The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has retained the benchmark rate at 13.5%.
Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, disclosed this decision during a press conference at the end of a two-day MPC meeting held on Tuesday at the apex bank’s headquarters in Abuja.
He explained that the committee unanimously voted to retain the MPR, after the rates were reduced from 14 percent to 13.5 percent in March 2019, the first time the MPR was reduced since July 2016.
Mr Emefiele said that the committee reviewed the upside and downside options to either tighten, hold or loosen and decided to hold policies at its current position.
“The MPC reviewed the upside and the downsides of the options to tighten, hold or to loosen.
“The committee felt that there would be more gains in the shortfall to medium term in holding policy at its current position. The committee decided by unanimous votes to retain the policy rate at 13.5 percent and to hold all other policy parameters constant.
“The MPC voted to retain MPR at 13.5%, retain the asymmetric corridor at +200 and -500 basis point around the MPR, retain the CRR at 22.5% and retain the liquidity ratio at 30 percent.”
He added that the committee suggested that the Federal Government should reconsider its 2020 budget oil price benchmark of $57 per barrel, due to the possibility that prices will remain relatively weak in the nearest future.
Mr. Emefiele in an exclusive interview with Channels Television said that the attribution of the rise to border closure cannot be totally ruled out, but the benefits are more.
“Inflation goes up from 11.22 to 11.61 between September and October, and mainly it’s because of the border closure.
“I am not going to entirely disagree that yes, because of border closure that has resulted in some supply shortages because of goods that are being dumped into the country.
“Who are those benefitting, in as much as I don’t like the fact that prices went up momentarily from September and October, the beneficiaries are Nigerians and companies where we have seen a situation where people have jobs, farmers who produce poultry and those benefitting from import of cars legitimately.”
The CBN Governor expressed his displeasure at the inflationary pressure but was quick to assure that the trend will witness an immediate turnaround.
“In as much as I do not like the fact that the inflationary pressures are coming up right now, I’m also saying that it will moderate and very quickly, maximum of another 3 to 4 months aggressively downwards.”
The Senate Committee on Finance on Monday refused to allow the representatives of the Central Bank of Nigeria Governor, Godwin Emefiele, to address it on the rationale behind the exchange rates it used for three key projects under the Presidential Infrastructure Development Fund.
The Committee had on Sunday invited the CBN Governor to appear before it on Monday November 4, but the CBN Governor, instead sent the Deputy Governor Operations, Mr Adebisi Shonubi, to represent him.
The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, has insisted that the closure of the nation’s borders is a great step that will improve the state of security.
While delivering a lecture on Friday at the Edo University, Iyamho in Edo State, he explained that it would specifically help to reduce the level of Boko Haram insurgence, kidnapping and cybercrime popularly known as ‘yahoo yahoo’.
“I can tell you that if we leave these borders closed for another two years, Boko Haram will reduce,” he said.
“I can tell you that Kidnapping and ‘Yahoo-Yahoo’ will reduce because they will now see that the only place that they can make money is in agriculture and not in kidnapping people”.
According to the CBN Governor, most of the arms being brought into the country were smuggled in through the borders.
But ever since the borders were shut, the development has yielded good results.
According to him, one week after the borders were closed, the President of the Rice Farmers Association called to say that all the rice in their warehouses had been sold.
“The poultry people also called to say they have sold all their eggs,” he said.
He believes that the continuous closure of the borders would help to generate employment and reduce crime as Nigerians would have found diverse opportunities in legitimate businesses.
The Federal Government has approved the sum of N19.18 billion to produce quality cotton seeds to revive the nation’s value chain in the cotton, textiles and garments sector.
Speaking at a high-level meeting in Abuja, Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele explained that nine firms will be given the funds as the government targets to achieve self-sufficiency in cotton production and textile materials within the next three years.
The apex bank signed a Memorandum of Understanding (MoU) with all the uniformed organisations in the country at the meeting.
“We are improving the linkage between cotton farmers and ginneries by ensuring that ginneries are able to obtain a high-quality cotton product produced by these farmers.
“In this regards, approval had already been given to the tune of 19.18bn to finance 9 ginneries with a view to retooling their processing plants, while providing them with improved access to finance at single-digit interest rates.”
The CBN Governor said the investment will help stop the $4bn lost annually to imported textiles.
According to him, the terms of the agreement guarantees all uniformed Federal Government agencies would source all their uniform needs from local textiles and garments factories.
He added that the same gesture will be made to the textile and garment firms
“This is to help sustain their operations and improve their production capacities.
“The same support will be extended to textile and garment firms, we have invested heavily in our local textile and garment factories to retool and produce assorted uniforms for our uniform services that meet international standards.”
The uniformed organisations present to sign the agreement include The Nigerian Police, Nigerian Army, Navy, Air Force, Civil Defence, Correctional Services, Nigerian Customs, NYSC, Road Safety Corp, Immigration, Federal Fire Service and Nigerian Drugs Law Enforcement Agency.
About 500,000 bags of local rice was sold by millers within one week of the border closure, the Central Bank of Nigeria governor, Mr Godwin Emefiele, has revealed.
Emefiele made the revelation on Monday while briefing reporters after meeting with President Muhammadu Buhari in Abuja.
He said that the Chairman of the Rice Processors Association complained to him that rice millers and processors in the country had 25,000 metric tonnes of unsold local rice in their warehouses and urged that something should be done to help keep their businesses alive.
The CBN governor who noted that he received the complaint before the nation’s borders were closed stated that the same person called one week after the closure that all the rice in their warehouses had been sold.
“Recently, the Chairman of the Rice Processors Association called me and said that all the rice millers and processors are carrying 25,000 metric tonnes of milled rice in their warehouses that they have been unsold because of the smuggling and dumping of rice through the Republic of Benin and other border posts we have across the country, and he would want us to do something about it,” he told reporters.
Emefiele added, “I am aware also that after some meetings held, in addition to those engagements we held with the President, the border was closed subsequently.
“A week after the borders were closed, the same Rice Millers Association called to say that all the rice in their warehouses has all been sold.
“Indeed, a lot of people have been depositing money into their account and they are telling them to hold on until the rice has been processed.”
The 25,000 metric tonnes of rice translates to 500,000 bags of (50kg) rice as 1,000 kilogrammes make one metric tonne.
The CBN governor also revealed that between 2015 and 2019, the number of companies setting up integrated and small mills rose astronomically and loan facilities have been given to help encourage the production of local rice.
He said, “Between 2015 and 2019, we have seen a rise in the number of companies setting up integrated and small mills; the CBN and the Federal Ministry of Agriculture and rural development has been at the centre of not just encouraging the production of rice in Nigeria, but also funding these farmers by giving them loans to acquire seedlings, fertilizers and some herbicides for rice production.
“The benefit of the border closure in Nigeria is that it has helped to create jobs for our people, bring our integrated rice millers back into businesses and they are making money; our rural communities are bubbling because farmers are selling.”
Condition For Re-Opening
Similarly, Emefiele noted that some members of the Poultry Association of Nigeria, who also complained of difficulties selling their eggs and processed chicken confirmed that since the closure, demand has been on the rise.
He stressed that proper engagements between the Federal Government and neighbouring countries are key to ending the spate of smuggling and a consequential reopening of the borders.
The CBN governor added, “We are not saying that the border should be closed in perpetuity, but that before it can be reopened, there must be concrete engagements with countries that are involved in using their ports as landing ports for bringing in goods that are smuggled into Nigeria.
“That engagement must be held, so we agree on the basis of what products they can land in their country and if it is meant for their local consumption, it’s understandable.
“But the fact that they are now smuggled into Nigeria, we all agree should not happen because it undermines our economic policies and desire to ensure that industries are alive and jobs are created in Nigeria.”
The monetary policy committee of the Central Bank of Nigeria is asking the Federal Government to consider the sale of its redundant public assets as part of efforts to increase its revenue base.
Speaking at a news conference after the monetary policy committee meeting in Abuja, the Central Bank Governor, Mr Godwin Emefiele, said the sale of redundant public assets would create significant revenue for government and resuscitate the redundant assets to generate employment and contribute to the nation’s economic growth.
President Muhammadu Buhari has directed the Central Bank of Nigeria (CBN) to stop providing foreign exchange for importation of food into the country.
He disclosed this on Tuesday when he hosted the All Progressives Congress (APC) governors to Eid-el-Kabir lunch at his country home in Daura, Katsina State.
The President explained that the directive was important considering the “steady improvement” in agricultural production and attainment of “full food security” in Nigeria.
He, however, noted that the foreign reserve would be conserved and utilised strictly for diversification of the economy, and not for encouraging more dependence on foreign food import bills.
“Don’t give a cent to anybody to import food into the country,” President Buhari was quoted as saying in a statement by his Senior Special Assistant on Media and Publicity, Mr Garba Shehu.
He added, “We have achieved food security, and for physical security, we are not doing badly.”
The President said some states like Kebbi, Ogun, Lagos, Jigawa, Ebonyi and Kano had already taken advantage of the Federal Government’s policy on agriculture with huge returns in rice farming.
He, therefore, urged more states to plug into the ongoing revolution to feed the nation.
President Buhari said he was particularly delighted that young Nigerians, including graduates, had started exploring agric-business and entrepreneurship, with many posting testimonies of good returns on their investments.
He told his guests that the incoming ministers would be “taught” and thoroughly guided to ensure they meet the targets of the APC-led government for the people.
The President added that the Office of the Secretary to the Government of the Federation (OSGF) would monitor the performances and scale-up targets of the prospective cabinet members.
He gave assurance that he would attend the Presidential Policy Retreat organised for the ministers by the OSFG, while insisting on compliance with laid down targets on key sectors of the economy that would directly impact on the livelihood of Nigerians.
In his remarks, the Chairman of the Nigeria Governors’ Forum and Governor of Ekiti State, Kayode Fayemi, said the President’s sense of justice, fairness and forthrightness had turned a major inspiration to governors on the way forward for the country.
He noted that the challenges faced by states “were enormous”, but the governors had remained undaunted, assuring the President of strong support and “the very best effort” to overcome all the obstacles.
The Chairman of the Progressive Governors Forum and Governor of Kebbi State, Atiku Bagudu, also appreciated the President for the unique leadership style of maintaining a healthy relationship with governors on individual and collective basis, pointing out that they had been “energised” to do more in their states.
The governor commended the President for making bold and courageous efforts to reposition the economy for majority Nigerians through inclusive policies.
“The country is more secure than in 2015, and the country is more prosperous than in 2015 because you are working for the majority of the people,” he added.
The governor said the party had been repositioned, after the 2019 elections, to work for the benefit of many Nigerians.
“There will be two elections this year and we need to work towards winning the two states,” he said.
Governor of the Central Bank of Nigeria, Godwin Emefiele, has confirmed plans by the bank to restrict foreign exchange for the importation of milk.
Mr Emefiele who made this known on Tuesday while addressing journalists at the end of the two-day meeting of the monetary policy committee of the bank, said that owing to the $1.2 billion to $1.5 billion spent yearly on milk importation, the bank intends to provide loan facilities for backward integration and milk production in Nigeria.
“It is correct that the CBN intends to restrict foreign exchange for the importation of milk. We believe that milk is one of those products that can be produced in Nigeria.
“We have seen the importation of milk in Nigeria before many of us were born; for over 60 years, Nigeria has been importing milk. Today the import of milk stands at between $1.2 to $1.5 billion, that is very high for import into the country.
“Given that it is a product we are very convinced can be produced in the country, what does it take to produce milk? Get a cow and give it plenty of water to drink, eat a lot of grass and positioned in a place without roaming around, that cow gets fat and we can get milk out of it,” he stated.
The CBN Governor said the bank held meetings with leading milk producers in the country to encourage them to begin the process of backward integration, but no significant progress has been made on the part of the companies.
“Three and the half years ago when the policy on the restriction of FX started, we considered including milk on the list of items that should be restricted from FOREX, but we conjectured based on the kind of sentiments that people will show that we should be very careful.
“We called in the management of the oldest milk importers in Lagos, we held at least three meetings with them. We told them what was to happen and what we decided, and we were trying to appeal to them to integrate backward and begin a process of developing and producing milk in Nigeria.
“Also, to some extent, they should help us reduce the rate of herder-farmer conflict, perhaps by now, the conflicts we are witnessing today won’t be as intense as it is at this time.
“By doing backward integration, it helps to reduce the rate of herders-farmers conflict and we are determined to make milk production in Nigeria a viable economic proposition and we would need to support them,” he added.
He stressed that the era of milk production in the country is fast coming to an end.
“We can no longer wait for you to be importing this product into Nigeria.
“If we restrict FX, anyone who needs a loan for the process will get it from the bank. But if it is to import milk into the country, I think we are getting to the end of the road and that is what we have discussed, and the era of restriction of FX for the importation of milk is really coming very soon.
“If they will not change their policy, we will not change our policy. We want people to produce milk in Nigeria.”
Read the full report of the bank’s achievements in the past four years and what it hopes to achieve over the next five years, below.
Gov. Godwin Emefiele, CON 5-year Policy Thrust of Central Bank of Nigeria. 2019 – 2024.
Good morning Ladies and Gentlemen and thank you for your presence at this Press Briefing. You would all recall that on 05 June 2014; following my assumption of office as the Governor of the Central Bank of Nigeria, I addressed a similar gathering to share with you my vision for my first term in office. It is in the same vein that we have called you again today to briefly reflect on our journey over the past 5 years, and outline our vision and policy thrust for the next 5 years.
2. But before I begin my remarks, please permit me to thank the Almighty God for giving me the opportunity to continue to serve our country again.
I would also like to thank President Muhammadu Buhari (GCFR) for not only re-appointing me but also for his support and confidence in the leadership of the Central Bank of Nigeria over the past 4 years. I thank the Nigerian Senate as well for confirming my nomination. Finally, I thank the management and staff of the Central Bank of Nigeria, for their hard work and dedication, particularly at moments when the Central Bank and indeed the Nigerian people faced difficult economic conditions.
Whatever achievements the CBN recorded in addressing those difficult conditions, was indeed reflective of the collective efforts of the management and staff of this great institution.
3. In my remarks today, I will be speaking on our efforts towards promoting price and monetary stability, exchange rate stability, financial system stability as well as our efforts to spur growth through our development finance interventions. Thereafter, I will speak on my vision for the Central Bank of Nigeria over the next five years, which is primarily driven by the need to support continued growth and development of the Nigerian Economy.
4. You will recall that during my maiden address on June 5, 2014, I stated that my vision would be to ensure that the Central Bank of Nigeria is more people focused, as its policies and programs would be geared towards supporting job creation, reducing the high level of Treasury-Bill rates, improving access to credit for MSMEs, deepening our intervention program in the Agricultural Sector, building a robust payment system infrastructure that will help drive inclusion, in addition to key macroeconomic concerns such as exchange rate stability, financial system stability and maintaining a strong external reserve.
5. As is the case with most plans, although most of the goals we set were achieved, I would be the first to admit that everything did not happen as contemplated. The normalization of monetary policy in the United States and the over 60 per cent drop in crude oil prices between 2014 and 2016, had significant adverse consequences on our economy and made us adjust our methods to ensure that we still implemented most parts of our vision. Given Nigeria’s dependence on crude oil revenues for close to 86 percent of our foreign exchange earnings and over 60 percent of government expenditure, the drop-in prices led to heightened inflationary pressures, depreciation of our exchange rate, significant drop in our external reserves, and eventually, a recession set in during the 2nd Quarter of 2016.
6. With concerted efforts by the monetary and fiscal authorities, we implemented a series of measures which led to the recovery of our economy from the recession by the 1st Quarter of 2017. Building on these efforts, I am delighted to note that our external reserves have risen from $23bn in October 2016 to over $45billion by June 2019. Inflation has dropped from 18.72 per cent in January 2017 to 11.40 per cent in May 2019. Our CBN purchasing manufacturers index has risen for 26 consecutive months since March 2017, indicating continuous growth in the manufacturing sector, as a result of measures implemented by the CBN which has improved access to raw materials and finance for manufacturing firms. GDP growth has risen for seven consecutive quarters following the recession, and our exchange rate has appreciated from over N525/$1 in February 2017 at the BDC window to N360/$1. With improved inflow of foreign exchange, the exchange rate has remained stable around N360/$1 for the past 27 months.
7. Recovery Efforts
Part of the measures we deployed to support the recovery include tightening of the monetary policy rate in order to rein in inflation; we also created an Investors and Exporters Window which allowed exporters and investors to inflow and sell their foreign exchange at the prevailing market rate. In order to reduce our reliance on the importation of items which could be produced in Nigeria, we restricted access to foreign exchange on 43 items, while deploying our intervention funds to support growth and productivity in the agricultural and manufacturing sectors. These measures helped to support the attainment of our monetary policy objectives such as a reduction in the inflation rate, stability in our exchange rate and improved accretion to our external reserves.
8. Financial System Stability
As some of you are aware, the drop-in commodity prices affected a good number of banks given their exposure to the oil and gas sector. Unfortunately, these resulted in an increase in Non- performing loans of our banks. As a result of risk management measures embarked upon by the CBN, capital adequacy and liquidity ratios of our commercial banks are now above the prudential level.
Capital Adequacy Ratio for the banking industry improved from 11 per cent in June 2017 to over 16 per cent in May 2019 and liquidity levels have also increased by over 20 per cent within the same period. In addition, the ratio of non-performing loans in the banking system has reduced from 15 per cent in June 2017 to 9 per cent in May 2019, due to concerted efforts by the CBN and the DMBs, although more work is being done to moderate NPL levels to the maximum prescribed level of 5 per cent. Our financial institutions are well positioned to perform their intermediation role, which will ultimately help in supporting the growth of our economy.
9. Access to Credit and Developmental Finance
As part of the goals set in 2014, we increased our development finance interventions in order to catalyze growth in critical sectors of the economy. Our objectives were driven by the need to increase investments by MSMEs as well as spur consumer spending, as these factors would have a positive impact on GDP growth and employment. Furthermore, our development finance efforts were driven by the need to reduce our reliance on revenues from crude oil.
10. At a point in our nation’s history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market. Some of these products include Cocoa, Groundnuts, Cotton and Palm-Oil. Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians. Regrettably, the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing our economy to the vulnerabilities that normally accompany an increased dependence on a single commodity for survival. For example, if Nigeria had maintained its market dominance in the palm oil industry, which stood at 40 per cent in the 70s, we would be earning above $20 billion annually from cultivation and processing of palm oil today.
This would have provided a sufficient buffer for our nation following the drop in crude oil prices. Our situation is further worsened by the unpatriotic activities of some unscrupulous individuals and businesses who embarked on massive smuggling and dumping of goods that can be produced in the country thus leading to the demise of our agricultural and manufacturing sectors and hence the attendant high level of unemployment.
11. Fellow Nigerians, we have a responsibility to reverse the current ugly trend where any external shock affecting oil producing countries bring us to our knees.
12. To correct this trend and as part of our intervention programs, we launched the Anchor Borrowers Program, which has improved access to finance for over 1m smallholder farmers, who are leading our efforts to improve cultivation of agricultural commodities, such as rice, tomatoes, fish, cotton and palm oil.
The Anchor Borrowers Program also enabled agro-processors and manufacturers to source their inputs from local sources, rather than relying on the importation of these items.
We also deployed other intervention facilities such as the Commercial Agricultural Credit Scheme, and the Real Sector Support Fund. These funds were used to channel single digit interest loans through our Deposit Money Banks and other Participating Financial Institutions to beneficiaries to support improved growth in the agriculture and manufacturing sectors. The effectiveness of these interventions in supporting the growth of our local industries has been supported by our FOREX restrictions on the importation of items that can be produced in Nigeria.
13. We also embarked on measures to discourage smuggling of restricted items into the country, by imposing restrictions on the use of financial institutions in Nigeria by identified smugglers, as their activities undermined the growth of our local industries. These measures are aiding our efforts to support local cultivation of goods in areas such as cotton, rice, palm oil etc.
14. We also sought to improve access to credit for MSMEs given the critical role they play in supporting the growth of our economy. Poor access to credit has been highlighted as a significant constraint to the growth of MSMEs. Moreover, given the impact of the recession, it was more important to restart the flow of credit to MSMEs to enable them engage in productive activities that would support growth. As part of efforts to support this objective, we created a N220bn MSME funds, which has been critical in supporting the growth of MSMEs in the agriculture and manufacturing sectors.
15. We set up the National Collateral Registry and supported the passage of legislation governing the activities of the National Collateral Registry and the Credit Bureaus. These measures have helped to encourage the flow of credit to SMEs by allowing them to provide movable assets as collateral in order to obtain finance from banks, relative to the previous process which required that they provide fixed assets. So far over N400 billion worth of assets have been registered in the collateral registry by MSMEs. The activities of the credit bureaus are also reducing the risk encountered by banks in lending to businesses, as it has helped to identify creditworthy borrowers.
These two initiatives contributed to the improvement in Nigeria’s Doing Business Scorecard in the World Bank’s 2017 Doing Business Rankings of 180 countries, as Nigeria moved up by 24 points from 169 to 144.
16. Payment System
Conscious that over 40 per cent of eligible Nigerians in 2015 lacked access to financial services, we embarked on a couple of steps to improve access to finance.
Through initiatives such as the Shared Agent Network Facility(SANEF) and the launch of our policy on Payment Service Banks, which enables non-banks to provide limited financial services, we sought to encourage the use of technological tools in improving access to finance for people who live in underserved parts of the country.
We also set up a payment services management department solely dedicated to enabling the build-up of a robust payment systems infrastructure, while seeking to contain the risk to the financial system that could emerge from the use of digital channels. As a result of our efforts, the total volume of retail electronic payments has witnessed a threefold increase over the last five years.
New financial access points are being created in parts of the North East and North West as a result of measures deployed by the Central Bank to extend financial services to the underserved in our rural communities.
17. Salary Bailout
The drop-in commodity prices and the resulting effects on government revenue, led to a severe drop in the earnings of most states in the country. Over 34 states incurred huge salary arrears and were unable to provide essential services, which led to the decision by the National Economic Council in June 2015, that the CBN work with Deposit Money Banks to provide support to state governments. In order to avert prolonged hardship in states, we provided an assistance program to states, which helped them to settle their overdue salary and pension obligations. These measures helped to ease some of the budget difficulties faced by state governments between 2015 – 2017.
It also provided enough cushion for states to begin to develop plans to generate revenue from alternative sources in an attempt to make the states economically viable.
While these results are reassuring, I think it’s fair to state that our task of building a stronger economy is far from complete. The pace of GDP growth remains fragile and is below the rate of our annual population growth at 2.7 per cent. The recovery of our economy from the recession has not resulted in a significant reduction in our unemployment rate. We are yet to see a substantial increase in credit to the private sector by our financial institutions.
The unexpected drop in crude prices given its impact on our economy also derailed our attempts at achieving some of the steps outlined in our vision such as bringing down the rate of T-Bills and in reducing the unemployment rate.
Our inability to address these challenges only served to reinforce our view that the CBN must continue to play an active role in supporting the growth of our economy, and redirect our emphasis on sectors that have the ability to support improved wealth and job creation for Nigerians such as the agricultural and manufacturing sectors.
19. Downside Risk to Growth in the near to medium term
Beyond our domestic challenge of high unemployment and subdued growth, our economy is faced with 3 external events, which have the ability to affect our growth trajectory over the near to medium term. First, rising trade tensions between the United States and China, United States and Mexico and subdued growth in the Eurozone as well as other emerging economies such as China, India, South Africa, Brazil, Argentina and Turkey, are affecting the outlook for global growth in 2019 and 2020.
The World Bank according to its latest report, projects that global growth will decline to 2.6 per cent in 2019 from 3.0 per cent in 2018, as a result of the above-mentioned factors.
20. The second external challenge that may emerge from rising trade tensions and a potential slowdown in growth in advanced and emerging economies, is the impact it could have on capital flows to emerging markets. The risk of sudden stops and reversals of capital flows has increased as some investors weigh the benefits of investing in safe assets in advanced economies relative to assets in emerging markets.
Third, we are also witnessing rising volatility in the crude oil market occasioned by the rapid increase in the supply of shale oil by the United States, which has seen its production rise from 9 million barrels in 2017 to over 12 million barrels today. The rise in US production continues to put downward pressure on crude oil prices, despite restrictions on crude oil output by OPEC members and sanctions by the US on the purchase of crude oil from Iran and Venezuela.
21. Our Vision for the Next 5 years
Fellow Nigerians, few weeks ago, we held consultations with some banks and business leaders in the Private sector. We thank them immensely for their thought-provoking ideas and counsel. We intend to sustain the pace of those consultations as this would act as barometer for measuring the progress being made in the implementation of our policies. Our assessment of the outcome of that deliberation shows that with concerted efforts, the challenges facing the country are easily surmountable.
Consequently, working closely with our fiscal authorities, we pledge to target a double-digit growth by the next five years and at the CBN, we commit to working assiduously to bringing down inflation to single digit; while accelerating the rate of employment. Put succinctly, our priorities at the CBN over the next 5 years are the following; First, preserve domestic macroeconomic and financial stability;
Second, foster the development of a robust payments system infrastructure that will increase access to finance for all Nigerians thereby raising the financial inclusion rate in the country; Third, continue to work with the Deposit Money Banks to improve access to credit for not only small-holder farmers and MSMEs but also Consumer credit and mortgage facilities for bank customers.
Our intervention support shall also be extended to our youth population who possess entrepreneurship skills in the creative industry.
This group deserve our encouragement. We shall also during this intervening period encourage our Deposit Money Banks to direct more focus in supporting the Education Sector. Fourth, grow our external reserves; and fifth, support efforts at diversifying the economy through our intervention programs in the agriculture and manufacturing sectors.
We are confident that when implemented, these measures will help to insulate our economy from potential shocks in the global economy.
In my second term in office, part of my pledge, is to work to the best of my abilities in fulfilling these objectives.
22. Macroeconomic Stability
On Macro-Economic Stability, over the next 5 years, with a key emphasis on supporting improved GDP growth and greater private sector investment, we intend to leverage monetary policy tools in supporting a low inflation environment, while seeking to maintain stability in our exchange rate. As a result;
• Decisions by the Monetary policy committee on inflation and interest rates will be dependent on insights generated from data on key economic variables.
• We would also strive to continue to sustain a positive interest rate regime to the delight of our important stakeholders.
• Monetary policy measures embarked upon by the CBN will be geared towards containing inflationary pressures and supporting improved productivity in the agricultural and manufacturing sectors.
• Working with other stakeholders, we intend to bring down the cost of food items, which have considerable weight in the Consumer Price Index basket.
• Our ultimate objective is to anchor the public’s inflation expectation at single digits in the medium to long run. We believe a low and stable inflationary environment is essential to the growth of our economy because it will help support long term planning by individuals and businesses.
• It will also help to lower interest rates charged by banks to businesses thereby facilitating improved access to credit, and a corresponding growth in output and employment.
23. Exchange Rate Stability
We will continue to operate a managed float exchange rate regime in order to reduce the impact which continuous volatility in the exchange rate could have on our economy.
• We will support measures that will increase and diversify Nigeria’s exports base and ultimately help in shoring up our reserves. While the dynamics of global trade continues to evolve in advanced economies, Nigeria remains committed to a free trade regime that is mutually beneficial; but, particularly aimed at supporting our domestic industries and creating jobs on a mass scale for Nigerians.
• We intend to aggressively implement our N500bn facility aimed at supporting the growth of our non-oil exports, which will help to improve non-oil export earnings.
• We will launch a Trade Monitoring System(TRMS) in October 2019, which is an automated system that will reduce the length of time required to process export documents from 1 week to 1 day. This measure will help support our efforts at improving our non-oil exports of goods and services.
• We will also work with our counterparts in the fiscal arm in supporting improved FDI flows to various sectors such as agriculture, manufacturing, insurance and infrastructure.
These measures while supporting improved inflows into the country, will help to stabilize our exchange rate and build our external reserves.
24. Financial System Stability
A resilient and stable financial system is imperative for continued growth of our economy given the intermediation role that financial institutions play in supporting the needs of individuals and businesses.
As a result, • We will continue to improve our onsite and off-site supervision of all financial institutions, while leveraging on data analytics and our in-house experts across different sectors, to improve our ability to identify potential risks to the financial system as well as risks to individual banks.
• In the next five years, we intend to pursue a program of recapitalizing the Banking Industry so as to position Nigerian banks among the top 500 in the world. Banks will, therefore, be required to maintain a higher level of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system.
• With the rise in digital payments and cyber security threats, we will develop a robust mechanism that will help ensure that the necessary safeguards are put in place by banks and financial institutions to protect against loss of data, fraud and cyber incursions in their respective systems.
25. Robust Payment System Infrastructure
An efficient payment system is vital to the effectiveness of monetary policy interventions.
It also helps in reducing the cost involved in payment for goods and services.
The Payment Services Management Department in the CBN will work to enable the buildup of a robust and secure payments infrastructure in Nigeria that is reliable and easy to access.
• We will reinvigorate our efforts at driving the cashless initiative across the country, due to the immense
efficiency gains that will be derived from it, and the impact it could have on our financial inclusion drive.
• Given Nigeria’s large size, and the cost involved in building bank branches across the country, the payment system department would support the spread and utilization of digital modes of transactions so that every Nigerian will have access to financial services.
• A strong emphasis will also be placed on improving speed and efficiency of payments channels, while working to ensure that digital channels are safe and secure. This will help to build confidence in our nation’s payment system.
• In order to improve utilization rate, we will continue to ensure that payment channels are interoperable, which will enable individuals with digital devices to transact across different banks or payment modes.
• Through measures such as the cashless initiative, USSD, Mobile Banking, agent networks and Payments Service Banks, Nigerians can expect to see significant improvements in the payment systems infrastructure over the next 5 years.
• We will also work with NIBSS, Banks and Fintechs in developing a regulatory sandbox. This sandbox will enable us to test financial
innovations by Fintechs and Banks in a controlled environment, in order to assess its impact on the growth and safety of our financial system.
26. Targeted Development Finance
Building on the success of our Anchor Borrowers Program and other intervention programs geared towards supporting the growth of our agriculture and manufacturing sectors,
and in keeping with the recent Presidential Directives, we intend to:
• Boost productivity growth through the provision of improved seedlings, as well as access to finance for rural farmers in the agricultural sector, across 10 different commodities namely: Rice, Maize, Cassava, Cocoa, Tomato, Cotton, Oil-palm, Poultry, Fish, and Livestock/Dairy.
• Our choice of these 10 crops is driven by the amount spent on the importation of these items into the country, and the over 10 million jobs that could be created over the next 5 years if efforts are made to expand cultivation and processing of these items in Nigeria. So far, we have held series of engagements with importers and producers of these products. Most of them have committed that they would install
or expand their production capacities in Nigeria. We believe these measures will help to boost not only our domestic outputs but also improve our annual non-oil exports receipts from $2bn in 2018 to $12bn by 2023.
• Our intervention programs will strengthen the linkage between farmers and agro-processors/manufacturers by ensuring that the output of farmers is purchased by agro-processors/manufacturers.
• This linkage with agro-processors is necessary in order to prove that farmers are creditworthy individuals with bankable contracts. It will also help to unlock private capital flows from financial institutions to farmers, in order to enable farmers meet orders from agro-processors.
• To complement the progress made so far as well as the lesson learnt from the conduct of previous programs, we intend to strengthen the capacity building arm of the Anchor Borrowers Program, which will help support better farming practices and higher outputs for farmers.
• Through the credit bureaus, we will also leverage technological tools such as analytics in
identifying and supporting farmers that have exhibited good credit behavior, in repayment of their loan obligations. This measure will improve their ability to source for financing from commercial banks.
• We will introduce a non-oil export aspect to the anchor borrowers’ program, which will be focused on linking smallholder farmers to international buyers.
• To discourage the activities of smugglers, who bring in restricted goods into the country, perpetrators and their affiliated companies will be blacklisted and denied access to banking services in the entire country.
• This renewed focus of our intervention program, coupled with increased support for research and development on improved seedlings and enhanced farming practices, will help drive exponential growth of our agricultural and manufacturing sectors.
27. Financial Inclusion
Over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the payment service banks, we intend to broaden access to financial services to individuals in underserved parts of the country.
• Our ultimate objective is to ensure that 95 per cent of eligible Nigerians have access to financial services by 2024.
• We will also intensify our financial literacy and consumer protection programs such that current and eligible bank customers are fully aware of the financial services being offered to them as well as the cost of utilizing these services, which will enable them to make well-informed choices.
• Besides providing valuable information to banking customers, we are committed to developing and enforcing strong rules to protect consumers. • Our banking supervisory and consumer protection department at the CBN will ensure that dispute resolution mechanism in financial institutions are not only efficient but also timely, in order to maintain the confidence of the Nigerian populace in the utilization of banking services.
28. Access to Credit
Beyond our intervention programs, we are also working to encourage banks and financial institutions to lend from their balance sheet in order to support the growth of critical sectors of the economy, such as Agriculture, MSMEs and the Real Estate Sector. Greater emphasis on improving consumer spending and business investment by MSMEs is critical to sustainable double-digit growth of the Nigerian economy.
• MSMEs today constitute over 90 percent of businesses in the country. Through the national collateral registry, over N400 billion worth of movable assets have been registered by MSMEs in the registry. We intend to triple this number over the next 3 years.
• Our ultimate objective is to broaden the range of collaterals that MSMEs can provide to banks in order to obtain credit.
This will help improve access to credit for farmers and MSMEs, and it will also support the growth of their respective businesses.
29. Unique Identification
• In order to ease the constraint poor identification has on availability of credit to prospective banking customers, the CBN will support an aggressive enrollment of prospective banking customers in the informal sector onto the BVN system.
• The current enrollment of 38 million unique banking customers will be expanded to 100 million over the next 5 years. Ongoing partnership with NIMC will also enable integration between the two databases.
• This effort will improve the comfort level on banks in providing services to an expanded customer base. It will also aid in the development of a credit profile for banking customers, which will assist in improving access to credit for creditworthy borrowers by banks.
30. Lending to MSMEs
• The recently established NIRSAL microfinance bank will also work to improve access to credit for MSMEs in rural communities, which will help stimulate improved economic activities.
• In order to reduce the constraints which high account receivables, have on the growth and operations of MSMEs, we will support the development of a Trade Receivables Portal, which will enable MSMEs trade their invoices with financial institutions in order to improve their cash flow and support ongoing operations of their respective businesses.
31. Consumer Credit
• Today, less than 10 percent of adult Nigerians who have a bank account, utilize financial products offered by banks, such as credit cards, personal loans, mortgage loans, auto loans and consumer durable loans. • Consumer credit is critical to the growth of our economy as it will help boost consumer spending, accelerate improved investments by businesses, who seek to meet the demand of consumers. Improved consumer spending and investments by businesses will ultimately help to spur the growth of our economy and support our job creation efforts.
• In order to spur lending to consumers, a lending framework will be announced by the CBN, under which large departmental stores, automobile companies,
equipment leasing companies, in partnership with financial institutions, and the credit bureaus, will be able to provide credit facilities at reasonable interest rates to consumers. This will help to spur consumer spending and aid our efforts at driving the growth of our economy.
• The framework being developed will support the emergence of a digital, less burdensome process for consumers who seek to access such facilities.
• Credit patterns of consumers will be shared with credit bureaus to assess repayment patterns and credit histories of customers. This will also enable financial institutions to provide additional credit to creditworthy borrowers.
• Financial institutions will also be mandated to disclose to consumers the upfront charges involved in accessing such credit facilities, in order to prevent consumers from being abused by money lenders.
32. Mortgage Lending
• Fellow Nigerians, you will agree with me that a lot of equity is currently tied down in mortgage assets which are today entirely cash backed. In our effort to support the growth of Nigeria’s real estate industry, the CBN will work in developing a framework that will enable banks to securitize mortgage loans, which can then be sold in the capital markets.
• Adequate safeguards will be put in place to reduce the risk of delinquency in the mortgage-backed assets that will be sold in the capital markets.
• These measures will reduce the credit and liquidity risk to banks of holding these assets on their balance sheets and improve the amount of funds available to support mortgage loans. It will also reduce the high cost of obtaining mortgages for banking customers.
I will like to conclude my remarks by stating that although these goals are onerous and tasking, the CBN will remain committed to fulfilling its mandated objectives of price and exchange rate stability. We will continue to work to safeguard the stability of our financial system, while supporting the development of a payment system infrastructure that will improve access to credit for all eligible Nigerians. Nevertheless, additional emphasis will be placed on supporting greater growth of our economy and in reducing unemployment, through targeted interventions in the agricultural and manufacturing sectors.
Over the next five years, this will be the task for the Central Bank of Nigeria under my leadership, and we intend to do our very best to achieve these objectives.
I thank you for your attention.
Godwin I. Emefiele Governor Central Bank of Nigeria
Governor of the Central Bank of Nigeria, Godwin Emefiele, has listed five things that the apex bank hopes to achieve over the next five years.
He stated the five things while presenting the Monetary Policy roadmap for his 2019-2024 new term in office on Monday at the CBN Headquarters in Abuja.
“Our priorities at the CBN over the next 5 years are the following; First, preserve domestic macroeconomic and financial stability; Second, foster the development of a robust payments system infrastructure that will increase access to finance for all Nigerians, thereby raising the financial inclusion rate in the country,” he said.
According to him, the third thing the bank hopes to achieve is to continue to work with the Deposit Money Banks to improve access to credit for not only smallholder farmers and MSMEs but also Consumer credit and mortgage facilities for bank customers.
“Our intervention support shall also be extended to our youth population who possess entrepreneurship skills in the creative industry.
“This group deserve our encouragement. We shall also during this intervening period encourage our Deposit Money Banks to direct more focus in supporting the Education Sector,” he said.
Fourth on his list is to grow the nation’s external reserves, and lastly, support efforts at diversifying the economy through the various intervention programs in the agriculture and manufacturing sectors.
The CBN Governor said he was confident that when implemented, the aforementioned measures will help to insulate the economy from potential shocks in the global economy.
“In my second term in office, part of my pledge is to work to the best of my abilities in fulfilling these objectives,” he said.
Emefiele was first appointed by former President Goodluck Jonathan in 2014 and was retained after Buhari assumed office in 2015.
On May 8, President Muhmmdu Buhari informed the Senate in a statement that he had decided to nominate the CBN governor for a second term.
It is the first time since 1999, when Nigeria returned to democracy, that anyone would be nominated to serve two terms as CBN governor.