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  • Interest rate will come down in 2018, says Emefiele

    Interest rate will come down in 2018, says Emefiele

    •$40b foreign reserves targeted

    For the first time in 16 months, the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, on Friday night, hinted on possibility of lowering interest rate in the New Year.

    The CBN boss spoke at the 2017 Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, on the positive economic outlook expected in 2018.

    He explained that monetary policy stance could change in 2018 when the underlying fundamental such as drop in inflation becomes more supportive. The CBN boss did not say how low the interest rate could drop in 2018.

    The CBN had at the peak of rising inflation, embarked on a cycle of tightening with Monetary Policy Rate (MPR)-the benchmark interest rate hiked in July 2016 from 12 per cent to the present 14 per cent.

    “If the pace of disinflation becomes adequate and we see inflation at predicted levels, I am very optimistic that Monetary Policy Committee (MPC) may begin to see strong justification for an easing of monetary policy, which may further accelerate the recovery process,” Emefiele said.

    Speaking on the theme; Policy Options for Sustaining Nigeria’s Economic Upturn, he said that from a peak of 18.72 per cent in January 2017, headline inflation recorded eight straight months of disinflation, with the rate declining to 15.98 in September.

    During this period, core inflation and imported food inflation, similarly fell from 17.90 per cent and 20.95 per cent, respectively, to 12.12 per cent and 14.83 per cent.

    He said the country has also seen a significant appreciation of the naira from over N500/$1 to about N360/$1. “In addition, we have seen stability in the rate for over six months now. I am glad to note that the exchange rate is not only stable, it is also converging across various windows and segments of the market,” he said.

    The CBN boss disclosed that since the establishment of the Investors’ & Exporters’ Forex Window, $10 billion has been recorded in autonomous inflows through the window. This, he said, reflected the effect of the increased transparency which that window accorded the forex market and its benign impact of improving investor confidence and business sentiments.

    He said that foreign reserves have recovered significantly from a low of just over $23 billion in October 2016 to over $34.3 billion as of November 3, 2017.

    “The accretion in reserves does not only reflect increased inflow but also our shrewd forex demand management strategy. When we introduced a policy restricting 41 items from our forex markets, we were called all manners of names. Today ladies and gentlemen, among the benefit of that policy is the considerable decline in our import bills. From an average of about $5.5 billion, our monthly import bill has fallen consistently to $2.1 billion in 2016 and $1.9 billion by half year 2017,” he said.

    According to him, the All-Share Index (ASI) and market capitalization recorded 32.10 and 32.30 per cent, respectively, to 35,504.62 and N12.24 trillion as at August 31, 2017 from the end-December 2016 levels.

    Due to the dogged implementation of our forex restrictions on certain items, the CBN recorded spectacular improvements in domestic production of most of these items. Local manufacturers are reporting 20 major boosts to their revenue and profit due to the policy.

    The apex bank boss said the CBN will strive to sustain the pace of recovery in the economy. He said that Nigeria’s import bill may have fallen but manufacturing and agriculture sectors still have a long way to go if we must attain self-sufficiency in those sectors.

    He said forex Reserves will continue to grow. “Over the last 12 months Nigeria’s forex reserves grew by over $10 billion from just over $23 billion in October 2016 to over $33 billion in October 2017. It is my belief that if we remain resolute with our efforts, policies and actions we can attain a forex reserve position of about $40 billion by end 2018.”

    On the sustenance of exchange rate stability, he explained that as the CBN entrenches and sustains the transparency in the forex market, as forex reserves accretion continues, and market confidence and improved sentiments remain, the exchange rate will not only be stable but would begin to appreciate against major currencies.

    Read Also: IMF: banks must recapitalise

  • ‘We’ll fight for single digit interest rate’

    ‘We’ll fight for single digit interest rate’

    As the first woman president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agricuture (NACCIMA), Chief Alaba Lawson bears the weight of the industrial world on her shoulders. In this interview with Biodun-Thomas Davids, she speaks on her vision for the association

    How will you measure NACCIMA’s effectiveness in the last 67 years?

    NACCIMA as the name implies – Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture – involves all the areas of economy, be it mining, agriculture, commerce and industry and all it takes to make the economy improve, our forefathers have tried their best, they worked together with the government, they came together in ensuring that NACCIMA as a whole has a voice in the organised private sector; so far, it has been an effective association.

     What are your thoughts on the fundamental objectives for establishing NACCIMA?

    We have done a lot – in a country of about 180 million people, I will say we are trying our best, our city chambers, state chambers, have done much in transforming our economy, especially in improving entrepreneurship in Nigeria. We bare our mind in letting the government know what will make our economy grow and improve. For example, on the interest rates charge by commercial banks, we have spoken our mind that it should be single digit; when you have single digit interest rate, you have a rest of mind and long term interest payment. When people get loans with single digit interest rate, they have the opportunity of turning it round, turning it over and maximising the advantage. To ensure this single digit interest rate works, we will move into lobbying.  We have tried by advocacy through the means of press conference. We are now taking step to lobby the law makers. To totally move this country out of recession, this single digit interest rate is one of what we need and it must be continuous. It is rare to find interest rate as high as 25%, 27 % in other countries; we will work to ensure the rate. We are talking with the federal government as well; there must be team work and public private partnership initiative to move the economy forward.

    You mentioned moving out of recession. Is NACCIMA playing any role in the area of economic growth and development policy set up by the federal government to keep recession at bay?

    We too have been trying our best; we are working together with the federal government. We have been going for presidential press briefings on recession, to know which areas of infrastructural development we can focus on. We are working to complement government efforts in creating enabling environments for SMEs growth in Nigeria. We commend government’s efforts in giving interest free loans to market women at the grass roots. I generally commend the federal government for its efforts in cushioning the effect of recession.

     Where does NACCIMA stand on yam export?

    There is nothing bad in the policy. Those negative reactions are like making hill out of mole. We should learn from the olden days, when our forefathers survived mainly by agriculture. They were building pyramids of cocoa, groundnut, rice; let us encourage people to go back to the farms. It is the right time to do it (yam exportation) and Nigeria is ripe for it; exportation of our agricultural products will with time be a better means of foreign exchange than our crude oil. Producing more and exporting will bring more income to farmers and other players in the sector. And if it’s going to be, we need to start from somewhere, by starting now, so there is nothing bad in it.

    What is your comment on sustainability of N-Power Social Intervention and Job Creation Programme of the federal government?

    It’s very sustainable. I want to borrow words from the vice president, during the last presidential briefing, he said,” Why can’t we continue repairing while the engine is still running.” That is, we must not be idle by giving excuses that it’s not possible. We must keep on with initiatives and timely interventions; we must change our orientation. Youths presently earning N30, 000 monthly stipends from the programme can make the best of the earning. They can even start working out lives with N10,000 – all they need is hard-work and keep working and planning. They are helping them to know that they can become employers of labour with the stipends. Of course Nigeria is not the first country to experience recession; America has experienced it, likewise Britain. The most important thing is every one old and young, doing best to ensure we have a stable economy.

    What does the slash in the 2017 budget, especially that of the Ministry of Power, Works and Housing portend for the economy and infrastructural growth in Nigeria?

    That is between the federal government and law makers, they will settle that.

    The National Identification Management Commission (NIMC) is on templating  enforcement of the  National Identification Number (NIN) before issuance of Nigerian passport from 2018; what will this move spell for investment in Nigeria?

     It is a good development; we must be able to have centralised data, and it’s going to boost the economy. The move is good and it will ease the flow of business transaction and investment in Nigeria instead of affecting it.

    As the first female president of NACCIMA, what are your visions?

    We mainly want to see SMEs grow in the area of agriculture and add value to it. When value is added to agriculture, there will be creation of more jobs that will increase productivity in Nigeria. The policy thrust of my administration within the 24 months of its span will place high premium on empowering the informal sector with special focus on SMEs. It will contribute to the promotion and creation of a conducive platform for business men and women to thrive in their ventures. There will be key emphasis on ensuring agriculture thrives for local consumption and emancipation of the nation’s economy from crude oil reliance. We will organise and embark on trade missions to different countries, meet with their chambers of commerce and business associations to foster robust and beneficial collaborations which will stimulate enterprise development and economic growth in our respective countries. We have the plan to launch the NACCIMA Youth Group with members drawn from the three regions: North, East and West. We shall further advance NACCIMA Business Women Group’s (NAWORG) activities. There will be series of visit to city, states, bilateral and regional chambers to evaluate their performance review their challenges and proffer solutions. We are collaborating with foreign embassies, chambers and business organisations through summits and projects. There will be Agro Summit in October in collaboration with the Brazilian and Indonesian embassies, in addition to collaboration with the Federal Ministry of Agriculture and Rural Development (FMARD), the Infrastructure Concession Regulatory Commission (ICRC), the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NISRAL) and many more.

     What can you say about the association’s international affiliation?

    NACCIMA has signed well over fifty (50) MoUs – cooperation agreements with several foreign chambers of commerce and other foreign business associations on a wide range of issues, towards the establishment and the promotion of framework cooperation in the field of commerce and industry. Oganisations we have affiliation with include: FEWACCI – Federation of the West African Chambers of Commerce; PACCI – Pan- African Chambers of Commerce and Industry; ECOWAS – Economic Community of west African States, ICC- International Chambers of Commerce; ACC – African Chambers of Commerce, CIPE – Centre for International Private Enterprise, UNIDO- United Nations Industrial Development Organization, Delegation of German industry and Commerce in Nigeria; EU – European Union; NEPAD – New Partnership for African Development.

  • Emmanuel: I won’t borrow at high interest rate for council poll

    Emmanuel: I won’t borrow at high interest rate for council poll

    Akwa Ibom State Governor Udom Emmanuel has said his administration will not borrow from banks to conduct local government election due to high interest rates.

    The governor urged political parties to be patient on the conduct of the poll.

    He said his administration was not in a hurry to conduct the election because of the prevailing tight economic realities.

    Emmanuel spoke on Saturday night while addressing reporters on his second year anniversary in office and this year’s Democracy Day.

    The governor said, Akwa Ibom was not the only state having a challenge with the tier of government.

    He said once the economy improved, the government would conduct the poll.

    Since Emmanuel became governor in May, 2015, he has not conducted a local government election.

    The tier of government has been handled by transition or caretaker chairmen through committees.

    Emmanuel said: “It’s because of the prevailing economic situation, it’s because of recession. Once the economy improves, we will conduct elections. This government will not borrow money with high interest rate to conduct local government elections.

    “What if you set up a local government council and you don’t have money to run the council? In recession, you carefully direct where money should go to. Since the economy is improving, all that will be done.”

    The governor said his cardinal programmee on industrialisation was being pursued with vigour, adding that it had led to the inauguration of some industries and ground-breaking for new ones to mark his second year in office.

    He urged the people to show appreciation to his administration’s efforts at establishing small and medium scale industries.

    According to him, in many developed economies, such ventures drive their economies, create wealth and reduced unemployment.

    Emmanuel said: “In many economies, it is the small and medium scale industries that drive the economy. I keep wondering when I hear people criticising the establishment of the pencil and toothpick industries. Akwa Ibom people should be proud to be the first manufacturers of these products. The Federal Government has been spending millions of naira to import pencils.”

  • CBN leaves interest rate at 14%

    CBN leaves interest rate at 14%

    THE Central Bank of Nigeria (CBN) yesterday kept its Monetary Policy Rate (MPR), its base interest rate, at 14 per cent.

    CBN Governor Godwin Emiefele, who spoke to reporters after the Monetary Policy Committee (MPC) meeting in Abuja, said the recession corridor would come to an end by the third quarter because of the positive financial and economic indicators, which he said would endure.

    Defending the MPC’s position to retain the current level of the MPR, Emefiele, said: “In consideration of the challenges weighing down the domestic economy and the uncertainty in the global environment, the Committee decided by a unanimous vote of eight members in attendance to retain the MPR at 14 per cent,  alongside all other parameters.

    The MPC decided to retain “MPR at 14 per cent.   Retain Cash Reserve Ratio (CRR) at 22.5 per cent. Retain liquidity ratio at 30 per cent and Retain the asymmetric corridor at plus 200 and minus 500 basis points around the MPR.”

    According to him, the Committee’s reluctance to alter the MPR in any fundamental manner is because of the current economic policy configuration and the need to allow the existing policies to fully achieve their intended goals and objectives.

    He said the Committee noted that the cost of capital interest rate in the economy was high and that the trend was not helpful to growth.

    Nevertheless, he said the MPC was concerned that loosening MPR would exacerbate inflationary impression, worsen the gains so far achieved in the exchange rate of the Naira and further increase the interest rate.

    On the financial stability outlook, Emiefele said the committee noted that in spite of the banking sector resilience, the weak macroeconomic environment had continued to exert pressure on the banking system, but however urged the Deposit Money Banks to intensify its surveillance in order to address emerging vulnerabilities.

    He urged the DMBs to step up credit drive in the private sector to support the economic recovery, a measure he claimed would send positive feedback to the financial system.

    On his insistence of the economy moving on the growth trajectory and ending the recession, he said: “My view is that with all the positive signs we see: inflation trending downwards, Gross Domestic Product improving to the extent that the negative growth rate has decelerated quite significantly, the fact that we have seen forex go to real sector and production capacities and industry capacities are beginning to improve, we have seen positive signs in various sectors of the economy, I am very confident that by the end of third quarter that we would be out of this and I still hold to that position.”

    Emefiele said the MPC, alerted on the risk of the possibility of the current increase in American shale oil production reducing the prices of crude oil and by implication,Nigeria’s revenue generation. As he put it: “We also alerted as risk the possibility of increased production of shale, that if that happens, it could upset our number,” but quickly added that the country must continue its drive towards the diversification of the economy.

    “No doubt, the movement of US fuel normalization will lead to movement of funds from a margin back to the US and will no doubt have adverse effects on this economy. But I will say that I do not anticipate that those adverse consequences will be so intense in our environment because these investments have long left us,” Emefiele stated

  • Fed Govt slams higher interest rate on tax debtors

    Fed Govt slams higher interest rate on tax debtors

    The Federal Government has approved a new interest rate spread on unpaid taxes for this year.

    The new interest rate was approved by the Minister of Finance, Mrs. Kemi Adeosun.

    According to the Minister, the new interest rate shall be five per cent over the Central Bank of Nigeria (CBN’s) Minimum Re-Discount Rate (MRR) for the year.

    She explained that Section 32(1b) of the Federal Inland Revenue Service (Establishment) Act 2007 empowers her to approve the new interest rate.

    Adeosun has therefore directed the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler to commence the implementation of the new interest rate on all unpaid taxes from July 1, 2017.

    The minister said the review of interest rates on unpaid taxes was one of the necessary measures adopted by the Federal Government to enhance tax compliance, minimise evasion and deter late payments.

    “Majority of Nigerian tax payers (PAYE) have taxes deducted automatically. However, those who do not and are required to file their taxes like companies and business enterprises, must understand that there are financial consequences for late payments.

    “This will support our efforts to ensure that people pay their taxes promptly, thus providing a sustainable source of revenue to the government to finance infrastructure and other projects,” Mrs. Adeosun said.

    Mrs Adeosun had, during the Finance Ministers’ meeting convened by the G24 Group at the 2017 International Monetary Fund (IMF)/World Bank Spring meetings in Washington, stressed the need for the country to embark on aggressive tax revenue generation in order to drive economic growth.

    She had emphasised that with a tax to GDP ratio of only six per cent, one of the lowest levels in the world, the country had to intensify effort at tax collection in order to build a sustainable revenue base that will deliver inclusive growth.

    She stated that the focus of the federal government in 2017 was to improve tax revenue through ensuring voluntary compliance with tax laws.

  • Lagos seeks forex, interest rate convergence

    Lagos seeks forex, interest rate convergence

    • State lauds Buhari’s Economic Recovery, Growth Plan

    Lagos State Governor, Mr. Akinwunmi Ambode yesterday called for convergence in foreign exchange (forex) rates and  interest rates’ reduction.

    He also pushed for a deliberate strategy to force down inflation rate to single digit as a means of stabilising the economy and putting ailing businesses back on track.

    Ambode, who spoke during the commissioning of an ultra-modern headquarters of Providus Bank in Lagos, said such measures would enable more investors to access funds and meet their obligations.

    Expressing optimism that the economy was gradually making steady move out of recession, Ambode said proactive steps must now be taken to sustain the successes recorded so far.

    Alluding to a recent report of World Economics revealing that the economy would soon move out of recession, he expressed delight at the fact that the consistent investment of the state government in critical sectors contributed to the resurgence of the economy.

    “While we are delighted that our efforts have contributed to this resurgence of the economy, there is still more to be done. The next steps are to achieve a convergence in the forex rates, force down inflation to a single digit and reduce interest rates. These will enable more business people to access funds and meet their obligations,” he said.

    He commended President Muhammadu Buhari over the Economic Recovery and Growth Plan (ERGP) recently released by the Federal Government.

    He said the economic blueprint would go a long way in charting the course for total economic recovery and growth desired by all.

    He also commended the Central Bank of Nigeria (CBN) for efforts at stabilising the exchange rates, and expressed optimism that the steps being adopted would help the ailing businesses to bounce back to profitability.

    Ambode said his administration has maintained a consistent programme of actively reflating the economy through massive expenditure in infrastructural development and engaging competent local contractors who in turn employ the people.

    He said between April last year and March  this year, a total of N16.9billion was released as payment of pension arrears to pensioners in the state, while N2billion was disbursed to young entrepreneurs and artisans under the N25 billion Employment Trust Fund (ETF) scheme.

  • Ex-CBN director: high interest rate disincentive to agric

    A retired director with the Central Bank of Nigeria ( CBN) Bishop Fred Adoyi said the high interest on loan to farmers is a disservice to the agriculture sector .

    Bishop Adoyi, who retired as Development Finance Officer (DFO)  appealed to deposit money banks to give loan to farmers on  0-9 per cent interest considering the hash economic reality in the country.

    In a telephone interview shortly after he was presented with an  award and appointment by National Farmers Export, Cooperative Congress (NAGFCC) in Makurdi Benue  state capital, Bishop Adoye stated that high interest loan to farmers is burden and cannot addressed food sufficiency .

    He said farmers needed to be encouraged to produce more food to feed the country and the only way was to give them loans on zero interest, saying farmers are still grappling with manual farming implements unlike their counterpart in Europe and America.

    Bishop Adoye said until Nigerians embraced  mechanised farming, achieving food sufficiency will be a mirage.

    On the award, he said it came  to him as a surprise  because he left the  service of the CBN years ago and was not expecting any award

    President of NAFECC Comrade Zakari Mathew said the award and appointment as consultant to  Bishop Adoyi was as result of his hard work and dedication during his period in CBN, which he rose to the rank of director before he retired

    Comrade Mathew noted with delight that during his years of service, Bishop Adoyi improved the fortunes of farmers in what is known  today as CBN/Anchor Norrowers Scheme.

    The scheme he said has led to the massive rice production  in the country.

  • MAN to Central Bank: reduce interest rate

    MAN to Central Bank: reduce interest rate

    Manufacturers yesterday pleaded for a rate cut to revive the sector.
    To the Manufacturers Association of Nigeria (MAN), retaining the Monetary Policy Rate (MPR) at 14 per cent by the apex bank would retard the sector’s growth.
    MAN President Frank Jacobs told the News Agency of Nigeria (NAN) in Lagos that the 14 per cent MPR would not boost domestic production.
    He said maintaining the present rate would prevent manufacturing from coping with the current recession.
    Central Bank Governor Godwin Emefiele had announced MPC’s decision to retain the MPR at 14 per cent at the end of its two-day meeting last week.
    Apart from retaining the MPR at 14 per cent, the CBN governor said the committee also voted to retain the Cash Reserves Ratio at 22.5 per cent.
    “We had thought that reducing the rates would enable banks to reduce percentage of getting loans to inject into the manufacturing sector to reflate the economy.
    “However, with the present circumstance, many domestic producers will be struggling to keep their businesses as a going concern and will not make profits.
    “As a result of the recession, most manufacturers will want to shed down workers, which will have negative social implication for the country,’’ he said.
    The MAN president urged the apex bank to reduce the interest rates in its next monitory policy meeting to ensure growth in the manufacturing sector.
    “It is only when rates are brought down that the manufacturers will be able to sustain and expand their businesses, even during recession,’’ he said.
    Jacob said with appropriate incentives, the manufacturing sector could cause an economic turnaround for the country.

  • NACCIMA seeks lower interest rate for investors

    NACCIMA seeks lower interest rate for investors

    To diversify the economy into the non-oil sector, there is need for  the government to ensure lower interest for investors, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has said.

    Its President, Bassey Edem, said the  interest rate charged investors by banks to investors were too high to stimulate the much-needed growth to lift the economy out of the woods.

    He spoke on the sideline of the review of the state of the economy and perspective on some trending socio-economic issues in Lagos.

    He described the economic situation as harsh, adding that rising inflation has reduced the real income and the purchasing power of the average Nigerian.

    He noted that inflation rate had risen from 9.55 per cent to 16.45 per cent since the beginning of the year, the highest point since 2005.

    He said the Gross Domestic Product (GDP) growth rate in the first quarter of the year was minus 0.36 per cent compared with the growth rate in the fourth quarter of last year, which it said, was 2.11per cent while the GDP growth rate in the first quarter of last year was 3.96per cent.

    Again, the same time, external reserves, decreased from $28.02 billion as at last February to $26.35 billion.

    Monetary Policy Rate (MPR), according to him, has been increased to 14 per cent from 11 per cent by last February.

    Edem added that the interest rate maintained a double digit figure, with the prime lending rate at 16.13 per cent and maximum lending rate of 26.73 per cent.

    The NACCIMA chief said the real sector is suffering from rising costs of production in a state of near economic stagnation while facing the prospects of being the base by which the government hoped to obtain tax revenue to finance the economy.

    “We note that the private sector, and by proxy, the majority of the populace which still exhibits confidence in the present administration are waiting anxiously to see the “Change” and dividends of democracy promised”.

    He urged the government to continue its fight against insecurity and corruption, adding that it should also stimulate the  economy.

    He said NACCIMA would continue to partner the government in actualising its economic plan for the country to ensure economic transformation and social development of the nation.

    “In the last six months, the outlook of the economy has been bleak. The rate of inflation has almost doubled, electricity generation has reduced by almost 50 per cent and the price of petroleum products has also doubled.

    “Again, foreign exchange earnings have continued to drop significantly due to reduction in output caused primarily by the vandalism of infrastructure and low crude oil prices in the global market,” he noted.

    Edem, who acknowledged the Federal Government for addressing these issues, said these  have not translated into measurable positive indicators, adding that it has rather led to recession has become worrisome to private sector operators.

  • CBN pegs interest rate at 14% to promote savings

    CBN pegs interest rate at 14% to promote savings

    The Federal Government yesterday got a wake-up call on the budget.

    Its implementation should be sped up to stimulate economic activities to bridge the output gap and create jobs, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) said yesterday.

    The MPC offered to work with the fiscal authorities to quickly mitigate the economic pains in the country, particularly the discomfort of inflation.

    It raised interest rate from 12 to 14 per cent to encourage savings and investment.

    Addressing reporters at the end of the bi-monthly MPC meeting in Abuja yesterday, CBN Governor Godwin Emefiele, said “the MPC underscored the imperative of coordinated action, anchored by fiscal policy, to initiate recovery at the earliest time”.

    The MPC, Emefiele said, advocated “for the urgent diversification of the economy away from oil to manufacturing, agriculture and services and called on all stakeholders to increase investment in growth stimulating and high employment elasticity sectors of the economy in order to lift the economy out of its current phase”.

    The MPC, he said, recognised the weak macroeconomic environment, as reflected particularly in increasing inflationary pressure and contraction in real output growth. Members, Emefiele said, “call on the Federal Government to fast-track the implementation of the 2016 budget in order to stimulate economic activity to bridge the output gap and create employment”.

    Members, the governor said, agreed that the economy was passing through a difficult phase, dealing with critical supply gaps and underscored the imperative of carefully navigating the policy space to engender growth and ensure price stability. The MPC  summarised the two policy options it was confronted with as restarting growth or fighting inflation.

    The MPC expressed concern over non-payment of salaries in some states and urged express action in that direction to help stimulate aggregate demand.

    The MPC restated its commitment to measures and deployment of relevant instruments within its purview to complement fiscal policy with a view to restarting growth.

    The Committee also enjoined Deposit Money Banks (DMBs) to partner with the government and the CBN “by redirecting credit from low employment generating sectors to those capable of supporting growth, reducing unemployment and improving citizens’ standards of living”.

    Emefiele lamented that the economy is still saddled with the effects of the shocks of the first quarter of 2016, which led to a contraction in output arising from energy shortages, high electricity tariffs, price hikes, scarcity of foreign exchange and depressed consumer demand, among others.

    The CBN governor also said “the implementation of the 2016 budget in the second quarter remained slower than expected”. “The Committee noted that most of the conditions undermining domestic output growth were outside the direct purview of monetary policy.

    “Aggregate output contracted in virtually all sectors of the economy, with the non-oil sector recording a decline of about 0.18 per cent, compared with the 3.14 per cent expansion in the preceding quarter. Agriculture and Trade were the only sectors with positive growth at 0.68 per cent and 0.40 per cent, respectively, whereas, Industry, Construction and Services contracted by 0.93, 0.26 and 0.08 percentage point, respectively.”

    Speaking on the biting inflation Emefiele said “the increase in headline inflation in June reflected increases in both food and core components of inflation”. Core inflation “rose sharply for the fourth time in a row to 16.22 per cent in June, from 15.05 per cent in May; 13.35 per cent in April; 12.17 per cent in March; 11.00 per cent in February and 8.80 per cent in January having stayed at 8.70 per cent for three consecutive months through December, 2015. Food inflation also rose to 15.30 per cent in June, from 14.86 per cent in May; 13.19 per cent in April; 12.74 per cent in March; 11.35 per cent in February, 10.64 per cent in January and 10.59 per cent in December, 2015.”

    Emefiele noted that the MPC was concerned that while the situation called for obvious tightening of the monetary policy stance, the technical recession confronting the economy and the prospects of negative growth to year-end needed to be factored into the policy parameters.

    The MPC voted to: Increase the MPR by 200 basis points from 12.00 to 14 per cent; Retain the CRR at 22.50 per cent; Retain the Liquidity Ratio at 30.00 per cent; and Retain the Asymmetric Window at +200 and -500 basis points around the MPR.

    Emefiele assured the country that the CBN development finance focus remained.

    He said: “We would through target interventions continue to support Disbursements of funds to certain targeted sectors of the economy, particularly agriculture, mineral sector those who want to go into new and fresh manufacturing, importation of plants so as to boost industrial output.”

    “The MPR was moved up by 200 basis points for specific reasons and the CBN remains committed to boost through targeted intervention and through its anchor borrower programme not only for rice but also for tomato and other agricultural produce where we see potentials for strong comparative advantage in the country, Emefiele said.