BY MARK ITSIBOR, Abuja
For the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, only a few innovations and steps need to be taken for the Nigerian economy to hug the headlines for the prowess of attracting investors’ confidence within the shortest possible time and put the economy on a sustainable growth pedestal. On that, Emefiele and his team have shown great resilience and commitment not just to stabilise the financial market and make it a toast of local and foreign investors, but to give life and practical meaning to the well-advertised economic diversification of the federal government.
Addressing a financial stakeholders’ roundtable meeting that was summoned by the Senate Committee on Banking, Insurance and other Financial Institutions recently, Mr. Emefiele did not lose guard when he took the Senators and other members of the forum through the issues around the Nigerian economy at large, and financial sector in particular. At a start, he blamed the so much pressure on the Naira on continues hanging of the Nigerian economy on importation. He lamented the fact that the economy is still being run on the determination of prices of foreign commodities, while calling on the fiscal authority to pay outstanding debts to contractors and concentrate more on infrastructure building and give premium attention to agriculture.
He recalled that based on the debilitating effect of continues dependence on imported products; the CBN has taken several steps to control the exchange rate and moderate inflation, with a focus to reduce interest rate. He assured the Senate committee that the central bank will do more intervention in the manufacturing sector at a maximum lending rate of nine per cent.
Despite that promise, there are fears that urgent/practical steps need to be taken to salvage the brouhaha over the infamous high interest rate that is now seen as inimical to investments.
The CBN is not oblivious of that. As a lasting solution to the ranging doom for the economy, the CBN has unveiled a new template to reinvent the economy. According to the new template, Nigerian government – both fiscal and monetary authorities need to boost agricultural funding to increase production of farm produce for sufficient local consumption and export abroad, with a focus to earn foreign currencies. The CBN is also seeking the support of the national assembly in the bank’s intervention efforts.
According to Emefiele, the central bank has concluded plans to engage all the banks on how to lend to the Small and Medium Enterprises (SMEs) that are seen as the bedrock of the economy. There have been concerns that the current interest rate that range from 16 to 20 per cent is anti-investment. He told the lawmakers that the CBN will also embark on capacity building for operators in the SMEs value chain and de-risk the SMEs business.
The template also underscores the need for the business operators to learn from the experience of other countries, engage in commodity exchange to make SMEs value chain attractive for lending.
The CBN wants genuine farmers with interests in Tomatoes, dairy, poultry, Rice, Cotton, and Wheat, farming to come up with more viable projects for financing. “We need to create jobs for our teaming youths,” he told the stakeholders who throng the committee meeting room.
Apart from its commendable efforts at making the Nigerian central bank a model for Central Banking and a financial catalyst in the African sub-region through stabilization of the once troubled foreign exchange market, the Emefiele-led CBN is viewed by the foreign media and, by extension the international community as a reliable force to help drive the nation’s economy out of recession (through its policies and models) and put it on the part of speedy recovery and financial stability. The CBN Governor also told the committee that N27 billion has been realized as intervention for the SMEs from the five per cent equity funds by all the banks.
The focus is to make Nigeria an investment destination to all and there are indications that the country is already walking that part. Nigeria was ranked as the nineteenth most attractive economy for investments flow into Africa by Africa Investment Index 2016 conducted by Quantum Global’s independent research arm, Quantum Global Research Lab. In 2015, Nigeria attracted a net foreign direct investment of US$3.1 billion.
Botswana was ranked first in the cadre as the most attractive economy for investments flowing into the African continent followed by Morocco, Egypt, South Africa and Zambia. According to the report, the top five African investment destinations attracted an overall FDI of US $13.6 billion.
Purchasing Managers Index research that was carried out independently by the CBN in June revealed that the Nigerian manufacturing PMI recorded the third increase consecutively, rising up to 52.9 index points in June 2017 from 52.5 index points in May. Employment level index in June 2017 stood at 51.1 points, indicating growth in employment level for the second consecutive Month. Of the 16 sub-sectors, 10 recorded growth in employment in the following order: computer & electronic products; plastics & rubber products; transportation equipment; appliances & components; paper products; petroleum & coal products; primary metal; fabricated metal products; textile, apparel, leather & footwear and food, beverage & tobacco products. The remaining 6 sub-sectors however recorded contraction in employment in the following order: cement; nonmetallic mineral products; electrical equipment.
The business activity index rose to 57.0 points in June 2017 for the third consecutive month. The index grew at a faster rate, when compared to its level in the previous month.
In the eyes of local and foreign experts, the increase in the PMI report indicates that the banking watchdog’s sustained dollar injections have impacted positively on the economy.