A few days ago, Nigerians were taken aback by the outburst of the Nigerian Economic Summit Group (NESG) in their statement with the title: ‘Matters Of Urgent Attention’ directed at the activities of the Central Bank of Nigeria (CBN).
It is pertinent to note that the NESG is a private sector-led think-tank and policy advocacy group. It promotes sustainable growth and the development of the Nigerian economy. Its mandate is to champion the reform of the Nigerian economy into an open, private sector-led one that is globally competitive on a sustainable basis.
The NESG in the statement had criticised the CBN’s interventions in the Nigerian economy in recent times, particularly in the agricultural sector, arguing that despite the huge sums of money the apex bank has been disbursing to support farmers in Nigeria, the nation is still battling with hunger.
In its reaction, the CBN insisted that whatever it did, in the form of interventions, was to save the economy from total collapse. The CBN also made it clear that its policy direction was to increase the flow of credit to critical sectors of the economy, in order to enable faster recovery of the economy. It frowned at the fact that such commendable efforts were either not sufficiently understood or, for whatever reasons, were not appreciated by some critical stakeholders in the country.
The apex bank in a statement pointed out that “with the disruptions caused by the COVID-19 pandemic, the Nigerian economy could have faced a major food crisis but for the government’s proactive intervention programmes in the agriculture sector.”
It listed some of the steps it has taken so far to include the one-year extension of a moratorium on principal repayments for CBN intervention facilities; strengthening of the Loan-to-Deposit ratio policy, which it said has resulted in a significant rise in loans provided by financial institutions to banking customers and the fact that loans given to the private sector have risen by over 21 per cent over the past year.
Other efforts taken include the creation of N50 billion target credit facility for affected households and small and medium enterprises through the NIRSAL Microfinance Bank; creation of a N100 billion intervention fund in loans to pharmaceutical companies and healthcare practitioners intending to expand and strengthen the capacity of the local healthcare institutions; creation of a research fund, which is designed to support the development of vaccines in Nigeria, among others.
The outbreak of COVID-19, no doubt, threw the global economy into chaos forcing central banks across the globe to embark on measures aimed at stabilising their respective economies by reducing lending rates, which declined to negative territory in several advanced economies, in addition to increasing the scale of their asset purchase programmes.
As a newspaper, we believe that the CBN cannot be faulted for the steps it has so far taken to save the nation from sinking into depression with the attendant negative consequences. The intervention efforts of the CBN, in our view were, and still are, in line with global trend and the result can be seen from the minimal effect the pandemic had on the nation.
Also, we appreciate the role of NESG as a critical platform for the discussion of issues related to the health of the nation’s economy. In particular, we note that its annual meetings come out with positions that the government draws from in its policy formulations.
However, its recent outburst suggests a crack in the relationship between the group and government or could it have been done in bad faith?
Already, some board members of the group are resigning over the comment against the CBN, an indication that all members were not carried along when the decision to issue the statement was made. A situation like this is unacceptable, especially at a time when all hands ought to be on deck to rescue the nation.
Be that as it may, it is our opinion that a healthy synergy between the CBN and the NESG is of the essence in the effort to build an economy that will prosper on a sustained basis. This is just as we believe that the private sector group should have passed its views through the appropriate channels to save itself the embarrassment of losing some of its members due poor information management on its part.