COVID-19: How CBN’s interventions saved economy

The Central Bank of Nigeria (CBN) said during the COVID-19 heat, the economic crisis befell Nigeria just like other countries, but it took several steps to keep the economy afloat.

Reacting to issues raised by the Nigerian Economic Summit Group (NESG) on Tuesday, CBN said, “The CBN like other Central Banks across the world had to embark on extraordinary measures in order to stabilize the economy from an extraordinary shock.”

Some of the steps include one year extension of a moratorium on principal repayments for CBN intervention facilities, strengthening Loan to Deposit ratio policy with over 21% rise, creating N50 billion target credit facility for households and SMEs, NGN100bn pharmaceutical funding, N1 trillion facility to boost local manufacturing, among others.

CBN also said it recently slashed the interest rate on savings accounts to ensure investors expand their businesses after observing a huge gap in deposits and loans across the banks.

“Total deposits stood at about N25 trillion in January 2020, total loans stood at N17tn. As of August 2020, while total deposits have increased to N29.7tn, total loans were only N19tn.”

It said rich firms and individuals had more savings rather than investing which should lead to hiring more people and producing more goods.

“In order to forestall a continuation of this trend, the CBN had to act to discourage these practices for the good of the economy.”

On the continued borders’ closure, the CBN spokesman, Isaac Okoroafor, said it was due to “significant economic sabotage involving smuggling of many fake products, drugs, small arms, and other goods,” from neighbouring countries.

“If these countries, given their huge benefits from a rigged system, deny there is even a

problem how can Nigeria reopen the border without resolving these matters?

On forex, it noted that it resumed allocating a certain amount of FX to licensed BDCs per week, who resell to small-scale users. In both categories, the CBN does not know the final buyers of this FX.

“Given that the NESG should know better, we believe that these allegations are reflective of sinister motives and malicious intent,” it noted.