EDITORIAL: Emefiele’s Policy Interventions

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The authorities of Ahmadu Bello University (ABU), Zaria, recently disclosed that the Central Bank of Nigeria (CBN), has spent N6 billion on its Business school. They also pointed out that the injection of funds has helped the school especially in its effort to expand and introduce related academic programmes in the school. This follows the apex bank’s policy under the supervision of the Governor, Mr Godwin Emefiele, to delve into development banking that will rub off on all sectors of the economy in an integrated pattern.

The ABU intervention is one among many in the nation’s tertiary institutions that have gone a long way to positively enhance the expansion of the frontiers of academic pursuit just as it eased the stress that would have been involved if the benefitting institutions were to toe the line of sourcing for funds through other channels.

On assumption of office as the helmsman at the CBN, Emefiele made it a point not to restrict himself to the core CBN functions of monetary policy formulation and implementation as well as financial systems’ stability. Drawing from his experience as an operations’ specialist in Deposit Money Bank (DMB) sub-sector of the banking sector and also as an academic, he knew that to remain on that track in an economy that was receiving some severe shocks that had instigated instability in its functioning mechanism would have created even more problems or, at least, delayed the progress so far attained with the interventions.

Based on this reasoning, it became imperative, in our opinion, that there has to be some form of not only policy shift but an expansion in the areas the apex bank can apply some measure of flexibility aimed at jump-starting the idle as well as low performing sectors and make them play their due role in revitalising the economy and place it on the part of growth and development. Initially, it seemed to be a risky foray off the Bank’s comfort zone but it has since proved to be a worthwhile experience not only for him and the Bank but also for the economy that has rebounded after a discomforting recession. One of the underlying factors that buoyed that CBN’s policy thrust has to do with its determination to minimize the effects of high interest rates on customers particularly in some select sectors of the economy that are critical contributors to the Gross Domestic Product (GDP).

There were other interventions in the core areas of manufacturing, agriculture and micro, small and medium enterprises (MSME). Before his arrival, the CBN had, in 1977, made a push towards the Agricultural Credit Guarantee Scheme. Since then, the Bank has continued to intervene through various developmental initiatives, all at single digit interest rates. As at today, the CBN has disbursed well over N400 billion in 490 projects under the Commercial Agriculture Credit Scheme. The apex bank has also disbursed over N45 billion under the Anchor Borrowers’ Programme (ABP). This particular policy has moved the country to the point that it was no longer depending one hundred per cent on imported rice as it has brought a dramatic reduction in the nation’s food import bill and has also released an overbearing pressure on the foreign exchange market. Similarly, the Bank has injected N150 billion under the MSME Scheme, and N236.4 billion under the Power and Aviation Intervention Fund.

In addition, through its Refinancing and Restructuring Facility (RRF), the CBN has disbursed over N400 billion to core manufacturers through the restructuring of their loans in Deposit Money Banks (DMBs) into longer term facilities, thereby helping to stimulate the economy with immediate liquidity for growth of the manufacturing sector. Combined, these schemes have created over 6.7 million direct jobs and a lot more indirect jobs.

There were arguments that some of his policies were a deviation from CBN’s core functions because they blocked leakages that had previously haemorrhaged the economy. In response, he had made it clear that in all cases, genuine leadership, the type that he was giving the CBN and, by extension, the economy, was not about popularity contest. It is about identifying what is good for the country and the people and pursuing same with single-minded determination based on sound and accurate reading of the economic barometer as well as the courage to pursue his convictions wherever it leads. We are persuaded to argue that the actions taken, as tough as they seem, are geared towards setting the economy on the path of sustainable development in the medium to long term. While we commend the CBN and, specifically the Governor, it is pertinent, in our view, that he, from time to time, revisit some of the interventions, especially in the power sector just to ensure that there is no abuse capable of negating the desirability of his intentions.

By LEADERSHIP Editors