CBN urged to mobilise finance to highly elastic employment sectors

AMIDST A FRAGILE BUT STABLE recovery from 2016’s recession, the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) members last Thursday stressed the need to focus on financing sectors of the economy that are highly elastic towards employment.

Considerations of the MPC from its last two-day meeting for the year, indicated that one of the sectors identified for more access to finance is the Small and Medium Scale Enterprises (SME).

The committee’s decision was amidst the belief that the domestic economy’s recovery from recession was tepid and efforts should be stepped up to strengthen aggregate out-

put and demand.

“In this regard, the committee urged the CBN to deepen and broaden access to finance to high employment elastic sectors with particular emphasis on small and medium scale enterprises,”

the CBN’s 121st communique on the Nov. 21 and 22, 2018 meeting stated.

Expressing their views on the negative output gap, the committee noted that the proposed increase in the national minimum wage would

stimulate output growth due to prolonged weak aggregate demand arising from salary arrears and contractor debt.

They said a resulting effect on the aggregate price level would be largely muted, “given that the monetary aggregates have largely underperformed in fiscal 2018.

In addition, the prevailing stability in the foreign exchange market would continue to moderate pressures on the domestic price level,” they stated in the communique.

In the document, obtained by business a.m, the committee also called on the CBN to extend the success recorded under the Anchor Borrowers Programme to other items including fish and palm oil, etc. by introducing more stringent measures to curb access to foreign exchange for products that can be produced within Nigeria.

These considerations, according to the communique were observed in relation to a positive outlook for the economy in the last quarter of the year.

The committee members expects that an effective implementation of the Economic Recovery and Growth Plan (ERGP) and the 2018 budget, improvements in the security challenges, enhanced flow of credit to the real sector and stability in the foreign exchange market will redirect the economy on a path of inclusive and sustainable growth.

They further noted that “increased production in the oil and the non-oil sectors are also expected to drive output growth in the medium term, but acknowledged the downside risks to this outlook to include: reduced portfolio inflows, weakness of fiscal buffers, low domestic credit, and sluggish aggregate demand.