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Tag: Central Bank of Nigeria (CBN)

  • CBN, BoI mull financing window for Edo Creative Hub

    The Central Bank of Nigeria (CBN) and the Bank of Industry (BoI) have disclosed plans to partner with the Edo State Government to ease access to finance to creators at the Edo Creative Hub, an initiative of the Edo State Governor, Mr Godwin Obaseki to rejig the state’s entertainment industry.

    The finance windows are expected to come from the programmes extended to the entertainment industry in an effort to diversify the Nigerian economy.

    Senior Special Assistant to the Edo State Governor on Investment Promotion, Mr Kelvin Uwaibi, who said this in a chat with journalists, said the opportunity came in the wake of the Stakeholders Meeting with actors in Nigerian’s entertainment industry held in Benin City. The stakeholders meeting was organised by EdoJobs, Edo State Investment Promotion Office, Trace TV and Market Development in the Niger Delta (MADE), which is funded by the United Kingdom’s Department for International Development (DFID).

    Read Also: CBN gov explains how Nigeria came out of recession

    He said the state government is working on a creative industry policy document that would provide the framework for the industry in the state and set parameters for government intervention and incentives.

    According to him, “We had a productive chat with members of the creative industry and are currently working on the entertainment industry policy document. The CBN and BoI have made commitments to ease access to finance and we are excited about that. This will set the tone for government’s engagement with the actors in the industry and set modalities for the incentives we will be providing.”

    He added that the plan was to ensure that the indigenous actors in the industry benefit from the input of those in the Diaspora, ensuring that the funds to be attracted are domiciled in and used by the actors across the different value chain in the state.

    “Our intention is to raise the standard. There will be a lot of capacity building. In no distant time, people from Edo will dominate the entertainment scene in Nigeria, as they will be getting the needed incentives to truly make an impact,” he added.

     

     

  • UPDATED: Growth, price stability don’t happen together, says Emefiele

    Central Bank of Nigeria (CBN) Governor, Godwin Emefiele has said that an economy is unlikely to achieve growth and price stability at a go, adding that one is likely to displace the other. He likened the scenario to one wanting to eat his cake and having it at the same time.

    “You want growth and price stability? You can’t eat your cake and have it?,” he said.

    Read Also: How Nigeria came out of recession, by Emefiele

    Emefiele is currently speaking at the University of Ibadan Distinguished Leadership Lecture Series, holding in Ibadan and organised by the University in collaboration with the apex bank.

    He said the CBN took several unconventional plans to keep the economy going, and stabilize the exchange rate. Some of the measures include the restriction of 43 items that can be produced locally from accessing foreign exchange officially, the introduction of the Investors and Exporters Forex Window and capital controls.

    Details Shortly…

  • Emefiele pledges five-year plan to diversify nation’s economy

    Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele says CBN  in the next five years, will aggressively pursue policies that will further diversify the Nigerian economy.

    Emefiele said this in an interview with newsmen on Friday in Nsukka, Enugu State,  after a Special Convocation of the University of Nigeria (UNN), where he was conferred with an Honorary Doctorate Degree in Business Administration.

    The pledge was coming after the Nigeria Senate on Thursday confirmed Emefiele for a second term in office as CBN Governor, starting June 3.

    Emefiele said the CBN in the next phase of his administration would consolidate on already existing policies.

    “Nigeria belongs to all of us and we have a role to play to make sure things get better.

    “I will also emphasise that Nigerian policy makers are good at developing policies, but the biggest challenge of the Nigerian economic policy is that people try circumventing policies.

    “Given this opportunity now,  we will make it very difficult for people to circumvent economic policies.

    “We must learn to respect our policies. If you don’t respect the economic policies of this country, and you fall short of our economic policies as an economic saboteur, you will be dealt with,” he said.

    Emefiele who is the 11th CBN Governor,  began his five-year tenure on June 3, 2014.

    Some of the major policies undertaken by the apex bank in the last five years included the Anchor Borrowers’ Programme which aimed at increasing the country’s local food production and conserving the foreign reserves.

    The CBN took the decision to also ban 41 items from accessing foreign exchange through official routes to encourage local production of the items and simultaneously conserve the nation’s depleting foreign reserves.

    Since then, the CBN had raised the number of items affected on the list to 43, with the inclusion of fertiliser and textile products.

    Some of the items not valid for foreign exchange at the Nigerian window included rice, cement, margarine, palm produce, beef, vegetables, poultry and eggs, private airplanes, wooden doors and Iron rods, among others.

    Read Also: Senate okays CBN Governor Emefiele for five more years

    The CBN also introduced the multiple foreign exchange system, which led to the creation of the Inter-bank/Wholesale, Invisible, Small & Medium Enterprises (SMEs) and the Investors/Exporters’ windows.

    Also, in 2018, the CBN signed a bilateral currency swap agreement with the People’s Republic of China worth about 2.5 billion dollars.

    The currency swap agreement was  designed to aid trade transactions between China and Nigeria and remove the need to first source for U.S. Dollars before payments for transactions involving the two countries.

    The CBN through the Banker’ Committee and in collaboration with all banks in Nigeria also inaugurated a centralised biometric identification system for the banking industry tagged: “Bank Verification Number (BVN)”.

    NAN

  • Apex bank begins move to revive textile industry

    Plans are underway by the Central Bank of Nigeria (CBN) to revive at least 20 textile companies before the end of this year.

    The apex bank has taken the first step in the journey to revive the sector with the kick-off of input distribution to 100,000 cotton farmers and the cultivation of 100,000 hectares of land in 23 states.

    To realise the ambitious dream, CBN Governor Godwin Emefiele has inaugurated the Textile Revival Implementation Committee.

    Members of the committee are drawn from the CBN, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), Kaduna State, Federal Ministry Power Works and Housing, Nigeria Customs Services, Federal Ministries of Finance and Agriculture and Rural Development, Ministry of Industry Trade and Investment and Nigerian Export Promotion Council.

    The committee which was inaugurated yesterday in Abuja, was charged by the CBN governor to resuscitate at least 50 textile firms by the end of 2023; collaborate with stakeholders to identify, name and shame textile smugglers in Nigeria as well as develop a framework for eradication of smuggling and dumping of textile products into the country, facilitate the production of 200,000 hectares of cotton fields by 2020 and maintain an annual increase of 100,000 hectares over the next three years.

    Read Also: CBN only apex bank without a board, says Sani

    The committee is also expected to work assiduously to deliver a minimum of 50 megawatts of captive power to Cotton, Textiles and Garment (CTG) firms in the interested states by 2021, and facilitate the effective pricing and delivery of gas, black oil and diesel to CTG firms in Lagos and other interested states to enhance their power generation and consumption.”

    Speaking at the event, the CBN governor lamented that “the CTG sector within the last 20 years had suffered a lot of difficulties especially, low cotton production, poor power and transport infrastructure, obsolete production lines, smuggling and counterfeiting, inadequate local patronage, high cost of production, and multiple taxation among others.

    “Smuggling of textile goods alone has been estimated to cost the nation over $2.2 billion. Today, most of the textile factories have all stopped operations and the workforce in Nigeria’s textile industry stands at less than 20,000 people. In addition, a large proportion of our clothing materials are imported from China and countries in Europe.”

    Speaking on the rationale behind the inauguration of the textile revival committee, Emefiele noted: “A consolidated approach of this magnitude will afford us economies of scale, synergy in resource utilization and provide a holistic solution to harnessing the potentials of the CTG sub-sector in Nigeria.”

    He was optimistic that the CBN would resuscitate the cotton belts nationwide and grow the value chain till the last mile of textile production.

    “We will need to set timelines for these deliverables and charge the technical committees to develop road maps that must be achieved within the set timelines,” he said.

  • CBN to revive 20 textile companies

    Plans are underway by the Central Bank of Nigeria (CBN) to revive at least 20 textile companies before the end of the 2019.

    The apex bank had taken the first step in the journey to revive the sector with the flag-off of input distribution to 100,000 cotton farmers, as well as cultivating 100,000 hectares in 23 states of the federation.

    To realise this ambitious dream, the CBN Governor Mr. Godwin Emefiele has inaugurated the Textile Revival Implementation Committee.

    Members of the committee are drawn from the CBN, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), Kaduna State, Federal Ministry Power Works and Housing, Nigeria Customs Services, Federal Ministries of Finance and Agriculture and Rural Development, Ministry of Industry Trade and Investment and Nigerian Export Promotion Council.

    The committee, which was inaugurated on Thursday in Abuja, was charged by the CBN Governor to resuscitate at least 50 textile firms by the end of 2023; collaborate with stakeholders to identify, name and shame textile smugglers in Nigeria as well as develop a framework for eradication of smuggling and dumping of textile products into Nigeria, facilitate the production of 200,000 hectares of cotton fields by 2020 and maintain an annual increase of 100,000 hectares over the next three years.

    The Committee is also expected to “work assiduously to deliver a minimum of 50 megawatts of captive power to Cotton, Textiles and Garment (CTG) firms in the interested states by 2021, and facilitate the effective pricing and delivery of gas, black oil and diesel to CTG firms in Lagos and other interested states to enhance their power generation and consumption.”

    Emefiele lamented: “The CTG sector within the last 20 years had suffered a lot of difficulties especially, low cotton production, poor power and transport infrastructure, obsolete production lines, smuggling and counterfeiting, inadequate local patronage, high cost of production, and multiple taxation among others.

    “smuggling of textile goods alone has been estimated to cost the nation over $2.2 billion. Today, most of the textile factories have all stopped operations and the workforce in Nigeria’s textile industry stands at less than 20,000 people. In addition, a large proportion of our clothing materials are imported from China and countries in Europe.”

    Speaking on the rationale behind the inauguration of the textile revival committee, Emefiele noted that “a consolidated approach of this magnitude will afford us economies of scale, synergy in resource utilization and provide a holistic solution to harnessing the potentials of the CTG sub-sector in Nigeria.”

    He was optimistic that “the CBN would resuscitate the cotton belts nationwide and grow the value chain till the last mile of textile production. We will need to set timelines for these deliverables and charge the technical committees to develop road maps that must be achieved within the set timelines,” he added.

  • Governors raised false alarm on recession – CBN

    The Central Bank of Nigeria (CBN) has dismissed the alarm raised by state governors that the economy might relapse into recession.

    CBN Deputy Governor Economic Policy Dr. Joseph Nnanna, who represented the CBN Governor Mr. Godwin Emefiele, dismissed the governors’ claims at the public presentation of the Spring 2019 edition of Regional Economic Outlook (REO) by International Monetary Fund (IMF) in Abuja.

    He said: “We are making smooth progress towards growth and by end of 2019, all things being equal, we are going to likely have between 2.8% and 3% GDP growth rate.

    “Since the third quarter of 2016, when we started coming out of recession, we have embarked on tight monetary policy in all its ramifications.

    ‘’Right now, we are on the path of achieving our price stability goal of single digit inflation.

    ‘’Are we going to witness increased inflation or are we sliding back into recession? My answer is no. But is that adequate?

    “My answer is no. 3% GDP real growth rate is not enough for Nigeria where our population growth rate is 3.2%.

    “Per capita growth rate is still negative but definitely, we are not going through the era of 2016 when we had a recession. That won’t happen hopefully. Not under CBN watch.”

    Read Also: Race for CBN governor heats up

    The major problem afflicting the labour sector, Nnanna said, is more of underemployment than outright unemployment “because majority of Nigerians are employed one way or another but they are functioning below capacity.

    “They are engaged in the informal sector which is not performing optimally. We also have a huge infrastructure deficit.

    “Infrastructure is the major constrain to economic development and growth. This has to be repaired.”

    He urged the governors and other policy makers to tackle the menace of non-inclusive growth because “it is inclusive growth that we need in Nigeria than any other thing.”

  • Govt counts TSA gains despite boycott by MDAs

    Under the Treasury Single Account (TSA), Ministries, Departments and Agencies (MDAs) are to deposit their accruable funds in a single bank account with the Central Bank of Nigeria (CBN). Four years after its implementation began, it has changed the face of public finance management, writes COLLINS NWEZE.

    The handling of the government’s receipts and payments is complex in many developing countries.

    In such countries, the ministries of finance/treasury lack a unified view and centralised control over the government’s cash and resources.

    This meant that the cash that could have been re-injected into system lie idle for months in numerous accounts kept with Deposit Money Banks (DMBs).

    Worst still, the revenue-generating Ministries, Departments and Agencies (MDAs) of government constantly borrow from banks (same funds they saved in the lenders) at exorbitant interest rates to fund government budgets.

    That was the case with Nigeria until September 2015 when the Federal Government began the full implementation of the Treasury Single Account (TSA) policy driven by the Remita, payment software developed and deployed by SystemSpecs to drive the scheme.

    Launched in 2006, Remita is an electronic platform that helps the government, corporate organisations, Small and Medium Enterprises (SMEs) and individuals to make and receive payments without stress. It aggregates multiple bank accounts, giving customers the ability to perform complete e-Transactions.

    The impact of the TSA in public finance management in the last four years depends on who is telling the story.

    For the Federal Government of Nigeria which records about N24.7 billion monthly from the TSA proceeds, the policy is a masterstroke against corruption and misapplication of public funds.

    But for commercial banks, which hitherto relied on funds from MDAs to post huge profits, and turning round to loan same funds to the government at high-interest rates, the policy has been a drainpipe on their revenue.

    In all, the TSA is seen as one of the most significant initiatives undertaken by any government in Nigeria to promote accountability, transparency and fight corruption in the management of public funds.

    It has given government greater control over its finances, tracking its inflow and outflow in an unprecedented manner.

    Analysts explained that apart from lowering the level of corruption, TSA exposes the emerging potential of Nigeria’s financial technology industry. As global competition rises and technology advances, the need to leverage IT for co-creation of value is a major factor for development.

    But the turnaround for TSA implementation was only achieved after SystemSpecs deployed Remita, a local technology software, to drive the project.

    Despite the huge progress made since TSA, grey areas still exist in its implementation. The partial compliance or outright boycott of the policy by certain MDAs such as the Nigerian National Petroleum Company (NNPC) and the Nigerian Immigration Service (NIS) and some Government Owned Enterprises (GOEs) cast aspersions on the commitment of the government to abating corruption in Nigeria.

    Surprisingly, these MDAs renowned for being cesspits of corrupt practices are the institutions actively subverting the policy, which raises the question as to why they are not fully compliant to the policy.

    Furthermore, the House of Representatives Ad-Hoc Committee chaired by Hon. Danburam Nuhu concluded its investigations into the running of the TSA but has failed to make public its findings from the enquiries. This act is in contravention of the 2011 Nigeria Freedom of Information Act which mandates free access to public information and records by the government.

     

    CBN steps in on transaction charge

     

    Of equal importance is the issue of transaction charge since the commencement of the current pricing regime, which has transferred the transaction cost of TSA from the government to the payer, in November 2018. According to a circular released by the Central Bank of Nigeria (CBN) to operators of the policy, non-card payers are required to pay a service fee of N150 plus Value Added Tax (VAT) per transaction with the government.

    This rate of N157.50 applies to every transaction irrespective of the amount being paid. On the other hand, card payers are required to pay a flat fee of N150 plus 0.75 per cent of the amount being paid, subject to a maximum of N1,200 per transaction.

    Financial pundits insist that SystemSpecs, the company powering the policy through Remita, deserves more recognition by the government and payment for service rendered over the years.

    “Without a doubt, the government must acknowledge the nationalism of the company in ensuring successful operation of the policy regardless of the initial issues it encountered at the National Assembly, and most importantly, when foreign companies and software failed,” they said.

    The TSA has been able to consolidate all inflows from government agencies using a single account-Consolidated Revenue Account (CRA) at the CBN. The effectiveness of the TSA since its introduction four years ago has proven that a level of sanity can be achieved in the use of public funds.

    Analysts believe that the TSA has helped the Buhari administration’s anti-corruption fight by flushing out ghost workers and saving the economy from imminent collapse.

    “Remita processes over $30 billion worth of transactions every year, and that’s just within Nigeria,” SystemSpecs’ Executive Director Deremi Atanda said at the yearly Gulf International Technology Exhibition (GITEX) in Dubai, United Arab Emirate (UAE).

    He continued: “There’s also a roadmap to take Remita to Africa. So, if you have the vision to be part of revolutionising payments in Africa at whatever level, driving financial inclusion at the national level, savings, micro-savings and micro-transactions, Remita is best placed to help you achieve that.”

    The Economist says: “TSA may be the biggest coup of all. It replaced a labyrinth of government piggy banks, giving Nigeria more control of its earnings.”

     

    The TSA in brief

     

    The TSA is a bank account or a set of linked bank accounts through which the government transacts all its receipts and payments and gets a consolidated view of its financial status at any given time.

    The TSA policy – initiated by former President Goodluck Jonathan administration but implemented by his successor, the Buhari’s administration – stipulates that all government taxes, levies and tariffs should be deposited with the CBN.

    The funds would subsequently be disbursed to MDAs based on approved rules to ensure accountability in the management of government resources. Several attempts to adopt the TSA in the past were unsuccessful.

    Reason: the CBN lacked the technological know-how to manage the retail aspect of the policy. An e-technology platform, Real-time gross settlement systems (RTGS), initially expected to drive the payment leg of TSA policy was unsuitable for retail payments.

    Prior to this development, every organisation that collects money for the Federal Government stacked cash in Deposit Money Banks (DMBs) where it is left to yield interest over the years for faceless individuals and groups while the government was starved of the funds meant for developmental projects.

    However, one major development that has contributed immensely to the robustness and efficiency of TSA is its integration with financial technology (FinTech). FinTech is an economic industry composed of companies that are trying to provide new financial solutions, which was previously the prerogative of banks. These companies are active in various domains, but they have one common attribute, which is: building and implementing technology, which is used to make financial markets and systems more efficient.

    Besides, payers are able to easily generate invoices for transactions online and make payment to the government through various channels including branches of all commercial banks, select Microfinance banks, Internet banking portals, Point of Sale terminal, cards on Web, Mobile Wallets, and collection agents.

    A payer can easily go to the website of any MDA to identify the item to be paid for and generate an electronic invoice or visit the concerned MDA to obtain an invoice which clearly indicates the amount to be paid for the relevant item/ service.

    TSA payment is evidenced by an automatically generated electronic receipt provided to the payer at the point of the transaction by the bank or sent to the payer’s registered email address.

     

    TSA boosts FinTech sector

     

    According to technology reports, financial technology is one of the fastest-growing industries in the world. It has grown into a N22.3 billion industry with a 75 per cent growth rate recorded in 2015. Global investment in FinTech ventures in the first quarter of last year reached $5.3 billion, a 67 per cent increase over the same period in 2015, and the percentage of investments going to FinTech firms in Europe and Asia-Pacific nearly doubled to 62 per cent, as reported by Accenture.

    In a more recent development, The Bank of England has opened up the UK’s payments systems – the “plumbing”, which facilitates same day money transfers between banks – to organisations that are not banks, giving FinTech startups another step up in their challenge to traditional banks. It’s the latest move by the UK’s financial authorities to foster technology innovation and “level the playing field” between the established institutions and newer ones. Nigeria can hopefully take a cue from this.

    The TSA journey has been a remarkable one. However, huge bottlenecks created by self-serving interests still militate against the full implementation of the policy. Despite its huge gains, the government is not treating the policy as a prized national asset that is helping to drive accountability and stock-taking. There are still some pockets of revenue leakages and financial impropriety all around. TSA is not primed to handle forex for now and this is a major excuse for universities requesting for exemption since their grants are mainly in foreign currencies.

    SystemSpecs’s Chief Executive Officer, John Obaro, said the deployment of Remita has reduced the government’s debt servicing costs, lowered liquidity reserve needs and boosted effective use of surplus cash.

    Obaro said his firm would continue to deliver on the TSA service terms of contract with the CBN despite being owed its earned fees on e-collections. He disclosed that some bank branches have started to turn down the collection of government deposits due to the non-payment of these agreed fees.

    Obaro said: “From our end, we have continued to provide and support the Remita platform, 24 hours a day and seven days a week, for use by citizens for all their payments to the Federal Government. Our continued support for the TSA is fueled by our belief in the enormous benefits the Remita software brings to the implementation of TSA to the average citizen.

    “We must admit though that we are excited and further driven by the fact that our indigenous Remita software has succeeded in powering the technological backbone for such a successful and strategic national initiative, along with other well-meaning Nigerians, we do not want this to fail.”

    Presenting a paper at a workshop organised in Abuja by the Office of the Accountant-General of the Federation and the World Bank, Prof. Stephen Ocheni said achieving an efficient allocation of resources and the stabilisation of the business cycle remained great challenges facing most parts of the world, particularly developing countries, such as Nigeria.

    In the paper titled: “Treasury Single Account: A catalyst for public financial management in Nigeria”, Ocheni of Public Sector Accounting, Kogi State University, Anyigba, said: “An important factor for efficient management and control of government’s cash resources is a unified structure of government banking.

    “Such unified banking arrangements should be designed to minimise the cost of government borrowing and maximise the opportunity cost of cash resources. This requires that cash received is made available for carrying out government’s expenditure programmes and making payments in a timely manner.”

    The Buhari administration has initiated and implemented the TSA and other economic policies for better management of national resources and the fight against corruption.  Besides the TSA, the government also introduced the Government Integrated Financial Management Information System (GIFMIS), Automated Accounting Transaction Recording and Reporting System (ATRRS), Integrated Payroll and Personnel Information System (IPPIS), International Public Sector Accounting Standard (IPSAS), among others to promote public financial management systems.

    The government began TSA implementation with the e-Payment component in April 2012 and its e-collections components followed in January, last year. On September 15, 2015, the government set a deadline for full compliance with the policy by all MDAs.

    According to Ocheni, the policy facilitates better fiscal and monetary policy coordination as well as better reconciliation of fiscal and banking data, which in turn improves the quality of fiscal information. The TSA also cuts the debt servicing costs and eradicates financial misappropriation in the public sector.

     

    TSA gains reverberate

     

    With TSA, Deposit Money Banks (DMBs) have also been constrained to diversify their sources of deposit mobilisation rather than rely on these idle funds which yielded interest for faceless individuals and groups, even as the government groaned under paucity of funds.

    Analysts believe that the TSA has helped Buhari administration’s anti-corruption fight by flushing out ghost workers and saving the economy from imminent collapse.

    Vice President Yemi Osinbajo once corroborated Atanda’s assertion from the cost-saving perspective. He disclosed that 40,000 ghost workers had been flushed out of the public service, due to the adoption of the TSA which is powered by Remita. The translates to a monthly saving of N720 million and N8.64 billion yearly at the prevailing N18,000 minimum wage.

    Remita has instilled the fiscal discipline that allows the government to have control over budget allocations while providing multiple entry points for collections.

    The implementation of the TSA policy has significantly reduced the government’s debt servicing costs, lowered liquidity reserve needs, and fostered effective use of surplus cash.

    Going forward, SystemSpecs is poised to tap into McKinsey’s projection that payments and financial services delivered via mobile phones and the Internet could transform individuals’ lives and economic prospects businesses and governments across the world.

     

    TSA’s impact on banks

     

    The CBN agreed that the policy regime triggered some unintended consequences, affecting the operations of banks, especially regarding deposit depletion, asset quality, a decrease in revenues and liquidity stress.

    The loss impacted banks differently in line with the proportion of their balance sheet that was sustained with the Federal Government of Nigeria (FGN) deposits.

    “Due to its large size and low cost, Federal Government of Nigeria deposits were a huge source of revenue for banks. Although specific data on revenue attributable to FGN deposits are not available, a good proxy is a yield on Treasury Bills, which is currently around 12 per cent.”

    The CBN said the TSA regime impacted the liquidity level in the banking system due to the attendant remittance of cash, which constitutes a major portion of banks’ liquid assets to the apex bank.

    “Furthermore, as part of risk management, banks with large government deposits mitigated their positions by investing the liability in T-bills and FGN bonds. These banks had to liquidate these investments in order to comply with the TSA regime, thereby further reducing their stock of liquid assets,” it said.

  • Local bond market attracts $6b, says CBN

    THE successful conduct of the general elections is rubbing off positively on investments, with the inflow of over $6 billion into the local bond market.

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele described the foreign capital inflows to the bond market as an indication of the continued investors’ confidence in the strength of the economy.

    The CBN boss, who spoke yesterday at the BusinessDay Post-Election Economic Agenda Conference in Lagos, also set a post-election agenda for the nation’s monetary policy. The current policy stance of the bank is expected to continue while inflation is estimated to rise to 12 per cent and moderate thereafter.

    Emefiele said the Nigeria bond market remains one of the most attractive investment destinations – In Bloomberg’s Emerging-Market Local-Currency Government Bonds index, which covers major emerging markets, including Nigeria, South Africa and Argentina.

    He said Nigeria’s bond continue to top the chart due to the stability of the Investors’ & Exporters’ Forex rate and the yields being high by emerging-market standards.

    Investors, Emefiele said, are sure that they can exit their positions if they want, which has been crucial in driving other investors into the market.

    Emefiele hinged the monetary policy stance of the bank on rising inflation expectations.

    He, however, noted that the bank would adjust the policy rate in line with unfolding conditions and outlooks. Just as in the previous year, he said the Bank would continue in its drive to ensure that the policy interest rate is set to balance the objectives of price stability with output stabilisation.

    The CBN boss also explained that since the establishment of the I&E Window in April 2017, the country has recorded about $35 billion in autonomous inflows through the window alone.

    He said: “As a result, exchange rate pressures eased considerably across all markets as the rates converged to about N360/$ and the distortive premium almost eliminated. At the Bureau De Change (BDC) segment, we saw a significant appreciation of the naira from over N525/$ in February 2017 to about N360/$ today. Rates at the I&E window also appreciated from nearly N382/$ in May 2017 to just over N360/$.”

    Read also: FOBTOB institutes empowerment scheme for members’ children

    On the exchange rate policy, he said the bank, despite the expected pressures from the volatility in the crude oil markets, will maintain its stable exchange rate over the next year.

    “Gross stability is projected in the foreign exchange market, given increased oil production and contained import bill”, he said.

    Emefiele expressed optimism that the country’s Balance of Payments would remain positive in the short-term, adding that the current account balance could improve further if oil prices continued to recover. He assured that this would be “supported by improved non-oil performance as diversification efforts begin to yield results to reduce undue imports.”

    Warning that the issues that led to the economic crisis between 2015 and 2017 remained visible, Emefiele stressed the need to significantly increase the country’s policy buffers, including fiscal measure, to increase its external reserve. He also reiterated the need to diversify the revenue structure of the Federal Government, in order to reduce dependence on direct proceeds from the sale of crude oil.

    He further advised that cheap financing be provided to boost local production of priority goods in critical sectors of the economy in order to reduce reliance on foreign imports.

    He also used the platform to highlight the efforts made by the CBN in the past five years in monetary policy and development finance, disclosed that the weakening of the Naira impacted the balance sheets of domestic banks.

    However, he said the bank took some measures such as monitoring the financial position and performance of supervised institutions and the assessment of the risk profile and governance management practices of banks, to guarantee financial stability.

    He listed other efforts carried out by the Bank to ensure financial system stability and the promotion of sustainable economic development to include the establishment of the investors and exporters’ window; conservation of foreign exchange through the restriction of access to foreign exchange on 43 items; and increased lending to the agricultural and manufacturing sectors.

    The governor, while soliciting continued support for the policy measures that restrict import of items that could be produced in Nigeria as well as increased penalty for smuggling of restricted items in Nigeria, expressed optimism that the Nigerian economy in post-May 2019 will witness growth and reduced unemployment.

     

  • CBN vows to make Nigeria world’s third palm oil producer

    The Central Bank of Nigeria (CBN) has vowed to help push Nigeria to the world’s third largest producer of palm oil.

    If successful, Nigeria will overtake Thailand and Columbia as a major palm oil producer in the world.

    Addressing stakeholders in the palm oil industry in Abuja Monday, the Governor of the CBN Mr. Godwin Emefiele stated that “our ultimate vision is to overtake Thailand and Columbia to become the 3rd largest producer over the next few years.”

    The CBN Governor noted that “if we had kept pace with our peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10bn worth of foreign exchange for the country. This analysis does not take into consideration the amount of jobs that could have been created in our rural communities from large scale small holder developments.”

    To achieve this, the CBN Governor is advocating for improved financing.

    According to him, “with regards to improving access to finance for small holder farmers focused on cultivation of palm oil, the Bankers Committee had established a special sub-committee to make recommendations on sustainable financing models for oil palm and four other critical agricultural commodities that include cocoa, sesame seed, shear-butter, animal husbandry and cashew.”

    Read Also: CBN, EFCC tackle economic crimes

    He added that as part of the Anchor Borrowers Program (ABP) and our Commercial Agriculture Credit Scheme (CACS), “the CBN will work with large corporate stakeholders and small holder farmers to ensure availability of quality seeds for this year’s planting season and agro-chemicals in order to enable improved cultivation of palm oil. We will also work to encourage viable off taker agreements between farmers and large-scale palm producing companies.”

    Thereafter he disclosed that “loans will be granted through our ABP and CACS programs at no more than 9% p.a to identified core borrowers.”

    Emefiele noted that “with an estimated 3 million hectares of land under cultivation, abundance of suitable arable land, we need the cooperation of our state Governments in the oil palm producing zones to make land available to investors with proven financial and technical capabilities, who will be able to support developments of large scale palm oil plantations in the country.”

    He then announced that all the states in the South-South and South-East regions have agreed to provide at least 100,000 hectares each for the initiative. This program is also expected to accommodate the small holder farmers.

    Monday’s meeting was enlarged to include Executive Governors and other top government functionaries from the oil palm producing states to elicit their buy-in and set a partnership model that would, with immediate effect, stimulate investments in the palm oil plantations, such that within the next 3-5 years, the global share of the country’s oil palm production would more than double.

    Emefiele lamented that “despite placing oil palm in the forex exclusion list, official figures indicate that importation of palm oil had declined by about 40 per cent from the peak of 506,000 MTs in 2014 to 302,000 MT in 2017. This indicates that Nigeria still expends close to $500 million on oil palm importation annually and we are determined to change this narrative.”

    “We intend to support improved production of palm oil to meet not only the domestic needs of the market, but to also increase our exports in order to improve our forex earnings” he said.

    Despite the availability of over 3m hectares of farmland for palm oil cultivation, production remains low at close to 2 tonnes per hectare, relative to a global benchmark of 25 tonnes per hectare. This is as a result of the maturation of existing palm trees, as some of these trees were planted in the 50s, as well as low investment in replanting high yielding palm oil seeds.

    Also speaking at the event, the Edo state Governor Mr. Godwin Obaseki cautioned that stakeholders to the oil palm initiative should “develop very clear plan of achieving the set objectives.”

    He also spoke on the need to revive the moribund oil palm research Institute and more investment in research and production of quality oil palm seeds.

    According to him, “we should understand that for meaningful investment to come into the oil palm industry, we have to think of other incentives, to encourage manufacturers to turn oil palm to other things.

    “What I mean is that palm oil can be used to manufacture margarine, soap, toothpaste and other things that require oil palm.

    “So we must also think about how to create incentives for those who are currently in the business to exploit all the uses of palm oil to create job opportunities for our people,” he said.

     

  • Rice production to hit record high in 2023

    Nigeria rice production could hit 16 million tons in 2023 if all the participating states under the Central Bank of Nigeria (CBN) Anchor Borrowers Programme convert their pilot programmes into massive  production, the  Executive Director, Agricultural and Rural Management Training Institute, Dr Olufemi Oladunni, has said.

    He said the nation’s rice production is expected to set a new record with increased cultivated area, which will increase paddy production to 16 million tons in 2023. The figure is now four million tons.

    According to him, Nigeria can produce more than 12  million tons over four-year with the support of President Muhammdau Buhari’s administration, adding that  increasing support to the paddy crop is likely to keep the country’s rice production high.

    He expects Nigeria to retain its ranking as the leading rice producer in Africa. Although most rice projects embarked by states are in pilot forms, Oladunni said the projects are  showing positive results.

    He said such projects, should be part of the nation’s strategy to stabilise and  increase the production of rice on a sustainable and economically viable basis. He urged more states to key into the CBN anchor  borrowers programme.

    Director-General,Africa Rice Center, Benin Republic, Dr Harold Roy-Macauley has said Nigeria has overtaken Egypt as the largest rice producer in Africa with four million tons a year

    Egypt was producing 4.3 tons annually, but it reduced by almost 40 per cent this year owning to the Egyptian government’s decision to limit cultivation to preserve water resources. Egypt’s rice cultivation requires about 1.8 billion metres of water in evaporation, transpiration and irrigation each year.

    Africa produces an average of 14.6 million tons of rough rice annually.

    He said there are efforts to increase overall rice production in Africa, but expressed doubts that it will curb rice importation as population has increased across the continent. Consumers, he said, are looking for safe and certified rice.