Our interventions geared towards saving economy, CBN replies NESG

By Philip Clement

The Central Bank of Nigeria (CBN) says it’s interventions was geared towards ensuring that the Nigerian economy is kept afloat amidst the coronavirus pandemic which has slowed every sector of the global and local economy.

READ ALSO: ‘How Naira strengthens against dollar amid CBN interventions’

The apex bank in a statement issued in Abuja by it’s director of corporate communications, Mr. Isaac Okoroafor noted that efforts were made to ensure the flow of credit to critical sectors of the economy in order to enable quick recovery of the economy.

The CBN however lamented that such giant strides were not being appreciated by some critical stakeholders in the country.

CBN was reacting to a statement titled, “Matters of Urgent Attention”, issued by the Nigerian Economic Summit Group (NESG), which questioned some of the measures taken by the apex bank to support the stability of the nation’s financial system and enable faster recovery of the economy following the negative impact of the COVID-19 pandemic on Nigeria.

Outlining some of it’s efforts during the pandemic,  the one-year extension of a moratorium on principal repayments for CBN intervention facilities and 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 percent over the past year.

It listed other efforts taken to include 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 nation’s healthcare institutions and creation of a research fund, which is designed to support the development of vaccines in Nigeria.

According to the apex bank, a N1trillion facility in loans was created to boost local manufacturing and production across critical sectors, while regulatory forbearance was granted to banks to restructure loans given to sectors that were severally affected by the pandemic.

Apex said it also engaged in mobilisation of key stakeholders in the Nigerian economy, which led to the provision of over N23 billion in relief materials to affected households, and set up 39 isolation centers across the country.

Okoroafor added that “The effect of these measures which included provision of palliatives to individuals affected by the pandemic, increase in access to credit to critical sectors of the economy that are either high employers of labor or have the ability to create jobs at a fast pace, helped to contain a significant decline in GDP growth in the 2nd quarter of the year.

“It is important for the NESG to note that our intervention programmes in the agricultural sector were a key contributor to the resilience of the agricultural sector during the crisis, as the sector experienced positive growth of 1.6 percent in the second quarter of the year despite the lockdown.”
In the statement, the CBN noted that the Nigerian economy is not immune to the consequences of the pandemic given the over 65 per cent drop in commodity prices, disruptions in global supply chains and the unprecedented outflow of over $100 billion of debt and equity funds from emerging markets between March and May 2020, in addition to the impact of the lockdown on economic activities.

According to the central bank, there has been an over 60 per cent reduction in revenues due to the federation account, with a significant drop in foreign currency inflows which led to downward adjustments in the naira/dollar exchange rate and a rise in inflation due to the exchange rate pass through effect of imported inflation.

On border closure, further submitted that, “We are disappointed that the NESG has not shown any tendency to deeply interrogate the real reasons for the closure. While the CBN is not opposed to its reopening, we must never forget the real reason why that border was shut in the first place: significant economic sabotage involving smuggling of many fake products, drugs, small arms, and other goods.”