No doubt the economic impact of the COVID-19 pandemic was devastating on the Nigeria economy. 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. This of course led to the economy slipping into recession in the third quarter of 2020. This marked the country’s second recession since the 2014 commodity price shock.
The economic environment not only deteriorated as the pandemic claimed lives and kept many people out of job, worsening the already unemployment situation but also triggered humanitarian, and in some cases, security challenges.
Speaking at the 55th Chartered Institute of Bankers of Nigeria (CIBN) dinner in Lagos, the Central Bank of Nigeria Governor, Mr Godwin Emefiele, however said there is no cause to panic. He said that prior to the recession, Nigeria witnessed 12 consecutive quarters of economic expansion after a similar experience in 2016. “As we are all aware, prior to the onset of the virus in December 2019, the Nigerian economy was on a positive growth trajectory, having made a significant recovery from the 2016-2017 recession, which was triggered by the drop-in commodity prices in 2016,” he said.
“We however expect that Nigeria would emerge from the recession by the first quarter of 2021, due to high frequency data that indicates continued improvements in the non-oil sector of our economy.”
Speaking further, Emefiele said, “We also expect that growth in 2021 would attain two per cent. However, downside risks remain, as restoration of full economic activities, particularly in service related sectors, remains uncertain until a COVID-19 vaccine is produced and made available to millions of people across the world.”
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.
As an optimist, the CBN governor even suggested turning the COVID-19 pandemic into an opportunity for Nigeria. According to him, “For how long shall we continue to rely on the world for anything and everything at every time? Although these developments are troubling, they present a clear opportunity to re-echo a persistent message the Central Bank of Nigeria (CBN) has been sending for a long time, and at this time even more urgently so: We must look inwards as a nation and guarantee food security, high quality and affordable healthcare, and cutting-edge education for our people.
“For a country of over 200 million people, and projected to be about 450 million in a few decades, we can no longer ignore repeated warnings about the dangers that lie ahead if we do not begin to depend largely on what we produce locally. The security and wellbeing of our nation is contingent on building a well-diversified and inclusive productive economy.”
The economic recovery and subsequent growth, analysts said, would be quickened by the CBN’s strategic policy implementations promoting real sector growth through development financing.
According to the apex bank, 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, will make development, welfare improvement to proceed at a faster rate.
To achieve this goal, the apex bank embarked on the implementation of intervention programmes to support key sectors of the economy ravaged by the pandemic.
The bank came up with intervention programmes for agriculture, manufacturing, infrastructure, health, the creative industry as well as the Micro Small and Medium Enterprises (MSMEs). The CBN has channelled funds at single interest rates to operators in these sectors and is implementing positive policies that would see their operations come back to life. So far in the agricultural sector, the CBN authorised 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.
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.
The CBN has already funded over 91 healthcare projects amounting to over N97 billion under the health sector intervention fund (HSIF) as at May 28 2021. The bank has also disbursed over N111 billion to 29,023 beneficiaries under the AGSMEIS as at May this year while 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.
The interesting thing about these intervention programmes is that they are spread across the 36 states of the federation and the FCT. Of particular interest is the CBN’s intervention in the agriculture sector with its Anchor Borrowers Programme (ABP), a programme that has revolutionised the nation’s agriculture sector and given farmers a new lease of life and hope for a better future.
So far, CBN has committed over N631 billion to the programme. The Anchor Borrowers Programme focuses mainly on farmers cultivating cereals (rice, maize, wheat etc.) cotton, roots and tubers, sugarcane, tree crops, legumes, tomato and livestock.
“When I became Governor of the Central Bank in June 2014, imports of rice, fish, wheat and sugar alone consumed about N1.3 trillion worth of foreign exchange from the Bank,” said Emefiele. “My immediate question was: can we not produce these ourselves? After all, only a few decades ago, Nigeria was one of the world’s largest producers and exporters of many agricultural products like palm oil, cocoa and groundnuts.”
The impact of the CBN in agriculture is clearly evident in the volume of rice, beans and maize the nation now produces which have significantly reduced the import bill on food. It is obvious the CBN shifted its policy focus from price stability to the stimulation of economic recovery and growth in the year 2020 to complement the federal government’s fiscal stimulus in a bid to support business continuity and economic sustainability.
–Gilbert, a development economist, wrote from Apo, Abuja