CBN urged to mo­bilise fi­nance to highly elas­tic em­ploy­ment sec­tors

Business a.m. - - FINANCE & INVESTMENT -

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.

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