absolute truth as the CBN Governor, Godwin Emefiele has explained several times, that the apex bank also has the mandate, ipso facto, to function as a government economic development agency.
“It is no longer news that the CBN has over the years been directly or indirectly involved in the financing of growth-enhancing programmes and projects of the Federal Government.
The involvement is incidental to the bank’s core mandates and part of its development and corporate social responsibilities, to accelerate growth and development of the Nigerian economy,” he said.
He added: “There are various schemes and programmes either implemented directly in conjunction with the Federal Government, or through specialised financial institutions.
In this regard, the bank’s intervention initiatives encompass real sector programmes, particularly, agriculture, small and medium enterprises, infrastructure and youth empowerment,” pointing out that the bedrock of these interventions is diversification.
He said: “Diversification of Nigeria’s economy is believed to be the only viable way to survive the environment of global economic uncertainty with the volatility of oil prices.”
The CBN chief, who spoke while declaring open a CBN Executive Seminar for management and senior staff members, stressed: “Privatisation certainly presents an opportunity for the most competitive and strategic option for Nigeria in the light of her current developmental challenges.”
He listed sectors that Nigeria can effectively practise this to include the digital economy, manufacturing and agriculture.
He said manufacturing creates a lot of jobs, the middle class, and transforms the society, adding: “These are areas we need to really focus on.”
Emefiele acknowledged that Nigeria has over the years depended on crude oil exports for its foreign exchange earnings and financing of government activities, pointing out that the recent developments in the international oil market have shown that this pattern is no longer sustainable, as financing of government programmes has become difficult with the attendant implications for macroeconomic stability and economic growth.
The decline in the price of oil, the CBN chief stated, has not only resulted in lower forex earnings for the country, but also in the decline in accretion to external reserves and pressure on the foreign exchange market, as well as constraining the government’s ability to deliver on its mandate.
The CBN’s interventions are intended overtime, to upscale the abilities in the economy, be it in agriculture, aviation, textiles, information communication technology, manufacturing, SMEs and the likes, to stand up and be counted as veritable contributors to the economic fortunes.
The apex bank is up against the notion that oil and its by-products only, should contribute the most to an economy.
Oil has its place, no doubt. The battle by the CBN is to properly situate oil as being among several others contributing to the economic fortunes, and thus demystify it as the sole contributor (providing about 90 per cent) of the Federal Government’s foreign exchange revenue.This CBN agenda should be embraced by all and not seen otherwise.
Revenue from crude oil are being unduly celebrated here as though they are exclusive to Nigeria. The notion is so highly revered here in our clime as though there are no countries elsewhere thriving, that have no drop, or a barrel of crude oil to their credit.
Nigeria, reputed to be the sixth largest oil and gas producer by Organisation of Petroleum Exporting Countries (OPEC) ranking, is the global capital of extreme poverty. It took over the baton in that obnoxious relay race from India.
Where then is the place of oil that all of our industries, natural and human resources are now subsumed and consumed by it?
It is only the realisation that a determined and focused race by the nation to exit the zone of total dependence on oil revenue, as is being propagated by the CBN that will salvage Nigeria from its economic quagmire and the grip of its suffocating relevance.
OPEC said Nigeria earned $206 billion from oil in five years (2015-2019). Whether that figure is inclusive of what went to the International Oil Companies (IOCs) is another matter.
Be that as it may, does that then signify that every factor of production, or resource should cease from making any contribution to the Gross Domestic Product (GDP), or national cake, as we are wont to call it! Make no mistake, most oil producing countries are busy steering their economies away from total dependence on crude oil.
The United Arab Emirate (UAE) is shifting its revenue base from oil to commerce and tourism, Saudi Arabia, the giant of them all, is already moving in similar direction, ditto Qatar and Bahrain.
Even oil, as an all-time useful energy resource, is on its way out of the centre stage to the backstage, which is why the CBN’s strident push to make room for other sectors to start making meaningful contributions to the GDP should be seen and embraced as a welcome development.
The interventions
The CBN’s push to revamp the various economic sectors and make them viable, has assumed greater dimension, transcending the initial boundaries that were envisaged.
No thanks to the outbreak of the COVID-19 pandemic. Notwithstanding the development, the bank has not only sustained the programme, it has added others to the scheme, expanding its scope to accommodate the new and challenging realities brought about by the global coronavirus infections.
N100b health sector intervention
The CBN N100 billion provision is to support the health sector in response to the COVID-19 pandemic. It is part of proactive measures to cushion the impact of the coronavirus pandemic on the economy and as an intervention for the health sector.
“This is with a view to strengthening the sector’s capacity to meet the potential increase in demand for healthcare products and services.
Specifically, the scheme is to provide credit to indigenous pharmaceutical companies and other healthcare value chain players intending to build or expand capacity.
The Scheme is expected to increase private and public investment in the healthcare sector, facilitate improvements in healthcare delivery and reduce medical tourism to enhance foreign exchange conservation,” the bank’s Director, Financial Policy and Regulation Department, Kevin Amugo, said.
Over N107 billion of this facility is reported to have been disbursed accordingly.
N50 billion
To tackle the COVID-19 pandemic across all strata of the economy, the CBN introduced a N50 billion Targeted Credit Facility as a stimulus package to support households and the MSMEs, particularly those impacted by the coronavirus.
Those eligible to access the fund based on the guidelines released by the CBN are households with verifiable evidence of livelihood adversely impacted by COVID-19.
Others are enterprises with verifiable evidence of business adversely affected as a result of the pandemic and those with bankable plans to take advantage of opportunities arising from the pandemic.
According to the CBN guidelines, activities covered under the scheme are agricultural value chain activities; hospitality, including pharmaceuticals and medical supplies, and airline service providers.
As at the last count, over N10 billion has been disbursed, or accessed by qualified firms and affected householders.
Rate cut
As part of its monetary and financial policy measures to further mitigate the impact of the COVID-19 pandemic on households, and businesses, the CBN approved regulatory forbearance for the restructuring of credit facilities in the Other Financial Institution (OFI) sub-sector, as contained in a circular by the apex bank reducing interest rates on its facilities through participating financial institutions from nine per cent to five per cent per annum
The circular by Amugo stated that CBN Intervention facilities availed through participating OFIs are granted a further one-year moratorium on all principal repayments, effective March 1, this year, saying the new policy measure by the apex bank is in continuation of its intervention in the nation’s economy so as to help manage the crisis caused by the coronavirus pandemic and reduce its effects on household and businesses.
Before the recent interventions aimed at mitigating COVID-19 pandemic impacts, the CBN had initiated other pre-COVID-19 interventions in agriculture, including the Anchor Borrowers Programme (ABP), manufacturing, aviation and power, have been done to enhance the productive capacity of the economy and grow the GDP.
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