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  • Emefiele: CBN has no multiple exchange rates

    THOSE accusing the Central Bank of Nigeria (CBN) of operating multiple foreign exchange (forex) rates are wrong, CBN Governor Godwin Emefiele has said.

    What obtains are multiple foreign exchange (forex) windows, Emefiele said.

    The CBN boss spoke at the University of Ibadan (UI) Distinguished Leadership Lecture Series, organised by the university in collaboration with the apex bank in Ibadan.

    The multiple forex windows ensures that forex reaches critical sectors of the economy, he added.

    Emefiele noted that the naira exchange rate had substantially converged around N360/$1, whether it is in the parallel market, or in the CBN.

    Emefiele said: “Let me defend multiple foreign exchange. Banks have responsibility to buy and sell foreign exchange to everybody. If I want to travel, whether you have a bank account or not, you should be free to buy foreign exchange for your trip.

    “We saw a situation whereby the CBN allocates forex to a bank, they only sold to their corporate customers where they can make more money and that put pressure on the market.

    “Then we started allocating forex to banks for Personal Travel Allowances and Small and Medium Enterprises (SMEs), and corporates, and people said we are doing multiple exchange rates. That is wrong. I agree that we have multiple forex windows, not multiple exchange rates.”

    The CBN boss also said that it is unusual for an economy 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. “You want growth and price stability? You can’t eat your cake and have it,” he said.

    Emefiele, who spoke on the theme: “Up against the tide: Nigeria’s heterodox monetary policy and the Bretton Woods consensus”, said the CBN took several unconventional plans to keep the economy going, and stabilise 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 (I&E) Forex Window and capital controls.

    According to him,  transactions in I&E Forex window  have reached over $48 billion since the inception  and our foreign exchange reserves has risen to $45 billion in April 2019 from $23 billion in October 2016.

    He said that balancing the objectives of price stability with output stabilisation, especially in the face of external headwinds, remains a challenge to monetary policy and central banks, particularly in emerging and developing economies.

    Emefiele said: “Since the global financial crisis, many central banks have begun to promote structural transformation and economic growth, beyond the singular mandate of price stability.

    “Consequently, policy toolkits now contain instruments that are aimed at developing the financial sector, engendering wider financial inclusion, and aligning financial policies with sustainable development and growth.”

    Emefiele disclosed that before the onset of the global financial crises, policymaking at central banks had been dominated by neo-liberal and orthodox doctrines, as promoted by key Bretton woods institutions like the International Monetary Fund (IMF).

    He said: “These tenets emphasised price stability as the sole and exclusive mandate of central banks. However, lessons learnt from recent crises, in addition to the global financial crisis, have raised doubts on the validity of this position. What became obvious, following the crisis, is that conventional monetary policy tools were not sufficient in dealing with the complexities resulting from the crisis; such as debt overhang and stagnating economic growth.”

    Though the 2007 CBN Act specifies price stability as the overriding mandate of the CBN, for the CBN, it is achieved when inflation lies within the tolerance band of six to nine per cent.

    Emefiele said the CBN’s experience with heterodox policies expanded during the recent economic crisis that began in 2014 due to some global shocks, three of which were simultaneous and significant in shaping the trajectory of the Nigerian economy.

    The CBN embarked on a cycle of tightening, which culminated in a July 2016 hike in the Monetary Policy Rate (MPR) from 12 percent to 14 per cent. This decision was expected to rein in inflationary pressures that may result from exchange rate pass-through to domestic prices and   ensure that inflation expectations are well anchored.

    “We introduced demand management approaches to conserve our reserves and support domestic production of certain goods in Nigeria. In this regard, we analysed our import bill, and encouraged manufacturers to consider local options in sourcing their raw materials, by restricting access to foreign exchange on 41 items (now increased to 43). Four of these items alone constitute over N1 trillion of our annual import bill.”

  • Emefiele: I&E forex window attracts $48b as reserves hit $45b

    The Investors and Exporters (I&E) forex window by the Central Bank of Nigeria (CBN) has attracted  $48 billion worth of transactions to the economy and raise external reserves to $45 billion, CBN Governor Godwin Emefiele, has said.

    The CBN boss, who spoke at the Special Convocation of the University of Nigeria, Nsukka, at the weekend, said Nigeria’s foreign exchange reserves have risen to $45 billion in April 2019 from $23 billion in October 2016.

    Emefiele, who spoke on the theme: “From recession to growth: The story of Nigeria’s recovery from the 2016 Economic Recession”, said Nigeria’s current stock of external reserves can finance nine months of current import commitments. “With improved availability of foreign exchange, the exchange rate at the I&E FX window has remained stable over the past 24 months at an average of N360/$, and the parallel market exchange rate has appreciated from N525/$ in February 2017 to N360/$ today,” he said.

    He explained that the Investors and Exporters FX (I&E) window introduced in April 2017 allowed investors and exporters to purchase and sell foreign exchange at the prevailing market rate. Also, the apex bank liberalised  the exchange rate management following the approval of the “Revised Guidelines for the Operation of the Nigerian Inter-bank Foreign Exchange Market” on June 15, 2016 and its operationalisation on June 20, 2016.

    “The commencement of this policy guideline introduced the Naira settled foreign exchange futures Mmarket,” Emefiele said. The CBN boss said the fiscal authorities concentrated on examining ways in which fiscal policy could support household consumption and business investments, as these two factors make up more than 85 per cent of Nigeria’s Gross Domestic Product (GDP) by expenditure.

    “In this regard, the Federal Government budgets were readjusted to adequately address priority infrastructure needs that would support improved investments by the private sector. This was complemented by various Presidential initiatives on improving the ease of doing business in Nigeria, dismantling regulatory bottlenecks, enhancing competitiveness and  industrialisation,” he said.

    The apex bank also increased its lending to the agricultural and manufacturing sectors, through targeted intervention schemes such as the Anchor Borrowers Programme, Commercial Agricultural Credit Scheme and the Real Sector Support Facility.  “In particular the CBN sought to improve domestic supply of four  commodities (rice,   fish,   sugar,   and   wheat), which consume   about   N1.3   trillion   annually   in  our nation’s  import   bill.   The  Anchor Borrowers Programme (ABP), which was launched in November 2015 by President Muhammadu Buhari, was designed to build partnerships between small holder farmers and reliable large-scale agro processors, with a view to increasing agricultural output, while improving access to credit for farmers,” he said.

  • Ex-CBN director lauds Buhari for reappointing Emefiele

    A former Director of the Budgetary Department of the CBN, Dr Titus Okunronmu, has commended President Muhammadu Buhari for re-appointing Mr Godwin Emefiele as governor of the apex bank.

    Okunronmu gave the recommendation in an interview with the News Agency of Nigeria (NAN) at Ota in Ogun on Friday.

    He described Emefiele’s re-appointment as a decision in the right direction, saying that the re-appointment would stabilise Nigeria’s macro-economic decisions.

    The former CBN director said that Emefiele had done well, noting that “the country’s inflation rate is drastically coming down.

    “He has achieved what it expected of him as the nation’s currency is now stable,’’ said Okunronmu.

    “Monetary stability is a major issue in any economy. Emefiele has achieved this.’’

    Read Also: Buhari reappoints CBN Governor Emefiele for second term

    Okunronmu said that it would be difficult to achieve monetary stability in a situation where the nation was running on deficit, noting that to have stabilised the monetary policies was a big achievement.

    A letter for Emefiele’s tenure renewal was signed by Buhari on May 8 and has since been sent to the senate for confirmation.

    The CBN Act stipulates that the senate must confirm the nomination of any of its governors before the appointment can take effect.

    This is the first time since 1999 that a CBN governor would be nominated to serve a second term.

    Emefiele was first appointed in 2014 by former President Goodluck Jonathan and was retained by Buhari when the president assumed office in 2015.

  • Emefiele: Focused policies that did the trick

    Godwin Emefiele’s focused leadership at the CBN coupled with the government’s support have pulled through far-reaching policies that have helped in growing the nation’s economic fortunes, reports Group Business Editor Simeon Ebulu.

    One sector of governance, or rather the economy, that has attracted the most commentary and attention is the Central bank of Nigeria (CBN). And it is not unexpected. The CBN plays the key role of being the banker to the government and as well takes charge of monetary policy. In addition, the CBN under the leadership of Godwin Emefiele as Governor has carved for itself other very important fiscal responsibilities that have helped, not only to stabilise, but have in combination with other policies, helped to grow the economy.

    At the onset of the present administration in 2015 while the various arms of the government were in formation, Emefiele, in an uncanny leadership initiative, took very far reaching steps (never envisaged), and transcended the realm of the monetary space, which is the apex bank’s natural playing field to the fiscal, to address through various interventions noticeable fissures that the absence of a federal cabinet had created. Some un-discerning minds and hasty critics at the time thought the CBN was over- reaching itself and fishing in allied waters. How wrong.

    The leadership at the CBN realised that the political gerrymandering playing out at the time would take a while to be sorted before the newly elected government settled down. Although President Muhammadu Buhari had set the process of constituting the Federal Executive Council in motion, the citizenry who have just elected the government that promised them ‘CHANGE’, could not care a hoot what it takes for the change to manifest. Time was of essence. In measured response designed to sustain the peoples’ expectation, the apex bank moved in by churning out a plethora of intervention schemes, by providing needed funds that several critical sectors in the economy required to function. This was the fuselage the elected government needed to hit the ground running. And the measures paid off handsomely.

    There was hardly a sector the intervention policy did not address. Name it: agriculture, aviation, power, transportation, just to name but a few. To argue against the CBN’s intervention in these critical areas as veering off  its core mandate, as some have done, is akin to saying that the apex bank is not part of the government. Emefiele’s bold decision that the Central Bank should step in to address the obvious needs in the various sectors in the manner that it did at the time, and still does, is well acknowledged as a step well taken even at the highest level of government.

    Emefiele’s unique leadership style and doggedness again came to the fore when the controversy as to how to determine the acceptable exchange rate of the local currency against the US dollar and other hard currencies raged. On the surface, all dramatis personae scheming for the adoption of one option or the other in the naira-cum dollar exchange spectrum meant well. While one school held that a  market determined rate (resulting in a weakened naira) will lead to an avalanche of forex inflow into the country,  the Emefiele school of thought argued for a regulated exchange regime, holding that a controlled exchange rate ( resulting in a strong local currency), offers a better parity for the economy. Suffice it to say that with President Buhari’s backing, Emefiele’s option and his doggedness paid off. This is the outcome of the obvious stable forex regime we have in the country today.

     

    Courage in taking bold decisions

    The CBN’s restriction on 41 items from accessing foreign exchange (forex) at official windows is another of Emefiele’s bold decisions. More than two years after the policy, its objectives, such as encouraging local production of the items and boosting local industries suffocated by the importation of competing products, are being realised.

    The policy implementation was part of the home-grown solutions introduced by the CBN Governor to sustain forex market stability and ensure the efficient utilisation of available  forex to grow critical segments of the economy. The measure implies that those who import these items can no longer buy forex from the official window to pay their suppliers. Rather, they will have to source forex from the parallel market or through Bureaux De Change (BDCs).

    Emefiele said the bank has been developing home-grown policies to surmount challenges that confronted the economy lately. “As I have always emphasised, it is our collective duty to ensure that the potential and prospects of the economy are optimally realised. The ongoing economic recovery requires the joint efforts and wise counsel of everyone, if we must take giant strides forward. The CBN is more determined now than ever to remain at the forefront of efforts to ensure that the rebound is not overturned,” he said at a recent forum with investors.

    He said the political-economy had experienced significant challenges over the last few years, revealing its structural deficiencies, particularly with regards to its dependence on crude oil, as a major source of its revenue and foreign exchange.

    According to hom, the 60 per cent decline in crude oil prices between 2015 and 2016 helped shaped the trajectory of the economy, triggering the recession in the first quarter of 2016. He  pointed out that with improved availability of forex, the exchange rate at the Investors & Exporters (I&E) FX window has remained stable in the past 12 months and the parallel market exchange rate premium has narrowed significantly. At the BDC segment, there was a significant appreciation of the naira from over N525/US$ in February 2017 to about N361/$ today. Rates at the I&E window also appreciated from nearly N382/$ in May 2017 to just over N360/$.

    The CBN chief said with regards to over-dependence on imports, the economic recession triggered mainly by the drop in crude oil prices, only strengthened the case for moving from a nation wholly dependent on consumption, to one that produces a large proportion of what it needs, particularly in areas where the resources needed for production are widely available across the country, saying this was the  thought process that informed his decision to impose the restriction on access to forex on the 41 items that can be produced in Nigeria.

    As he put it: “There has been considerable discourse particularly on whether the restriction on access to foreign exchange for 41 items is driving local production, with some nay-sayers stating that it has constrained productivity and growth in the economy. Based on our internal research conducted at the Central Bank of Nigeria, there is strong support that the recovery of our economy from the recession may have been much weaker or even negative, without the implementation of the restriction on 41 items.”

    He pointed out that the apex bank’s research supported the conclusion that the “combination of the restriction on 41 items along with other measures imposed by the fiscal and monetary authorities have helped to promote the recovery,” saying: “Any attempt to reverse the course of this action may have untold consequences on the growth trajectory of our economy, particularly in our push to diversify and restructure our economy.”

    He said there’s a push by well-meaning Nigerians for elongation of the list of 41 items  to include additional items that can be locally produced, stating that many entrepreneurs were taking advantage of this policy to venture into domestic production of the restricted items with remarkable success and great positive impact on employment.

    Emefiele referred to the dramatic decline in the nation’s import bill and the increase in domestic production of these items as a pointer to the efficacy of this policy, saying noticeable declines were steadily recorded in our monthly food import bill from $665.4 million in January 2015 to $160.4 million as at October 2018; indicating a cumulative fall of 75.9 per cent and an implied savings of over $21 billion on food imports alone over that period. Most evident were the 97.3 per cent cumulative reduction in monthly rice import bills, 99.6 per cent in fish, 81.3 per cent in milk, 63.7 per cent in sugar, and 60.5 per cent in wheat,” he stated.

    The CBN chief, who defended these policies when he spoke at the  53rd Annual Bankers’ Dinner in Lagos, with the theme: “Strengthening the economic recovery process in Nigeria”, said : “In my inaugural address after assuming office as the Governor of the Central Bank of Nigeria in June 2014, I indicated that my mandate would be to ensure that the Central Bank of Nigeria is more people-focused, as its policies and programmes would be geared towards supporting job creation and fostering inclusive growth, in addition to key macro-economic concerns such as inflation and exchange rate stability. I hope to use this opportunity tonight to convey a sense of the strong commitment of the Central Bank of Nigeria towards supporting measures that would wean the nation from its dependence on imported goods, create wealth and jobs for our teeming youths, and promote a more stable and resilient financial system.”

    He said the CBN will always act in good faith, with the best available information and in cognisance of current economic conditions, to pursue the goals of price and financial system stability, saying after a wave of scathing criticisms that trailed some of its policies, “many of these measures are today widely applauded as brilliant and conscientious actions.”

    As policymakers, our perspectives are typically different from those of the public; but our data, information and outlook remain superior. I, therefore, enjoin our critics to avoid being hasty in their condemnation of our policies, Emefielee said.

     

    Anchor borrowers programme

    The Anchor Borrowers Scheme is one progamme that has clearly established, as unassailable the success story of the regulator’s intervention in growing the economy, this time, at the base of the nation’s economic stratum – Agribusiness. The programme has not only repositioned and lifted primary producers from subsistence level, it has enhanced their productive capacity and established them as both input suppliers and producers for export.

    The synergy and the multiplier effects generated by the Anchor Borrowers Programme (ABP), as typified by numerous commentaries, including that of the President, tell the story.

    Buhari said the CBN’s -initiated ABP will lift thousands of small farmers out of poverty and generate millions of jobs for unemployed Nigerians. Buhari, who stated this at the unveiling of the programme in Birnin-Kebbi, Kebbi State, frowned at the huge sums spent by Nigeria on the importation of food items that could be produced locally. He said Nigeria’s N1 trillion bill on importation at the time was not sustainable.

    Before  ABP,  allocation of forex to the importation of  rice, wheat, milk, tomato, fish, cotton and fertiliser, among others, had contributed greatly to the depletion of the nation’s foreign reserves, especially in the face of low oil revenue resulting from falling oil prices. The implication was rising unemployment and escalating food imports. This prompted the CBN, under the leadership of Emefiele to shift from concentrating only on price, monetary, and financial system stability to act as a financial catalyst in specific sectors of the economy, particularly agriculture in a bid to create jobs on a mass scale, improve local food production, and conserve scarce foreign reserves.

    The apex bank had set aside a portion of the N220 billion Micro, Small and Medium Enterprises Development Fund to finance agricultural projects at a single-digit interest rate of nine per cent. Chiefly among the aims was to create economic linkages between over 600,000 smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilisation of integrated mills.

    Buhari’s pronouncement had since become a reality as Nigerian peasant farmers now have a foretaste of what it takes to be millionaires. No doubt, Emefiele deserves some accolades for keeping faith with the vision of President Buhari by demonstrating uncommon commitment and patriotism for home-grown products for the diversification of the productive sector and boosting the revenue base of the nation’s economy.

    Other areas the bank has distinguished itself,  include: Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL); Real Sector Support Facility (RSSF); The Nigeria Electricity Market Stabilisation Facility (NEMSF); Entrepreneurship Development Centres (EDCs); Youth Entrepreneurship Development Programme (YEDP); Export Stimulation Facility (ESF); Agri-business/Small and Medium Enterprises Investment Scheme (AGSMEIS), Paddy Aggregation Scheme (PAS); Accelerated Agricultural Development Scheme (AADS).

    As at October 2018, 2.5 million direct jobs had been created through implementation of the Anchor Borrowers’ scheme and another 1 million more indirect jobs are believably created also. A total number of 862,069 farmers cultivating about 835,239 hectares of land, cultivating 16 different commodities including rice, wheat, maize, cotton, soya-beans, poultry, cassava and groundnuts, tomato, in addition to fish farming had already benefited from the programme.

    Also, another N2 billion Gino Tomato processing plant and farm has sprang up in Kaduna State, owing to the support of the CBN’s agricultural support Anchor Borrowers’ Programme. The plant has the capacity to mill 30 tons of fresh tomatoes a day. The Director, Corporate Affairs Department , GBfoods, Dr. Teddy Ngu said about 100 hectares of land was available to be cultivated, saying that about 30 hectares was currently under cultivation. “We plant in phases so that we can harvest in phases,” he said, adding that the idea is to keep the factory running continuously.

     

     

  • Nigeria safe destination for investment – Emefiele

    The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, has urged foreign investors to look the way of Nigeria as a veritable destination for investment.

    The CBN chief, who spoke in Washington DC on Friday night at a special outing with foreign investors, the Diplomatic community and other special interests, said Nigeria was ready for investment  having gone through a successful election.

    Emefiele, who dwelt extensively on the various steps the apex bank has taken to stabilise the exchange rate regime and make forex available to the critical sector of the economy, said its policy to restrict access to forex of 41 items, had the support of the President Muhammadu Buhari. He said the President asked the CBN to list those items that can be produced locally, but for which hard currency were being allocated.

    He said one of the fallouts of the policy was that it has boosted local productive capacity and has helped to create millions of direct and indirect jobs.

    He said in the course of the general election and due to the confidence that greeted the process, Diaspora currency inflow was unencumbered and even increased, as against expectation that the period was risky for business.

    The CBN chief said the introduction of the Investor & Export (I&E) further boosted the confidence level of foreign investors, as that window provided guarantee for full retrieval of any volume of investment and realizable profit by players in the market.

    Emefiele was full of praise for the success of the Anchor Borrowers Programme which targets local farmers, as one of the major achievements of the bank under its development interventions.

    He said: “As at December 2018, a total sum of N178.48 billion had been disbursed through 19 participating financial institutions to 902,518 farmers. During the period, over 2.8 million and 8.4 million direct and indirect jobs were created under the Anchor Borrowers Programme.”

    On the country’s foreign exchange policy, Emefiele said that the focus has always been to ensure price stability.

    He highlighted some of the foreign exchange reforms undertaken by the bank, which included the ban of the 41 items, the establishment of the investor’s and export’s window and the SME Window of the foreign exchange market.

    According to him, this resulted in stable exchange rate, foreign exchange liquidity, vibrancy in the capital market, improved supply of foreign exchange supply with positive impact on GDP growth.

    Emefiele said also that Nigeria, through its financial inclusion strategy had recorded a lot of progress in giving its adult population access to a broad range of formal financial services at an affordable cost, saying that statistics have shown that in Nigeria today, the number of adult with access to financial services has grown from 58.4 per cent in 2016 to 63.2 per cent in 2018.

  • Ahmed, Emefiele join experts at IMF/World Bank meeting

    The Minister of Finance, Mrs Zainab Ahmed and the Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele, will join other economic experts from around the world to discuss issues affecting global economy in Washington DC, U.S.

    The News Agency of Nigeria (NAN) reports that the discussions are scheduled to hold between April 9 and April 14, under the auspices of the World Bank Group and the International Monetary Fund (IMF) in Washington DC.

    The 2019 Spring Meetings of the IMF and the World Bank is expected to bring together central bank governors, ministers of finance, parliamentarians, private sector executives, representatives from civil society organisations and the academia.

    The experts will discuss issues of global concern, including the world economic outlook, poverty eradication, economic development and aid effectiveness.

    The meeting will also feature seminars, regional briefings, press conferences and many other events with focus on global economy, international development and the world’s financial system.

    NAN reports that Nigeria attends the meeting each year because of the quantum of investments and technical support it receives from both the IMF and the World Bank.

    Although Nigeria currently has zero loans with the IMF, it enjoys technical support from the organisation.

    The World Bank Group on the other hand is helping to fight poverty and improve living standards in the country through 33 Core Knowledge Product Reports and 29 ongoing National and Regional projects.

    This is in addition to about 60 Trust Funds.

    The World Bank Group since 1958, has supported Nigeria with loans and International Development Association (IDA) credits worth about 14.2 billion dollars.

    The group in 2017 fiscal year alone committed 1.51 billion dollars to Nigeria, 2.58 billion dollars in 2018 and in 2019; it has already committed 20 million dollars on different development projects across the country.

    Read Also: Buhari calls for safe, inclusive digital world

    Some of the projects are on nutrition, polio eradication, conflict monitoring, electrification, erosion, education, economic transformation, promoting fiscal transparency and accountability in states.

    Meanwhile, the Executive Directors of the World Bank on Friday unanimously selected David Malpass as President of the World Bank Group for a five-year term, effective Tuesday.

    Earlier in his career, Malpass served as the U.S. Deputy Assistant Secretary of the Treasury for Developing Nations and Deputy Assistant Secretary of State for Latin American Economic Affairs.

  • CBN slashes interest rate to 13.5 percent

    The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has for the first time in over two years adjusted interest rate downwards to 13.5%

    Addressing journalists at the end the second MOC meeting in 2019, Central Bank Governor Godwin Emefiele disclosed that “the MPC voted to adjust the Monetary Policy Rate (MPR) by 50 basis points from 14% to 13.5%; retain the asymmetric corridor of +200/-500 around the MPR; retain CRR at 22.5% and retain the liquidity ratio at 30%.”

    Emefiele stated that in arriving at the decision to adjust MPR (interest rate) downwards, “the committee was convinced that doing this will further uphold the bank’s commitment to promoting strong growth by way of encouraging credit flow to the productive sectors of the economy.”

    He noted that “the MPC also felt that through loosening by a marginal rate, will serve to manage the sentiments in the capital flow market owing to the wider spread in yields in the emerging markets and the developing economies relative to the advanced economies. Moreover, the real interest rates will still remain positive.”

    When asked if there was a relationship between slashing interest rates and the loosening stance of the MPC as signalled on Tuesday, and funding Small and Medium Enterprises (SMEs) Emefiele stated that, “to a reasonable extent, there is a relationship between lending to not just SME but to the agriculture, manufacture and the real sectors of the economy and our decision today. The reason being that if you consider the fact that for instance, January 2017, inflation had attend the level of risen 18.72 percent and by December 2017, as a result of the pressure on the foreign exchange market, reserves have dropped to about $23 billion and by that same month, even what was accruing into central bank had dropped to about $500 million from as high as over $3 billion sometime in August 2013/2014.”

    Emefiele added that “exchange rate as a result of the pressure had accelerated to as high as N525 to a dollar. But if you compare those numbers with where we are today, the inflation at 11.3 percent, foreign reserves at close to $45 billion, and we feel this trend will continue. Exchange rate converging in all the markets at between N358 to N360, GDP being in positive trajectory consecutively for five to six quarters then you will agree with me that there is relative stability and we have proved that there is sustainability in the level of macroeconomic indices in Nigeria.”

    Defending the decision further, Emefiele noted that “having being on this part particularly the MPR at about 14% since July 2016, and with the relative stability we have seen in the macroeconomic variables over the last two to two and a half years, we just think that this should be the next phase where we begin to think about consolidating growth. This should be the next phase where you should be talking about how do we create more jobs and reduce the level of unemployment in our country for people.”

    “We believe this should be the next phase where we should be talking about how do we diversify the base of the Nigerian economy? And that in doing that, we will continue to keep our eyes on the stability that we have achieved so far in the macroeconomic environment – I mean we will continue to do what we have been doing that is keeping inflation low, we will continue to do what we are doing that is keeping the exchange rate stable, we will continue to do what we are doing to ensure the reserves remain on positive trajectory at comfortable levels to be able to sustain the level of growth in our economy.”

    All these notwithstanding, Emefiele was cautious when said “there is a need for us to say, listen, we need to consolidate on what we have achieved so far and that is to begin to look at the level of growth again. Looking at growth again also means that while keeping our eyes on those other parameters, let’s see whether we can signal a direction from the monetary policy to the direction of supporting and really accelerating growth in the country.”

    Accelerating growth he said “means that we need to push harder to consolidate GDP, we need to push harder to make sure we create jobs and we need to push harder to diversify. So doing this will naturally mean that we are softening gradually but I repeat and it shouldn’t be mistaken that we will continue to do what we are doing, what we have done in the past keeping inflation at a moderated level, we will continue to do so. I think we are moving in the right direction.”

    Asked if this new level of easing on the interest rate will put pressure on the Naira, the CBN Governor said, “the answer is a capital NO, I don’t see that. Like I just told you that we have seen stability in the market over the last two to two and a half years and there is no need for anybody to worry. We will withstand any pressure.”

    When questioned if Nigeria is prepared for any economic pressure, the governor answered by saying, “we have gone through it in 2015, 2016 and 2017, with the support of everybody, our management and MPC members were able to overcome such challenges and I do not think that there is any challenge that the management of the Central Bank cannot surmount. We would surmount them.”

    On the growth projection of 2.7% by the CBN, Emefiele said, “we have actually being in positive growth trajectory in the last five to six quarters with an average GDP growth of about 1.9%. I think that if you look at the trend from 2017 into 2018, we will naturally say that if we push hard, even harder than we have done in the past, that we should be able to attain the 2.7% and 3% growth. What we are just trying to say here is that with the data available, and with consistency and with the push, that we are positive we will be trending towards 2.7% to 3% in growth rate which is actually not fantastic if you consider where Nigeria’s growth trajectory has always been around 5%.

  • My tenure ends in June, says Emefiele

    The governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, on Tuesday in Abuja said that his tenure will end in June, 2019.

    Emefiele who stated this while responding to questions surrounding his ‘sack’ from office, said “at least you can see me, I am doing my work, my tenure expires in June and at least let’s continue.”

    He noted that even if he leaves at the end of his first tenure “the intervention programmes of the CBN has been on since 1978 and it has moved from one governor to another I am very optimistic that even if another governor comes, no right thinking person will abandon an initiative that is laudable and that is meant to create jobs for the good of our country.”

    The Central Bank of Nigeria (CBN) Tuesday dismissed claims that the CBN governor has been sacked.

    Responding to inquiries from The Nation Tuesday, the Director Corporate Communications of the CBN Mr. Isaac Okorafor told The Nation that “the governor is in his office working.”

    Read Also; Emefiele still in office, says CBN

    Another official of the CBN also told The Nation Correspondent that “there is nothing like that, the governor is here, his tenure expires in June.”

    An online media had reported on Monday afternoon that the CBN governor has been sacked by the presidency and given two weeks to clear his table and “handover to an unnamed successor.”

    President of National Cotton Association of Nigeria Mr. Anibe Achimugu at the textile stakeholders meeting in Abuja told the CBN governor that “we give God the glory that you are sitting here today. You have done well; we are praying that even with our own intervention, that you will do a lot more by the grace of God.”

  • Emefiele to Atiku: your monetary policy agenda disastrous

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele has warned that the Peoples Democratic Party (PDP) presidential candidate’s suggestion that the exchange rate should be free float is a recipe for disaster.

    The CBN governor said: “The MPC reviewed it and concluded that it would be wrong. It is as good as saying that we should go back to the era of Structural Adjustment Programme (SAP) in Nigeria. The implication can better be imagined. It will certainly lead to capital flight, lead to massive depreciation or devaluation of the currency and ultimately to currency crisis in Nigeria and I think we should all know that it is a road to perdition to ever go in that direction.”

    Addressing reporters at the end of the bi-monthly Monetary Policy Committee (MPC) meeting, the first for the year, Emefiele added: “There is no capital control in Nigeria today because you cannot find the CBN trying to intervene in the market for demand and supply of foreign exchange.”

    Emefiele went on: “Normally, the Central Bank as an independent institution is apolitical but it is also important that at the MPC meeting today we asked ourselves if there is any merit in it to begin to say that we should look at free-floating the currency or that we should allow free import of goods that we have restricted. The MPC came to a conclusion that this was a wrong premise.

    “We cannot be talking about allowing import of items that can be produced in the country today, exporting jobs from Nigeria to foreign countries, and we say we have the interest of Nigeria at heart? We don’t agree with anybody. It is a wrong premise to say that you will allow imports to just flood the country just because you want to please anybody. It is not in our interest.

    “We will remain apolitical. We will not want anybody to drag the central bank into issues that are within our remit otherwise, we would respond to it.”

    The CBN governor admitted that the apex bank has instructed banks ro suspend interest on loans for fuel imports. According to him, “we have indeed told banks to suspend interest on those loans from July 2017. They should collect whatever credit notes have been issued and credit the account of petroleum marketers immediately. If any bank refuses to do so, the marketer or their association are free to report to CBN, mention the name of the bank and we will appeal to the bank to please carry out this instruction.”

    With regards to forex restrictions on imported items, Emefiele said CBN would get even more aggressive to see to it that any or all food items that can be produced in Nigeria and consumed in Nigeria and are currently being imported into Nigeria may face forex restrictions.

    Emefiele said: “We would go through our records and once we convince ourselves that these products can be produced in Nigeria, we will place them on the FX restriction list. It means that you cannot source foreign exchange from Nigeria foreign exchange market to import those items into Nigeria. If you have free dollars, you can bring it in but you will not be able to even make payments for those goods with dollars from the Nigerian foreign exchange market. This is because we think that the initatives that CBN has put in place in the past to cut imports and diversify the structure of the Nigerian economy is yielding results and we will continue to be that aggressive. And we also went further to say that the Economic Intelligence Department of the CBN together with EFCC would investigate any company, any individual suspected of bringing these items through smuggling or any means for money laundering and economic sabotage. And that if we discover and conclusively too, that these companies or individuals that are are involved in bringing these goods, we would write to all the banks that they should blacklist all those companies and individuals running those companies that they can no longer operate any bank accounts in any Nigerian bank. We don’t need to talk about prosecuting them but just to say we will not allow you to do business in Nigeria and of course you know the implications of that.”

    Highlighting his successes and achievements as CBN governor, Emefiele argued that “Dangote is today establishing the biggest refinery I have ever seen. The size of Dangote refinery is at least 10 times the size of Victoria Island. By April 2019 when Dangote Fertiliser Plant begins to roll, we will place a ban on the importation of fertiliser because Nigeria will both be self-sufficient and even export.”

    He also disclosed that he has “written to governors in the Southsouth and Southeast that time has come to stop importation of crude palm oil. A barrel of crude palm oil is more expensive than crude petroleum per barrel. I told them that we will re-establish the oil palm belt in the Southsouth and Southeastern parts of the country. Edo State has reacted positively like some other states. With support and intervention from CBN and government, we would reverse the trend. That should be the direction. It is important to say this so that people can know that the economy is doing well. A lot of work still needs to be done, there are still a clouple of vulnerabilities and fragilities that we see in the economy but we are determined to resolve them.”

    At the end of the MPC meeting, all 11 members voted to keep the policy parameters unchanged from their current levels. By this decision, the MPC decided to retain the MPR at 14%; retain the asymmetric corridor of +200/-500 basis points around the MPR; retain the CRR at 22.5 per cent; and retain the Liquidity Ratio at 30 per cent.

    In his assessment of the economy so far, Emefiele said: “It is important for me to say that if we think about where we are coming from, I would say I like to use some numbers: for instance, in September 2008, Nigeria’s reserve was about $62 billion, GDP was 7.2%; inflation was 15%.

    “By January 2014, GDP was 6.2%, inflation had trended downwards to 8% and external reserve was 40%. Let us not forget that we were in a period of prosperity, in terms of crude prices between 2009 and 2014 which is five straight years, with no shut-ins in pipelines, with high crude oil price, reserve still dropped.

    “From the end of 2014, we started another round of global crises. The global crises resulted in stagflation in Nigeria. GDP dropped, to 2.79% in 2015, went further and contracted to negative of 1.58% in 2016, improved in 2017 and then we are hopeful that 2018 would end at about 1.8%.

    He added that “Inflation was 15% in 2008, dropped to 8% in 2014 and it moved up to about 9.5% and by January 2017, it had moved up to 18.7% but today, through the activities of monetary and fiscal authorities, inflation had gone down to 11.4%.

    He also stated that “by 2008, with higher reserves, with higher productivity reserves dropped to $40 billion in January 2014 anmd ended 2014 at $35 billion, went further down in 2015 to $28 billion and indeed by October 2016 as a result of economic crises, reserves had plummeted further to $23 billion. Today as a result of all the actions and activities of both the monetary and fiscal authorities supported by the government, reserve is up, went to $39 billion in 2017 and 2018 we closed at $42.5 and I said so in my communique that even as at now, as a result of the confidence in the management of the Nigerian foreign exchange, the confidence in the management of the country, we’ve seen confidence even in foreign investors returning, reserves as at yesterday was $43.28 billion.”

    Emefiele added: “We have seen FX stability in the market and as if all of you will recall, that sometime in 2016 and up to early 2017, we saw a situation where exchange rate even in the black market had moved up in February to N525/$ and I was being told that by March, it will hit N1000/$. But as a result of the actions of CBN today, the all markerts in fact BDC has come down to about N360/$ and even slightly lower. The I&E Window, which is a market that we set up as a free in-free-out market today is about N362/$. So we have seen a substantial convergence in the foreign exchange market in Nigeria.”

    On balance of trade developments, the CBN governor noted that “when people say nothing has happened in the economy, they should know that it is not a fair comment to make both on government and also on the monetary authority. In 2008, imports stood at $86 billion. By 2017, it had dropped to $45.8 billion as a result of the activities of government and of monetary and fiscal authorities.”

    “Trade balance in 2008 was $46.2 billion, went down during the period of global crises to $6.4 billion and today it is up. In 2017 it was $13.15 billion and closed at $18.7 billion in 2018. When you talk about activities that related to issues on the restriction of foreign exchange for the importation of certain food items you will also find for instance that rice which is a major staple in Nigeria: data from the Thai Rice Exporters Association says that in 2014, Nigeria imported 1.2 million metric tonnes of rice. In 2015, it had dropped to 644 metric tons. In 2016 to 58,000 metric tons. In 2017, to 23,000 metric tons and 2018 to 6,000 metric tons” he pointed out.

    While reading the communique, Emefiele lamented that “on external borrowing, committee noted the increase in debt levels, advising for caution, noting that it could fast be approaching the pre-2005 Paris Club exit levels. MPC also noted that although there was an increase in inflation rate for the second consecutive month based on month on month, inflation continued to moderate indicating that the year on year measures will also moderate in the near term.”

     

  • Emefiele outlines policy thrust for 2019

    The Governor, Central Bank of Nigeria (CBN), Godwin Emefiele has outlined the monetary policy thrust for 2019.

    He said the short-term outlook of the economy remains good, adding that current tight stance of the bank will continue in the near-term.

    Emefiele stated these while delivering the keynote address entitled: “Strengthening the Economic Recovery Process in Nigeria” at the 53rd Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) held in Lagos late last year.

    He also said that the bank, working with the Federal Government, was open to foreign investors who were keen to support efforts at unlocking the immense opportunities in Nigeria’s economy.

    “Your Central Bank today is more committed to creating wealth and putting in place strong policies for creating jobs for our growing youth population; your Central Bank today is ever more committed to promoting a more stable and resilient financial system,” he said.

    While advising against hasty criticism of monetary policies, which he said were taken based on macroeconomic and geopolitical contexts, he assured that the CBN would always act in good faith, with the best available information and in cognizance of current economic conditions, to pursue price and financial system stability, support job creation on a massive scale and ensure a more inclusive growth in the economy.

    On the restriction of access to foreign exchange from the Nigerian market for 41 items that can be produced in Nigeria, he reeled out statistics to show that the policy had helped to boost local production of the items. He said that the combination of the restriction on 41 items along with other measures imposed by the fiscal and monetary authorities helped to promote the recovery that got Nigeria out of recession.

    He warned that any attempt to reverse the policy could negatively affect economic growth in the country, particularly as it relates to the push to diversify the Nigerian economy. He also disclosed that the CBN’s Economic Intelligence and Banking Supervision Departments would work closely with the Economic and Financial Crimes Commission (EFCC) to expose and sanction any bank, company or Foreign Exchange operator that colludes with individuals or companies to undermine the policy on 41 items.

    Speaking on the success of the Anchor Borrowers’ Programme, he said the development finance intervention scheme had ensured that Nigeria emerged from being a net importer of rice to becoming a major producer of rice, supplying key markets in neighboring countries. According to him, as at October 2018, a total number of 862,069 farmers cultivating about 835,239 hectares, across 16 different commodities, had so far benefited from the programme, which had generated 2,502,675 jobs across the country.

    He said the Nigerian economy had performed creditably compared to the performance of other emerging markets such as Brazil, South Africa, Turkey, and Argentina, adding that the country’s dominance over the review period was due to the stability of the Investors & Exporters (I&E) Foreign Exchange window rate and the yields being high by emerging-market standards.