Amidst concerns over the continuous drop in the volume of the nation’s foreign reserves, the Central Bank of Nigeria (CBN) said yesterday that there is no need to panic.
Nigeria currently has a foreign reserves gross rate of about $44.3 billion, which still safely leaves the country on the green side.
At $44 billion, CBN still has between 17 and 20 months of import cover, while the international standard is at least three months import cover.
Speaking at the 2018 Abuja International Trade Fair with the theme: “Enhancing SMEs in Agribusiness through Innovative Technology”, CBN’s director of corporate communications, Isaac Okorafor, insisted that the apex bank has solid reserves base to defend the Naira.
“Oil price is also moving in the direction we desire. With all these combinations, we are very, very comfortable. We have the reserves to defend the naira. And we have the total support to encourage the SMEs to go into production”, Okoroafor noted.
The CBN Spokesman blamed the drop in foreign reserves on the recent reversal of the capital flows by portfolio investors who, he said, moved to countries like the United States of America where there was a recent rise in interest rate.
He said the Nigerian economy was not affected because the country built enough buffer of reserves to be able to tackle situations like this.
“The second one is that we are using the reserves to defend the value of our currency. It only made it drop a little. You would recall that we survived on even $23.6 billion. The economy was running. Now, we are over $44 billion”, Okorafor added.
He explained that more than any other institution in Nigeria, the CBN has demonstrated a passionate commitment to the support of SMEs in the Agribusiness through its various development finance interventions and schemes such as Agricultural Credit Guarantee Scheme Fund, N200billion Commercial Agricultural Credit Scheme; N200billion SME Restructuring & Refinancing Facility, SMEs Credit Guarantee Scheme, N300billion Power and Airline Intervention Fund.
He listed other intervention schemes to include the N220billion Micro, Small and Medium Enterprise Development Fund, Nigeria Incentive-based Risk Sharing System for Agricultural Lending and Real Sector Support Facility, among the 14 interventions the bank embarked on recently.
Okorafor said the Bank will continue to roll out proactive and innovative policies to ensure that all economic sub-sectors, especially the SMEs in Agribusiness, receive the desired support.
Promising that the Godwin Emefiele-led CBN will continue to ensure that the apex bank delivers on its core mandate of ensuring monetary and price stability, Okoroafor said, “We are determined to ensure that Nigeria’s economy remains in a state of consistent growth even as we focus on economic diversification and national food sufficiency”.
In his remarks, president of the Abuja Chambers of Commerce, Prince Adetokunbo Kayode, said CBN’s Monetary Policy Committee, which has the responsibility of formulating monetary and credit policy, has also done remarkably well in either adjusting or retaining key indicators.
“We recognize (with great appreciation) the genuine efforts of the present administration of the apex bank under the able, focused and visionary leadership of the Governor, Mr. Godwin Emefiele. CBN is now more than ever committed to the regulation, preservation and stabilization of the integrity of our currency,” Kayode added.
W/Bank Cuts Nigeria’s Growth Prospects To 1.9%
Meanwhile, the World Bank has reduced its forecast for Nigeria’s economic growth this year by 0.2 per cent to 1.9 per cent.
The bank also reduced its economic growth forecast for sub-Saharan Africa this year to 2.7 per cent from an earlier forecast of 3.1 per cent, citing slower than expected growth witnessed in Africa’s largest economies.
It also cut its estimate for South African GDP expansion to one per cent this year from 1.4 per cent before, and sees growth in 2019 remaining subdued as high unemployment constrains domestic demand.
Nigeria’s growth had slowed in the second quarter, while South Africa is slipping into a recession.
The World Bank noted that sluggish expansion in Angola, Nigeria and South Africa, the three biggest economies, is weighing on economic activity in the area.
The region, which had posted a fairly fast average growth rate in the years leading up to 2015, suffered a loss of momentum in economic output after commodity prices crashed in 2015 and 2016.
In April this year, the World Bank had predicted that the recovery would gather pace this year, with average growth expected at 3.1 per cent, up from 2.3 per cent last year.
The bank yesterday said: “The slower pace of the recovery in Sub-Saharan Africa is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa.”
The World Bank explained that lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture.
“The road ahead is bumpy. The tightness of oil supply suggests that oil prices are likely to remain elevated through the rest of the year and into 2019. Metals prices have been lower than previously forecast and may remain subdued in 2019 and 2020 amid muted demand, particularly in China”, it said.
The World Bank further hinted that the rest of the countries in the region have been growing steadily this year, including those that don’t depend on commodities such as Ivory Coast, Kenya and Rwanda.
Albert Zeufack, the World Bank’s chief economist for Africa, urged governments in the region to stop wasting money boost productivity to support the region’s economic recovery.
He warned that high public debt in some countries in the region, combined with weakening currencies and rising interest rates, could endanger their ability to service those debts.
“Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt,” Zeufack said.
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