The effect of the COVID-19 pandemic on global economic system was devastating. Nigeria was not spared the impact of this ill-wind. An economy which grew by 1.87 per cent in real terms in the first quarter of 2020, contracted by 6.1 per cent and 3.62 per cent in second and third quarters of 2020, respectively. That the economy slipped into recession in third quarter of 2020 was inevitable.
Following the uncertainty brought about by the pandemic, many countries of the world began to place restrictions on the export of their essential products particularly food and healthcare products. And for an import dependent country like Nigeria, it was like the end has come. However, it brought out the best in the management skills of institutions like the Central Bank of Nigeria (CBN) which opted to turn the seeming disaster into an opportunity through some interventionist measures.
The apex bank accepted that the developments thrown up by the pandemic were troubling enough just as they present a platform for it to re-echo its persistent message that the nation must look inwards so as to guarantee food security, high quality and affordable healthcare, and cutting-edge education for the citizens.
For a country of over 200 million people, and projected to be about 450 million in a few decades, it is suicidal, in the opinion of this newspaper, for the country to continue to ignore repeated warnings about the dangers that lie ahead. In other words, the security and wellbeing of the nation is contingent on building a well-diversified and inclusive productive economy.
It is from this perspective that analysts argue that the economic recovery and subsequent growth will be quickened by the CBN’s strategic policy implementations promoting real sector growth through development financing.
We recall that the Governor of the bank, Mr Godwin Emefiele, had insisted that development financing, which is the supply of finance to various sectors of the economy, will promote the growth of the economy in a holistic manner and this, invariably, will make development, welfare improvement to proceed at a faster rate.
It is pertinent to note that it was to achieve this goal that the apex bank embarked on the implementation of intervention programmes to support key sectors of the economy ravaged by the pandemic. These sectors include but are not limited to agriculture, manufacturing, infrastructure, health, the creative industry as well as the Micro Small and Medium Enterprises (MSMEs).
Most of these intervention funds were made available to these sectors at single interest rates. So far in the agricultural sector, the CBN authorized commercial banks to give up to N2 billion maximum loan to youths interested in going into agriculture. The loan, which comes under the Accelerated Agriculture Development Scheme (AADS) at five per cent interest rate per annum was created by the regulator in collaboration with state governments to engage 370,000 youths in agricultural production.
Furthermore and in line with its COVID-19 response plan, the CBN created a N100 billion credit facilities for the health sector, under the Health Sector Intervention Fund (HSIF), another N100 billion Targeted Credit Facility (TCF) and N1 trillion intervention fund for the manufacturing sector. From January 2021 to date, the apex bank has disbursed over N157 billion for 29 real sector projects. Within the same period, the bank has disbursed another N26 billion for 10 projects under the covid-19 manufacturing intervention scheme (CMIS) while over N255 billion has been disbursed for 78 projects under the CMIS from January 2020 to May 28, 2021.
Similarly, it has already funded over 91 healthcare projects amounting to over N97 billion under the health sector intervention fund (HSIF) as at May 28 2021 just as it disbursed over N111 billion to 29,023 beneficiaries under the AGSMEIS as at May this year. Another N3 billion was disbursed to 341 beneficiaries under the Creative Industry Finance Initiative (CIFI) within the same period.
Under the Targeted Credit Fund (TCF), over 548,345 beneficiaries have received a cumulative sum of over N253 billion. The bank also disbursed over N3 billion to 7,057 NYIF beneficiaries, while over N85 billion was disbursed to746 MSMEDF beneficiaries within the same period. Of particular interest is the CBN’s intervention in the agriculture sector with its Anchor Borrowers Programme that has revolutionized the agricultural sector and given farmers a new hope.
It is obvious that the CBN, for good reason, shifted its policy focus from monetary and price stability to the stimulation of economic recovery and growth to complement the federal government’s fiscal stimulus in a bid to support business continuity and economic sustainability.
A prominent player in the economy and Director-general, Lagos Chamber of Commerce and Industry (LCCI), Muda, in analyzing the CBN’s interventions, commended its focus on stimulating the economy and pointed out that several governments globally did the same through the provision of fiscal stimulus to support households, small businesses, and their economies generally while central banks eased monetary policy conditions.