•Ogbeh seeks lower interest rate for agric
Nigeria’s economy needs to grow by six or seven per cent for it to have greater impact on the lives of the people, Central Bank of Nigeria (CBN) Governor, Godwin Emefiele said yesterday.
Speaking at the ongoing 2017 Annual Bankers’ Committee Retreat held in Lagos, he said growth must be achieved at six or seven per cent for people to feel the impact saying such growth figure would reduce poverty rate.
Emefiele said that after five quarters of continuous contraction of the Gross Domestic Product (GDP), beginning from first quarter of 2016, the economy recorded a positive growth of 1.5 per cent in third quarter of this year, signalling an exit from recession. But he said the growth figure is still low and that higher growth is needed to tackle unemployment, create more jobs and other issues.
Also speaking, the Minister for Agriculture, Audu Ogbeh called on the CBN to reduce lending rate for agriculture as is the case in many parts of the world.
Emefiele said creating a more financially inclusive society is seen as the viable path towards sustainable economic growth.
He added that improving access to finance is timely given the sustained external headwinds that the Nigerian economy faced following the drop in crude oil prices, which began in the third quarter of 2014. He said the outcome of these headwinds include heightened inflation, drop in external reserves and significant depreciation in the naira-dollar exchange rate, and depressed Gross Domestic Product (GDP) growth.
Emefiele said inflation dropped from a peak of 18.72 per cent in January 2017, headline inflation recorded eight straight months of disinflation, with the rate declining to 15.91 in October 2017.
Also, the exchange rate made significant appreciation of the naira from over N500/$1 in December 2016 to about N360/$1 in October 2017 while the forex supply since the establishment of the Investors’ & Exporters’ Window in April 2017, we have recorded about $10 billion in autonomous inflows through this window alone.
He said external reserves have recovered significantly from $23 billion in October 2016 to over $34.3 billion as of November 3, while there have also been improvement in the in the “Doing Business Indicators”.
He said that intervention funds such as the Anchor Borrowers Programme has helped to drive productivity in Nigeria’s agriculture sector by providing finance to large numbers of small holder farmers across the country.
“While the drop in our export earnings and the gradual recovery in growth exposed the fragility of our domestic economy, it also reinforced the view within the CBN and the Bankers Committee for the need to revise our growth strategy as a nation,” he said.
He said that improving access to finance for millions of Nigerians who do not have access to financial services can serve as a catalyst for sustained growth and creation of jobs in our economy. He disclosed that improved access to financial services could lead to a boost of Nigeria’s current GDP by 12.4 per cent ($88 billion) and the creation of new deposits worth $36 billion by 2025.
“Improvements in deposits will ultimately lead to an increase in lending activities by financial institutions, thereby supporting growth and job creation across key sectors of our economy,” he said.
The apex bank, he said, will create a framework that that supports the build-up of a new ecosystem that connects deposit-taking banks, telecommunications companies, merchants, and ICT providers to the general public.
Emefiele added that with Anchor Borrowers Programme has attracted an investment of over N45 billion.
He said that under the Accelerated Agricultural Development Scheme, the CBN along with the Federal and state government intends to create close to 360,000 jobs (10,000 jobs per state) through improved access to finance for current and prospective participants in the agricultural value chain.
The Minister for Agriculture, Audu Ogbeh said that the average interest rate charged on agriculture loans worldwide is 3.5 per cent. He said nine per cent interest rate in Nigeria is fine but could be lower.
“We could have it (interest rate) lower because when we meet farmers from Brazil, China, Uruguay, and United States, the average lending rate to agriculture is 3.5 per cent. In some places like Japan, there was a time it was zero. So, we would like to see it lower. If it is lower, it will become more attractive,” Ogbeh said.
He also said there was need to bring more young people into mechanized farming because the generation of farmers are now 60 years old on the average. “In another two to four years, they cannot do much. If young people do not come on board, with mechanisation and lower interest rate, this country will starve and we do not want that to happen,” he said.
