4 policies to watch in Emefiele’s 2nd term
The reappointment of the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, for a final term of five years by President Muhammadu Buhari ended weeks of speculations with regards to the economic direction of the current administration.
Since winning re-election for a second term, analysts have expressed the need for President Buhari to quickly communicate his economic direction to enable investors take position on in the economy.
The president’s letter to the National Assembly on the reappointment of Emefiele has partly responded to what to expect from the economy in his second tenure as analysts have told Daily Trust that it is a positive development for the economy.
In this analysis, Daily Trust takes a look at five policies from the Emefiele-led CBN that have been critical and would be consolidated upon in his second stint as governor of the apex bank.
export,
Import, window
The purpose of the window was to boost liquidity in the Forex market and ensure timely execution and settlement for eligible transactions.
The cumulative transactions on the import and export window since the CBN created the market 26 months ago was put at $50bn as at the end of March, 2019.
The surge in inflows was attributed to offshore investors’ interest in Nigeria’s fixed income securities.
The CBN has been a market participant at the window to promote liquidity and professional market conduct.
The CBN Deputy Governor, Economic Policy, CBN, Dr. Joseph Nnanna, had described the window as a mighty success, saying it had performed beyond expectation.
On his part, the Chief Executive, Financial Derivatives Company Limited, Mr. Bismark Rewane, noted that the creation of the window was a good move, saying it had helped in attracting more investors and led the country closer to a perfect market.
To the Managing Director, Afrinvest West Africa Plc, Mr. Ike Chioke, the window has won the confidence of foreign investors.
It is expected that this trend will continue.
Agricultural, investment scheme Forex SMEs
Three years after the CBN in collaboration with the Bankers Committee initiated the Agricultural Small and Medium Enterprises Investment Scheme (AGSMEIS), the fund is expected to hit N90bn in 2019.
Speaking at the end of the 10th Annual Bankers Committee Retreat in Lagos, Godwin Emefiele said the fund would support businesses that were into farming, trading, as well as the creative industry.
“We want those who will display genuine intention to take these loans, do their business and pay back,” he added.
Under the CBN, there is the commercial agriculture lending scheme, N210bn set aside for MSMEs and close to N60bn available to fund agric and small businesses and yet these monies are lying there, they are not being deployed to the people.
“We know we are doing our best in the area of the Anchor Borrowers Programme (ABP) where over 850,000 farmers have accessed the loans and where over N100bn has been disbursed, but we are saying it is not enough, Emefiele added.
He further said, “We are saying there are still more people who need to access this and then create jobs for people, particularly in the rural communities, and also improve the wealth in our rural areas. It is permeating, but it is not moving as fast as we thought.”
ABP
The Anchor Borrower Programme (ABP) which was initiated by the CBN and launched by President Muhammadu Buhari has lifted thousands of small farmers out of poverty and generated millions of jobs for unemployed Nigerians.
In his remarks at the launching of the ABP and flag off of the 2015 dry season farming in Birnin-Kebbi, Kebbi State, the president frowned at the huge sums spent by Nigeria on the importation of food items that could be produced locally, stressing that Nigeria’s N1tn importation bill at the time was not sustainable.
Prior to the introduction of ABP, allocation of Forex to the importation of items such as rice, wheat, milk, tomato, fish, cotton and fertiliser had contributed greatly to the depletion of the nation’s foreign reserves, especially in the face of low oil revenue resulting from falling oil prices.
The apex bank had set aside a portion of the N220bn Micro, Small and Medium Enterprises Development Fund to finance agricultural projects at a single-digit interest rate of nine per cent.
Chiefly among the aims was to create economic linkages between over 600,000 smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilisation of integrated mills.
Noticeably, the gap between the levels of local rice production and domestic consumption has been reduced within a space of three years.
At the last count, 200,000 smallholder farmers from 29 states of the federation are already benefitting from the N43.92bn released through the CBN and 13 participating financial institutions to fund the agricultural programme.
As at October, 2018, 2.5 million direct jobs had been created through implementation of the ABP, according to President Buhari, and that about 1 million more indirect jobs were believably created also.
A total of 862,069 farmers using about 835,239 hectares, cultivated 16 different commodities including rice, wheat, maize, soya-beans, cassava, groundnuts and tomato, in addition to fish and poultry farming had already benefited from the programme.
From Kebbi, Ebonyi, Anambra and Cross Rivers to Kano States - among other parts of the federation, the ABP has given a good boost to local rice production, creating jobs and empowering many across the country.
43 Forex restricted items
Emefiele had argued whenever it mattered that pragmatic economic nationalism favoured the protection of the domestic economy as long as such an action did not harm its neighbours and trading partners.
The implementation of the policy on 41 items, which Emefiele rationalised as unnecessary drains on the country’s Forex reserve, contributed greatly to getting the Nigerian economy out of recession, citing growth in the real Gross Domestic Product (GDP) and improved reserve accretion as success indicators.
According to him, the policy was aimed at stimulating the domestic economy in order to enhance domestic production and protect local industries from undue foreign competition and take-over.
For example, the fourth quarter (Q4 2018) report on Nigeria’s provisional Balance of Payments (BoP) estimate that was released a few days ago indicates a significant improvement as the country recorded a surplus of $2.80m, compared to the huge deficit of $4.542bn recorded the preceding quarter.
It had also recorded a surplus of $6.180bn in the corresponding period of 2017, according to a Brief on Balance of Payments Statistics for Fourth Quarter 2018 released by the CBN. A balance of payments surplus means that Nigeria exported more than it imported during the period under review.
On the brag list of the Federal Government today is the fact that the administration has produced over seven million 50Kg bags of fertiliser through the CBN intervention programme.
“Eleven blending plants with a capacity of 2.1 million metric tonnes have been reactivated. We have saved $150m in foreign exchange and N60bn in subsidy.
“Fertiliser prices have dropped from N13, 000 per 50Kg bag to N5, 500,” President Buhari had disclosed while pointing to some of the achievements of the ABP.
Another revolution similar to what was recorded in the production of rice has started in Nigeria as the CBN has made good its promise to support massive tomato production in commercial quantity in the country.
Already, tomato processing plants have started springing up in parts of the country that would soon make Nigeria selfsufficient in the commodity.
During a facility tour of Dangote Tomato Processing Factory and Farms in Kadawa, Garun Malam Local Government Area of Kano State recently, Mr. Emefiele enthused that Nigeria now had a major tomato processing plant in Dangote Farms, which he said had the capacity to meet nationwide demand of tomato.
Apart from that, another N2bn Gino Tomato processing plant and farm has sprung up in Kaduna State, owing to the support of the CBN’s ABP. The plant has the capacity to mill 30 tonnes of fresh tomatoes per day.
Analysts believe that the success of this policy will give impetus to add to the number of Forex restricted items
What the experts are saying
The Chairman, Chartered Institute of Bankers of Nigeria (CIBN), Abuja chapter, Prof. Uche Uwaleke, described the re-nomination of Emefiele as one development that spoke to policy consistency and would further consolidate macro-economic stability, especially with respect to exchange rate and inflation.
“Investors, both domestic and foreign, can have some degree of confidence in the direction of monetary policy, which is positive for the capital market. One thing is now certain: that the interventions by the CBN in critical sectors of the economy, especially agriculture and non-agricbased SMEs, will continue,” he said.
The Head of Research at the FSDH, Ayodele Akinwumi, said: “Let’s give it to him, no human being is perfect, the man has done well. The kind of partnership that the CBN has with the bankers committee, for me is the best ever. They have been coming together to collaborate on how to improve the economy and the banking system.