Not a few economic analysts agree that there is urgent need for fiscal measures to complement efforts of the monetary authorities in reflating the Nigerian economy. Some have even accused the Central Bank of Nigeria (CBN) of involving itself too far in performing fiscal functions. Those who hold such view say that the bank has gone beyond its core mandate of price and monetary stability. But they don’t seem to be aware of the development financing mandate of the CBN along its core monetary policy function. The call has been for a collaboration between monetary and fiscal authorities to build a strong economy.
Upon assumption of office in 2014, CBN Governor Godwin Emefiele unfolded a 15-point vision to build a model, people-centered bank capable of delivering price and financial system stability and promoting sustainable economic development. His diligent delivery of that promise earned him a second term as head of the Nigerian central bank.
When he was reappointed by President Buhari in 2019, he unveiled a five-point agenda to ensure domestic macroeconomic and financial stability; foster the development of a robust financial payment system infrastructure that will increase access to finance to all Nigerians, thereby raising the financial inclusion rate in the country and continue to work with deposit money banks (DMBs) to improve access to credit for not only smallholder farmers and MSMEs but also the consumer credit and mortgage facilities to bank customers.
He also promised to extend intervention support to the teeming youth population who possess entrepreneurial skills in the creative industry; encourage deposit money banks to direct more focus on supporting the educational sector and grow external reserves, with a focus on supporting efforts at diversifying the economy through intervention programmes in the agricultural and manufacturing sectors. Fortunately, the CBN under the leadership of Emefiele has achieved significant success in the plan to diversify the nation’s economy.
The CBN has like at no other time churned out monetary policies and guidelines of huge dose of growth prospects and maintained a strong courage in its conviction on the populism of such policies, which development experts say will increase the nation’s foreign portfolio and domestic trading activities.
The conduct of monetary policy by the CBN over the years has been designed majorly to influence the growth of money supply consistent with the required aggregate Gross Domestic Product (GDP) growth rate. Beyond that, the apex bank under the leadership of Mr Emefiele has taken steps to ensure financial stability, maintain a stable and competitive exchange rate of the naira to the U.S Dollar and put the economy on the track of speedy recovery.
The somehow invisible impacts of the articulated policies and interventions of the CBN towards reviving Africa’s largest economy are based on some factors that require more than the hands of the monetary authority to fix. For instance, as rightly stated by Mr Emefiele, the size of Nigeria’s foreign exchange reserve and the value of the naira critically depend on public lifestyle and on the value and types of imports that are allowed into the country. Nigeria is unarguably an import-dependent country, and any country that solely lives and depends on importation always suffers setback in its economy. Although the CBN has partially floated the naira, the exchange rate is yet, determined by the forces of demand and supply.
As part of efforts to deepen the foreign exchange market and stabilise the financial markets generally, the central bank has deployed a number of policy instruments including an increase in the benchmark interest rate, which is one of the major attracting factors to foreign investment. Complementary administrative measures were also taken towards achieving this goal, among which was the directive to International Money Transfer Organisations (IMTOs) to sell forex directly to Bureau de Change Operators, in order to improve liquidity in that segment of the foreign exchange market.
The impact of these on the Nigerian economy was quite severe, cumulatively plunging the economy into a recession. The tough period called for bold and positive decisions to be taken and the CBN.
The CBN-initiated Anchor Borrowers’ Programme (ABP) launched by President Muhammadu Buhari in November 2015 has triggered a revolution in the value chains of selected crops, especially rice. This novel development finance intervention scheme ensured that Nigeria emerged from being a net importer of rice to becoming a major producer of rice, supplying key markets in neighboring countries. Statistics reveal that a total number of over one million farmers cultivating over hundreds of hectares of land.
In 2014 he took office, there was a 60 per cent decline in the price of crude oil, geo-political tensions rose and were widespread along critical global trading routes and the normalisation of monetary policy by the United States’ Federal Reserve System led to acute capital flow reversals.
But his proactive policies have helped pulled the Nigerian economy out of the doldrums. For instance, a peep into the CBN development finance books shows that the central bank has spent N1.7 trillion on its various agricultural intervention programmes headlined by its ABP. Official information showed that a total of 3,067,983 million farmers have benefited from the programmes, and another 1,195,974 million projects financed and guaranteed as part of its development finance programmes.
There are concerns that despite the interventions to boost food production, Nigeria still faces shortage in food supply chain, resulting in rising food inflation.
Monetary Policy Committee of the central bank had raise the concern over the worsening security situation in many parts of the country, particularly, the food producing areas, where farmers face frequent attacks by herdsmen and bandits in their farms.
Emefiele had at the 23rd-25th combined convocation at the Federal University of Agriculture, Makurdi, Benue State earlier this year said N608.366 billion had been disbursed to 3,038,899 farmers that cultivated 3,776,228 hectares along 21 commodities through 23 participating financial institutions in 36 States and the FCT as at March 2021 under it’s ABP.
Besides the ABP programme, the CBN’s support for the agricultural sector includes: Agricultural Credit Guarantee Scheme (ACGS): provides 75 per cent guarantee for loans given by Deposit Money Banks (DMBs) and Micro Finance Banks (MFBs) for agricultural purposes. “As at March 2021, 1,195,326 projects have been guaranteed valued at N123.580 billion,” he said.
He said N696.038 billion has been disbursed to 648 projects as at March, 2021under the bank’s Commercial Agriculture Credit Scheme (CACS).
According to Mr Emefiele, N19.692 billion has been disbursed to 14 beneficiaries under Accelerated Agricultural Development Scheme (AADS), while another N111.706 billion was disbursed to 29,023 beneficiaries who participate in Agribusiness Small and Medium Enterprises Investment Scheme (AGSMEIS).
“Paddy Aggregation Scheme (PAS): provides working capital to processors to aggregate paddy during peak season in order to take advantage of low prices and build a healthy stock to sustain their processing activities. N100.189 billion has been released to 39 millers.
“Maize Aggregation Scheme (MAS): provides working capital to feed mills, large scale poultry farmers, confectionery companies to stock maize during peak season and benefit from lower prices for maize at harvest. N6 billion has been released to 8 beneficiaries,” he said, adding that the apex bank also funded Presidential Fertilizer Initiative (PFI) with N35 billion working capital to support raw materials acquisition by blending plants to guarantee local supply of fertilizers.
For Nigeria’s first professor of the capital market, Professor Uche Uwaleke, the overall objective of these interventions is to promote financial inclusion in the country, tackle unemployment, insecurity and other social challenges.
LEADERSHIP had exclusively reported that the CBN released the sum of N12.552 billion to large, medium and small-scale poultry farmers in the country as part of its strategy to boost egg and meat production as well as create more jobs in the country.
Sources at the Bank indicate that between the last quarter of 2019 and November 2020, farmers in the poultry value chain in the country received a total sum of N12,552,000,000 from various commercial banks and the NIRSAL Microfinance Bank.
According to the bank, large-scale companies that benefited from the CBN intervention programmes include Fortune Heights and Animal Care, both in Ogun State; Dasco Engineering in Lagos, Olam Hatcheries in Kaduna, Eastern Plains in Anambra State and Emmpek Farms in Delta State. Other beneficiaries listed under the Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS) window include Elabi Farms in Bayelsa and Aladeyelu Farms in Ondo.
Some of the CBN intervention schemes are; Non-Interest Guidelines for Accelerated Agriculture Development Scheme (AADS); Non-Interest Guidelines for Intervention in Textile Sector; Guidelines for the operation of the Agri-business, Small and Medium Enterprise Investment Scheme (AGSMEIS) for Non-Interest Financial Institutions; Non-interest Guidelines for Non-oil Export Stimulation Facility; Non-interest Guidelines for Anchor Borrowers’ Programme; Non-interest Guidelines for Real Sector Support Facility Revised Guidelines; Non-interest Guidelines for the operation of the Credit Support for the Healthcare Sector, Modalities for the implementation of the Creative Industry Financing Initiative (Non-interest version).