Emefiele Calls For More Collaboration Between Universities And Key Industry Players

 

The Governor of the Central bank of Nigeria, Mr Godwin Emefiele, has asked managers of higher institutions of learning in the country to draw knowledge from curricula that cater to the modern realities of the country.

Mr Emefiele made the call during the 51st convocation lecture of the University of Lagos on Tuesday where he was invited as the guest speaker on the topic: National Development And Knowledge Economy In The Digital Age: Leapfrogging SMEs Into the 21st Century.

The CBN boss harped on the need for an enhanced learning experience for students as well as fostered innovation amongst faculty and staff in schools across the country.

 

In his presentation, Mr Emefiele said: “enhanced collaboration between universities and players in key sectors of our economy such as agriculture, manufacturing and ICT are necessary to enable implementation of sound ideas generated from our universities. For instance, universities in most developing countries have little or no formal linkages to industry. This often arises from the implementation of training curricula that is irrelevant to the industry, thereby, resulting in the production of ill-equipped graduates.”

 

As one of the steps to addressing that challenge, Emefiele advocated collaboration between institutions of higher learning and industry key players in key sectors of the economy.

Mr Emefiele maintained that “the current economic situation in Nigeria requires an accelerated adoption of knowledge to drive our developmental goals. The fast pace of growth and innovation in the digital space along with the large and growing population of vibrant youths places Nigeria on a vantage position to harness these potentials for accelerated development.”

He beamed his light on advanced economies whom he affirmed had adopted technology-driven development models rather than the previously adopted traditional factors of production including labour and capital.

The CBN governor identified SMEs as the backbone of national and economic development which he said is due to their contributions to GDP through employment generation and poverty eradication.

He gave identified SMEs as accounting for close to 90 per cent of total enterprises in most countries. In a report which he said is from the Organisation for Economic Cooperation and Development, 98 per cent of Chinese firms are SMEs, contributing around 68 per cent to exports and a whopping 60 per cent to Chinese’s GDP while employing 75per cent of the Chinese workforce. The experiences of Japan, Korea, Indonesia, Philippines, Thailand and Hong Kong are like China with about 90 per cent of their industries classified as SMEs.

In spite of the numerous benefits of the SMEs to economic development and job creation, limited access to finance, inadequate infrastructure and poor digital penetration were some of the challenges Mr Emefiele identified to be confronting it.

To tackle those challenges, the CBN boss revealed some of the interventions of the apex bank to include the provision of support to selected higher institutions in the country to enhance training and quality as well as development of finance interventions to support SMEs.

Other programmes of the bank include the SME Credit Guarantee Scheme (SMECGS), Micro, Small and Medium Enterprises Development Programme (YEDP); Agribusiness/Small and Medium Enterprises Investment Scheme (AGSMEIS). Others are the Entrepreneurship Development Centres (EDCs), National Collateral Registry(NCR), Creative Industry Financing Initiative (CIFI), Targeted Credit Facility (TCF) and the Nigeria Youth Investment Fund (NYIF).

Small and Medium Enterprises Development Fund is another scheme through which Mr Emefiele said the CBN is channelling low-interest wholesale funds to the MSME segment.

So far, over N83.9 billion are reported to have been disbursed to 216,704 beneficiaries with a nine 9 per cent interest charge.

Former Vice presidential candidate, Pastor Tunde Bakare was the Chairman of the convocation lecture.

He advised graduating students to take up the attributes of respect for value, discipline, dedication, calculated risk, integrity and intelligence; attributes he said he learnt from his mother and have helped him through life.

CBN To Demand Payback Of Budget Support Loans From States, Says Emefiele

 

State governments will start paying back the loans provided to them between 2015 and 2016 by the Central Bank of Nigeria (CBN).

The apex bank granted the loans to states as budget support facilities within the period, the CBN Governor, Godwin Emefiele, said during a visit to Nasarawa State.

He stated this during a session with reporters on Thursday in reaction to claims by Edo State Governor, Godwin Obaseki, that the Federal Government had printed an additional N50 billion to N60 billion to make up for state allocations.

“It is important for me to put it this way that in 2015/2016 … we did provide budget support facility for all the states of the country.

“That loan remains unpaid till now and we are going to insist on the states paying back those monies going forward, since they are accusing us of giving them loans – effectively that’s what they are saying,” the CBN governor said.

He added, “If you understand the concept of printing of money, it is about lending money. There is no need for all the controversy around the printing of money as if we are going into the factory, printing naira, and then distributing (it) on the streets.

“It is very inappropriate for people to just give some coloration to the word ‘printing of money’ as if it is a foreign word coming from the sky.”

A file photo of Central Bank of Nigeria Governor, Godwin Emefiele.
A file photo of CBN Governor, Godwin Emefiele.

 

According to Emefiele, most countries of the world today are facing an economic crisis, apart from the health challenges resulting from the COVID-19 pandemic.

As a result, he believes it will be irresponsible of the CBN or any central bank to stand idle and refuse to support its government.

The CBN governor decried that Nigeria was in a bad situation, especially with the problem of productivity output – the Gross Domestic Product (GDP), as well as inflation and increased price of commodities.

He, however, stated that the nation’s financial regulator would continue to put in place adequate measures to mitigate the effect of the present situation on the people.

“For us to begin to see some people playing some games, trying to come up with overheating its (the nation’s) polity talking about the printing of money, I think it is unfortunate and totally inappropriate.

“I would like to advise that this should stop. We should all work for the growth of our country and not play politics. I am not a politician and I keep saying so; I am a banker, and I should be left to do my work,” said Emefiele.

Reps Summon CBN Governor, Army Chief Over Arms Purchase


The Chief of Army Staff, Lieutenant General Ibrahim Attahiru, and the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, have been summoned to appear before an ad-hoc committee of the House of Representatives next month.

Members of the ad-hoc committee, chaired by Olaide Akinremi, summoned both men on Monday after they failed to honour an earlier invitation extended to them.

The motion for their summon was moved by a lawmaker, Bede Eke, who was furious that the army chief, for a second time, did not appear before the committee despite having rejected his representative on the first day of the hearing which held on March 12.

The lawmakers are among the committee that is reviewing the purchase, use, and control of arms, ammunition, and related hardware by the military, paramilitary, and other law enforcement agencies in the country.

They had invited Attahiru and Emefiele to appear before them on Monday to answer questions relating to the purchase of arms for the security agencies.

The army chief and CBN governor, however, failed to appear before the committee, an action which was condemned by the lawmakers.

A combination of photos of Lieutenant General Ibrahim Attahiru and Mr Godwin Emefiele.

[READ ALSO] Arms Fund: Presidency Says No Money Is Missing, Explains How $1bn Was Spent

Thereafter, the lawmakers passed a resolution to summon Attahiru and Emefiele to appear before them on April 7, 2021.

Recently, it was alleged that funds meant for the purchase of arms were missing under the leadership of the former service chiefs.

The claim was credited to the National Security Adviser (NSA), Major General Babagana Monguno, during an interview with BBC Hausa Service earlier in March.

While the former service chiefs have since denied the allegation, the office of the NSA also said Monguno was quoted out of context and did not categorically make such a claim.

The Senior Special Assistant to the President on Media and Publicity, Mr Garba Shehu, also clarified the controversy triggered by the claim during an interview on Channels Television’s Politics Today.

“I want to assure you that nothing of that money is missing … the reference by it in the interview with Hausa Service of the BBC by the National Security Adviser, I think, has been misconstrued and mistranslated,” he said.

COVID-19: ₦300bn Disbursed To 76 Manufacturers, Says Emefiele

File photo of CBN Governor, Godwin Emefiele

 

The Central Bank of Nigeria has said that about ₦300 billion has been disbursed to 76 manufacturing companies from the ₦1 trillion facilities set up in April last year, in a bid to mitigate the impact of the coronavirus pandemic on the sector.

CBN Governor, Godwin Emefiele, disclosed this on Friday, during the contract signing for localisation of manufacturing of Oral B products by P&G in Nigeria.

He explained that the facility set aside, is a strategic move by the monetary and fiscal authorities towards driving recovery of the Nigerian economy, following the downturn in the 1st half of 2020, as a result of the COVID-19 pandemic.

“At the Central Bank of Nigeria, we set up a N1 trillion facilities in April 2020 for the growth and expansion of manufacturing firms in Nigeria,” he said.

“So far close to N300bn has been disbursed to 76 manufacturing firms, which would boost local manufacturing across critical sectors over the next few years.

“Our efforts have aided the recovery of the manufacturing sector as reflected in the Purchasing Managers Index which shows that the index on manufacturing activities rose from a low of 42.4 points in May 2020 to 48.7 points in February 2021.”

Emefiele said that the 0.11 percent GDP growth in Q4 2020 is fragile and driving further growth of the economy would require continued investment support that will enable the growth of the manufacturing sector in Nigeria.

He maintained that given the comparative and competitive advantage Nigeria has, it will be smart for multinationals to invest in domesticating their manufactured productions lines in the country.

“Not only do they have access to our large market, Nigeria can serve as a base for them to export goods to other markets in Africa.

“Our efforts at putting in policy measures to encourage improved production of made in Nigeria goods, is driven out of the need to create jobs and wealth for our growing population.

“The impact of a manufacturing plant also goes beyond its immediate environment, as it also enables the growth of SMEs that work to meet the needs of the manufacturing plants and the staff,” he stated.

Cryptocurrency Ban: CBN Governor, Godwin Emefiele Honours Senate’s Invitation

 

The CBN Governor, Godwin Emefiele has arrived at the National Assembly to honour the request by the Senate Joint Committee on Banking Insurance and other financial institutions, (including ICT and cybercrime) to brief on the opportunities and threats of cryptocurrency on the nation’s economy.

The decision by the Senate to invite the CBN governor is sequel to a motion by a federal lawmaker, Senator Istifanus Gyang during plenary on February 11, on the CBN’s directive to stop financial institutions from transactions in cryptocurrencies and matters arising from them.

CBN Governor, Godwin Emefiele arrives at the Senate to brief the cryptocurrency ban on February 23, 2021

The federal lawmakers called for caution, pointing out that while cryptocurrency has its negative sides and it has become the fastest-growing form of transaction all over the world.

They argued that technology has changed the way business is conducted in Nigeria and the country cannot run away from cryptocurrency.

But the CBN Governor during his appearance today, pointed out that the bank is not in a popularity complex and its actions are welcomed by all Nigerians with nothing to hide.

He affirmed the banks’ commitment to protecting all actors in the financial space especially the uninformed.

According to him money laundering, terrorism financing, and other nefarious activities are being carried out using cryptocurrencies and the opacity of financial dealings using cryptocurrencies threaten the soundness of Nigeria’s financial institutions.

Present at the meeting was the Director-General of the Securities and Exchange Commission, chairman of the ICPC, and the chairman of the NFIU.

All agencies present were in support of the CBN ban on accounts engaging in cryptocurrency transactions, they also cited how opaque and unregulatable cryptocurrency transactions are.

It would be recalled that the CBN had on February 5, ordered all banks to close accounts of anyone who transacts in cryptocurrency.

The order was contained in a circular to banks and other financial institutions, signed on Friday by the Director of Banking Supervision, Bello Hassan, and it is expected to take effect immediately.

According to the CBN, dealing in cryptocurrency or facilitating payments for cryptocurrency exchanges is prohibited.

READ ALSO: Use Of Cryptocurrency Illegal In Nigeria, Says CBN

“The Central Bank of Nigeria circular of January 12, 2017, ref FPR/DIR/GEN/CIR/06/010 which cautioned Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), other Financial Institutions and members of the public on the risk associated with transactions in cryptocurrency refers,” the statement said.

“Further to earlier regulatory directions on the subject, the bank hereby wishes to remind regulated institutions dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.

“Accordingly, all DMB’s NBFI’s or OFI’s are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.

“Please, note that breaches of this directive will attract severe regulatory sanctions. This letter is with immediate effect”.

The CBN further noted that the use of cryptocurrencies in Nigeria contravenes existing laws.

The apex bank warned Deposit Money Banks (DMBs) to desist from transacting cryptocurrencies and dealing with entities who do the same.

According to the CBN, cryptocurrencies are “issued by unknown and unregulated entities” and are increasingly being used to conduct ” many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.”

Cryptocurrency: Senate Invites CBN Governor, Godwin Emefiele

 

The Senate has invited the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele to brief its committees on the opportunities and threats of cryptocurrency on the nation’s economy.

The decision of the Senate to invite the CBN governor is sequel to a motion by a Federal Lawmaker Senator Istifanus Gyang during plenary on Thursday, on the CBN’s directive to stop financial institutions from transactions in cryptocurrencies and matters arising from them.

In their contributions; Federal lawmakers called for caution pointing out that while cryptocurrency has its negative sides and it has become the fastest-growing form of transaction all over the world.

They argued that technology has changed the way business is conducted in Nigeria and the country cannot run away from cryptocurrency. What has required some of them to say, is regulation.

The CBN had on February 5, 2021, ordered all banks to close accounts of anyone who transacts in cryptocurrency.

The order was contained in a circular to banks and other financial institutions, signed on Friday by the Director of Banking Supervision, Bello Hassan, and it is expected to take effect immediately.

READ ALSO: Use Of Cryptocurrency Illegal In Nigeria, Says CBN

According to the CBN, dealing in cryptocurrency or facilitating payments for cryptocurrency exchanges is prohibited.

“The Central Bank of Nigeria circular of January 12, 2017, ref FPR/DIR/GEN/CIR/06/010 which cautioned Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), other Financial Institutions and members of the public on the risk associated with transactions in cryptocurrency refers,” the statement said.

“Further to earlier regulatory directions on the subject, the bank hereby wishes to remind regulated institutions dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.

“Accordingly, all DMB’s NBFI’s or OFI’s are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.

“Please, note that breaches of this directive will attract severe regulatory sanctions. This letter is with immediate effect”.

The CBN further noted that the use of cryptocurrencies in Nigeria contravenes existing laws.

The apex bank warned Deposit Money Banks (DMBs) to desist from transacting cryptocurrencies and dealing with entities who do the same.

According to the CBN, cryptocurrencies are “issued by unknown and unregulated entities” and are increasingly being used to conduct ” many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.”

The CBN Governor is to appear before the committees on banking, ICT, Cybercrime, and Capital market.

These committees are to report back to the Senate in two weeks.

Ogoni Oil Spillage: Contempt Charge Filed Against CBN Governor Over N182 Billion Judgment Debt

PHOTO USED TO ILLUSTRATE THE STORY: A file photo of officials on duty in Ogoniland, Rivers State. Photo: Twitter- @FMEnvng

 

A contempt charge has been filed against the governor of the Central Bank of Nigeria, Godwin Emefiele over his alleged refusal to order the payment of N182 billion to Ogoni people in Rivers State.

The N182 billion was awarded against oil giant, Shell Petroleum Development Company over the oil spillage experienced by the Ogoni people as a result of the activities of the company.

The plaintiffs represented by Lucious Nwosu, a Senior Advocate of Nigeria (SAN), filed the contempt charge praying the Federal High Court in Abuja to commit the CBN governor to prison for allegedly disregarding an order of court that awarded the money to the aggrieved Ogoni people.

READ ALSO: Edo Governorship Election: Tribunal Defers Ruling On Petition Against Godwin Obaseki

At the hearing of the suit, on Wednesday, counsel to the Ogoni people expressed displeasure over the absence of the CBN governor.

He insists that the charge against Emefiele is semi criminal in nature and warranted his physical presence in court.

Lawyer to the CBN governor, Damian Dodo however informed the court that it was not the habit of his client to underrate any court of law and assured that Emefiele will do the needful at the appropriate time.

On his part, the counsel representing Shell Petroleum Development Company, Olawale Akoni informed the court that he had filed a motion praying the court to dismiss the contempt charge or in the alternative to stay proceedings after taking arguments.

Justice Taiwo Taiwo while adjourning the matter till January 26, 2021 directed the CBN governor and other parties to obey court orders.

Nigeria’s Economy May Emerge From Recession In 2021 Q1, Says Emefiele

File photo of CBN Governor, Godwin Emefiele

 

The Central Bank of Nigeria (CBN) has predicted that the nation’s economy may emerge from recession in the first quarter of 2021.

CBN Governor, Godwin Emefiele, who made the prediction on Friday during the 55th annual Bankers Dinner which held in Lagos, noted that the expected economic growth was two per cent.

“With the sustained implementation of our intervention measures, we do expect that the Nigerian economy could emerge from the recession by the first quarter of 2021,” he said.

“We also expect that growth in 2021 would attain 2.0 per cent. However, downside risks remain, as restoration of full economic activities, particularly in service-related sectors, remains uncertain until a COVID vaccine is produced and made available to millions of people across the world.

“Second, with the significant rise in cases in advanced markets and the imposition of lockdowns in parts of Europe, concerns remain on the impact this could have on growth in advanced economies, commodity prices and the financial markets.”

READ ALSO: ‘Jonathan Has Been Working For Buhari’s Government,’ APC Tells PDP

The CBN governor also called for measures to “insulate our economy from the impact of these shocks through our diversification efforts, while also working to ensure that we adhere to safety protocols in order to prevent a surge in COVID-19 related cases, as this could further cripple economic activities.

“Our actions in 2021 would be guided by the considerations that emerged from the Monetary Policy Committee meeting of November 23 & 24, 2020, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices.”

Emefiele’s remarks come six days after Nigeria’s economy slipped into another recession, the second of its kind in a space of four years.

According to a new report released by the Nigeria Bureau of Statistics on November 21, the economy shrank again in the third quarter of this year.

The nation’s economy maintained a second consecutive negative growth after contracting by 3.62 per cent in the third quarter.

The cumulative Gross Domestic Product (GDP) for the first nine months of 2020, therefore, stood at -2.48 per cent just as it recorded a -6.10 per cent in the second quarter.

SEE FULL STATEMENT HERE:

Gov. Godwin Emefiele, CON

Address at the 55th Annual Bankers Dinner

Lagos, Nigeria

27 November 2020

_______________________________

(Protocols)

It is indeed a pleasure to once again address the banking community at the 55th Annual Bankers Dinner, being organized by the Chartered Institute of Bankers of Nigeria (CIBN). Since I assumed office as the Governor of the Central Bank of Nigeria in June 2014, I have attended 6 consecutive annual dinners by the CIBN. These dinners provide a significant opportunity for me to engage with stakeholders in the banking and finance community on events that are shaping our economy, and the policy measures being embarked upon by the Central Bank of Nigeria to support greater economic growth and continued stability of our financial system.

Let me at this juncture, specially thank the leadership of the Chartered Institute of Bankers of Nigeria led by its President, Mr. Bayo Olugbemi. I appreciate Mr. Seye Awojobi and his team, for their efforts in putting this event together. I want to also extend my gratitude to the Managing Directors/Chief Executive Officers of our banks and other financial institutions who have found time to attend the conference despite their very busy schedules.

Likewise, I welcome my colleagues from the CBN, especially the Deputy Governors, and other senior management of the Bank who are present. And to everyone at this event whether in person or virtually, I would like to thank you for attending.

This dinner comes at a challenging time for our nation, taking into account the impact of COVID-19 on the global economy. In Nigeria, we had to address the public health challenge, in addition to implementing a variety of policy measures aimed at reversing the unprecedented downturn in economic activities during the first half of the year. The emerging reports on progress in developing a vaccine by several firms is indeed reassuring, as it indicates that a solution to the health challenge is in sight. It will also help to support growth in the medium term, by aiding full restoration of economic activities particularly in service related sectors such as education, aviation, hospitality and tourism.

In my remarks today, I hope to provide an assessment of the measures taken by the Central Bank of Nigeria in addressing the impact of the COVID-19 pandemic on the Nigerian economy, as well as our outlook on the path ahead.

Pre-COVID-19 Economy

As we are all aware, prior to the onset of the virus in December 2019, the Nigerian economy was on a positive growth trajectory, having made a significant recovery from the 2016-2017 recession, which was triggered by the drop-in commodity prices in 2016. Following the recession, we witnessed 12 consecutive quarters of economic expansion, and GDP growth in the fourth quarter of 2019 stood at 2.55 percent. Our exchange rate remained stable for over two years at N360/$ and our external reserve witnessed significant accretions from the sale of crude oil and continued inflows from foreign investors.

Our banking system remained strong, as key indicators reflected improvements across several areas. Capital adequacy ratio for the banking industry was above 15 percent, surpassing the prudential requirement. The ratio of non-performing loans declined from 11 percent in April 2019 to less than 6.1 percent by January 2020. Our intervention efforts in the agriculture and manufacturing sectors continued to support employment generating activities and improved local production of goods that can be produced in Nigeria.

COVID 19

The onset of the COVID-19 pandemic in the first half of 2020, and the lockdown measures put in place to contain the spread of the virus, caused an unprecedented shock to the global economy. Global economic downturn, which was particularly significant in the second quarter of the year, saw declines in growth in advanced and emerging market countries, such as the  United States (-9.5 percent), United Kingdom (-20 percent), India (-24 percent) and South Africa (-17 percent). As a result, far-reaching measures were taken by fiscal and monetary authorities in advanced and emerging markets to stabilize their respective economies.

Like other economies, the Nigerian economy was not immune from the COVID-19 shock in 2020. Nigeria’s gross domestic product (GDP) contracted by -3.4 percent in the third quarter, a welcome improvement from the – 6.1 percent recorded in the second quarter.

The negative rate of growth was due to a series of external factors in addition to the lockdown measures, imposed in order to curtail the spread of the virus. Some of the key constricting factors were: Crude Oil Restriction on global travel by land and air; along with the slowdown in commercial activities, led to a significant reduction in the demand for crude oil, which contributed to a 65 percent decline in crude oil prices between January and May 2020. The drop in crude prices, along with OPEC reduction of Nigeria’s production quota led to a significant decline in our foreign exchange earnings, along with a more than 60 percent decline in revenues due to the federation account.

Today, crude oil prices have recovered from its low of US$19 per barrel in April 2020 to US$45 per barrel in November 2020; but it is yet to return to pre-pandemic levels of over US$60 per barrel as at January 2020. GDP growth in the oil sector in the third quarter remained subdued due to the OPEC restrictions on oil output.

Restrictions on Movement GDP growth particularly in the manufacturing sector was significantly impacted by the restrictions on movement as many factories and businesses operated at limited capacity, in addition to a decline in demand for service-related activities, which require extensive in person contact, such as transportation, hospitality and tourism.

Global Supply Chains

Significant disruptions in domestic and global supply chains as a result of lockdown measures in key markets in Asia and Europe between March and May 2020, affected delivery of inputs and machinery to firms in Nigeria and this contributed to a slowdown in manufacturing activities. Some countries such as India and Vietnam imposed restrictions on the exports of vital materials in order to meet the needs of their local market. This challenge reinforces the need to build more resilient systems that can support our production needs in times of crisis.

Capital Flows

The impact of the pandemic and the resulting slowdown in economic activity, led to a significant outflow of funds from emerging market economies. Foreign investors withdrew over $100bn worth of funds from emerging markets between February and April 2020. These funds were  subsequently invested in safe haven assets such as US treasury bills and the Japanese Yen. The increase in outflows from emerging markets also led to a corresponding depreciation in the currencies of several emerging market countries such as Brazil (- 27.3%), Turkey(-35.1%), Argentina(-35%), Russia(-20%), Angola(-27%) and South Africa(-9%) year to date.

Exchange Rate

Like other emerging market countries andcountries reliant on oil exports, the decline in crude oil earnings as well as the retreat by foreign portfolio investors significantly affected the supply of foreign exchange into Nigeria. In order to adjust for the decrease in supply of foreign exchange, the naira depreciated from N305/$ to N360/$ and subsequently to N380/$. With the decline in our foreign exchange earnings and successive exchange rate adjustments, the CBN has continued to implement a demand management framework, which is designed to bolster the production of items that can be produced in Nigeria, and aid conservation of our external reserves.

Due to the unprecedented nature of the shock, we continued to favour a gradual liberalization of the foreign exchange market in order to smoothen exchange rate volatility and mitigate the impact which, rapid changes in the exchange rate could have on key macro-economic variables. This we believe is in line with international best practices in countries where managed float arrangements are in operation. At the same time, measures are being taken by the authorities to improve our non-oil exports and other sources of foreign exchange.

These measures have helped to prevent a significant decline in our reserves. Our external reserves currently stand above $35 billion and are sufficient to cover 7 months of import of goods and services. Inflation Inflationary pressure persisted during the year due to several factors. In addition to the disruption to global and domestic supply chains as a result of COVID-19, inflation was exacerbated by the increase in VAT rate, petroleum prices, electricity price adjustments, farmer-herder clashes, exchange rate adjustment, and flooding that occurred in many parts of our farm belt areas. Inflation in October 2020 stood at  14.2 percent. We however expect inflation to begin to moderate by the first half of 2021 as efforts are being made to enable significant cultivation and production of key staple items in the dry season.

Response by the Monetary and Fiscal Authorities

Given the impact on COVID-19 on key economic variables earlier mentioned, the fiscal and monetary authorities took unprecedented measures to prevent any long-term damage to the growth prospects of our economy. Our first objective was to restore stability to the economy by providing assistance to households and businesses that had been severely affected by the pandemic. In addition, we sought to stimulate economy activity through targeted interventions in critical sectors such as agriculture, manufacturing, electricity and construction. Cumulatively our intervention efforts represent about 3.5 percent of Nigeria’s GDP. Some of these measures we took include:

  1. A cumulative reduction of the monetary policy rate from 13.5 to 11.5 percent between May and September 2020 in order to spur lending to the economy.
  2. A 1-year extension of the moratorium on principal repayments for CBN intervention facilities;

iii. Regulatory Forbearance was granted to banks to restructure loans given to sectors that were severely affected by the pandemic

  1. Reduction of the interest rate on CBN intervention loans from 9 to 5 percent
  2. Strengthening of the Loan to Deposit ratio policy, which has resulted in a significant rise in loans provided by financial institutions to banking customers. Total gross credit rose by over 21 percent over the past year, from N15.5 trillion to N19.54 trillion. In addition, over N738 billion has been provided as credit to manufacturing related activities by the banks.
  3. Creation of N150 billion Targeted Credit Facility (TCF) for affected households and small and medium enterprises through the NIRSAL Microfinance Bank. Already, N149.21 billion has been disbursed to 316,869 beneficiaries. Given the resounding success of this program and its positive impact on output growth, we have decided to double this fund to about N300 billion, so as to accommodate many more beneficiaries and boost consumer expenditure which should positively impact output growth.

vii. The Bank also disbursed AgriBusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS) (N92.90 billion to 24,702 beneficiaries), Anchor Borrowers Program (ABP) by the sum of N164.91 billion to 954,279 beneficiaries.

viii. Mobilization of key stakeholders in the Nigerian economy through the Coalition against COVID19(CACOVID), which led to the provision of over N28bn in relief  materials to affected households, and the set-up of 39 isolation centers across the country.

  1. Creation of a NGN100 billion intervention fund in loans to pharmaceutical companies and healthcare practitioners intending to expand and strengthen the capacity of our healthcare institutions; so far 60 health care related projects are being funded to the tune of over N60 billion as a result of the intervention.
  2. Creation of a research fund, which is designed to support the development of vaccines in Nigeria.
  3. Establishment of a N1 trillion facility in loans to boost local manufacturing and production across critical sectors; 53 major manufacturing projects, 21 agriculture related projects and 13 service projects are being funded to the tune of over N360 billion from this facility.

Results of our interventions

The impact of these measures along with the removal of restrictions on movement and resumption of international travel, led to improvement in key indicators of the economy, as several economic activities returned to positive growth.

A sectoral assessment of economic activities in the third quarter indicates that the economy witnessed positive growth in key sectors such as Information and Communications Technology, Agriculture, Health, Construction, Finance and Insurance and Public Administration. The Agricultural sector continued to record positive growth supported by productivity gains in the sector, interventions by the government, and improved demand for local produce.

The Manufacturing Purchasing Managers Index, in the month of November stood at 50.2 points, indicating an expansion in manufacturing activities after six months of contraction. A total of 18 sectors recorded positive growth in the third quarter relative to 13 sectors in the second quarter, which reflects significant improvement in economic activity.

Furthermore, 36 out of the 46 economic activities tracked by NBS, reflected positive improvements in growth, which includes activities that recorded negative growth.

In the Investors and Exporters Window, close to $150m is being traded daily as a result of our measures to sanitize activities in the foreign exchange market. In addition, the Nigerian Stock Exchange All Share index rose by 65 percent between April and November 2020, reflecting improved sentiments by investors on the fundamentals of publicly listed companies. As a result of these measures, GDP growth in the third quarter, improved to -3.6 percent from -6.1 percent in quarter two, even though the economy fell back into a recession. We however expect that Nigeria would emerge from the recession by the first quarter of 2021, due to high frequency data that indicates continued improvements in the non-oil sector of our economy.

Financial System Stability

With the decline in economic activities, the CBN instituted measures in the banking system, in order to prevent an economic crisis from spilling over into a financial crisis.

Inaction on our part would have led to a wave of bankruptcies by firms along with rising unemployment, which would ultimately have a significant impact on the balance sheet of banks. As a result, we ensured that;

  1. Banks made adequate capital provisions to cover for unexpected losses
  2. We supported viable businesses that had been affected by the pandemic through access to our intervention funds

III. We enabled banks to restructure loans granted to sectors affected by the

pandemic. As a result of these measures, NPL ratios has remained low at 5.7 percent. The capital adequacy ratio of the banking industry, at 15.5 percent, remains above the prudential requirement percent. In addition, return on earnings in the banking sector was over 21 percent as at October 2020. Similarly, Other Financial Institutions (OFIs) recorded a remarkable improvement as aggregate assets grew by N582 billion, or 16.94 per cent (year-on-year), to N4.02 trillion as at end-September 2020.

While the news of the continued growth in the banking and finance sector in the third quarter of the year is encouraging, the ultimate strength of our financial system would depend on three key factors;

  1. Ensuring that banks have adequate capital buffers to withstand similar pandemics.
  2. Developing adequate internal controls that will be able to identify potential risks to banks, such as cyber threats, as well as putting in place measures to contain these risks.

III. Being able to adapt your business model to changes taking place in the business environment.

This last point is vital as COVID-19 has demonstrated the impact externally induced disruptions could have on the Nigerian economy. It is therefore imperative from an economic as well as a security perspective, that the banking and financial system works to support growth in sectors that have significant growth potential, and can enhance the resilience of the Nigerian economy, in the face of external shocks.

Outlook

With sustained implementation of our intervention measures, we do expect that the Nigerian economy could emerge from the recession by the first quarter of 2021. We also expect that growth in 2021 would attain 2.0 percent. However, downside risks remain, as restoration of full economic  activities, particularly in service related sectors, remains uncertain until a COVID vaccine is produced and made available to millions of people across the world.

Second, with the significant rise in cases in advanced markets and the imposition of lockdowns in parts of Europe, concerns remain on the impact this could have on growth in advanced economies, commodity prices and the financial markets.

We must therefore find ways to insulate our economy from the impact of these shocks through our diversification efforts, while also working to ensure that we adhere to safety protocols in order to prevent a surge in COVID-19 related cases, as this could further cripple economic activities.

Our actions in 2021 would be guided by the considerations that emerged from the Monetary Policy Committee meeting of November 23 & 24, 2020, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices.

Given the fact that the rise in inflation is not due to monetary factors but rather the prevalence of structural rigidities and supply shocks, traditional tools of monetary policy may not be helpful in addressing current inflationary pressures. Rather, a more useful policy will be the supply-side measures implemented by the Bank. As a result, emphasis will be placed on strengthening the development finance initiatives of the CBN in order to stimulate greater production and reduce unemployment.

We intend to increase our support for measures that will aid improve cultivation of local produce in Nigeria, with particularly emphasis on improving our yield levels, as food inflation continues to remain the key driver of inflationary trends.

The banking sector therefore has a significant role to play as a facilitator of growth in the agriculture sector, through its intermediation function. Some of the opportunities in the agriculture sector that banks should explore include ways to address some of the existing gaps in the agriculture value chains, such as storage centers, transport logistics, and technology  platforms, that can enable rural farmers to sell their produce directly to the markets. These measures would help to improve productivity of farmers, reduce post-harvest losses, increase access to finance for farmers and improve sourcing of local raw materials for processing by manufacturing and industrial firms. It will also aid improved production of local goods, enable the creation of jobs, while supporting the growth of other sectors of our economy such as manufacturing, and transportation.

Information Communication Technology

Another sector which has emerged as a significant source of resilience in mitigating the impact of COVID-19 on the economy, has been Information and Communications  Technology (ICT). In the third quarter of 2020, the ICT sector made contributions of over 17.8 percent to GDP growth, 47 percent higher than its contributions a year earlier.

The growth of startups in the fintech and health care space rose in response to the pandemic. It is important that we leverage ICT as an enabler for growth in key sectors of the economy.

ICT start-ups are emerging to support SMEs, farmers, and in providing quality learning to students. It is important that the banking sector consider viable IT firms in these areas that have the potential to not only serve the needs of the local market but are also able to export ICT related services to countries across the world. India for example exports close to a $100bn worth of ICT related  services every year and I believe that our ICT industry can make significant contributions to our export earnings.

The Central Bank recently issued Payment Service Banks licenses to 3 firms as part of our efforts to drive financial inclusion and ensure that majority of Nigerian citizens are banked. The Payment Service Banks, along with Mobile Money Operators and Banks are expected to leverage ICT channels in improving penetration of digital financial services and products to Nigerians. Driving sustainable growth of our economy would require that the banking industry, support the growth of ICT firms that are inclined to improve productivity across key sectors in the economy.

Infrastructure Finance

Another critical area that the banking sector ought to consider for stable growth of our economy is Infrastructure Finance. With the decline in revenues due to federal and state government as a result of the drop in crude oil prices, alternative ways of funding infrastructure are critical if we are to generate sustained growth of our economy. As we are all aware, the cost of logistics is often seen as a significant impediment to the growth of businesses in the country.

A well-built infrastructure system, comprising hard infrastructure such as roads and ports, and soft infrastructure such as broadband penetration, can have a multipliereffect on growth by enabling the expansion of business activities in the country. We believe that a well-structured infrastructure fund can act as a catalyst for growth in the medium and the long run. The support of the banking community will be important in achieving this objective.

Conclusion

Distinguished ladies and gentlemen, in concluding my remarks, let me assure all Nigerians that the Monetary and Fiscal authorities are alive to their responsibilities to restore the economy back to recovery.

At this point, I would like to seize this opportunity to appeal to Nigerians, particularly our Media Economic Analysts.

We confess that the problem we face today is of a global dimension. The global economy is challenged, just like the Nigerian economy. My appeal to our media analysts  is that in the course of conducting their analysis of the Nigerian economy, they should realize that their public comments particularly if they are alarmist, create panic in our environment. We cherish their counsel but urge that they be more constructive in their pungent criticisms, which could hamper our efforts to return our country and economy back to recovery. When you overdramatize the problem, you create panic that slows the process of recovery.

While COVID-19 has brought on several challenges to our economy and indeed the banking sector, it offers a unique opportunity for us to build a more resilient economy that is better able to contain external shocks, whilst supporting growth and wealth creation in key sectors of our economy. Proactive steps on the part of stakeholders in the banking and financial system in supporting the growth of sectors such as agriculture, ICT and infrastructure, will strengthen our ability to deal with the challenges that have been brought on by COVID-19 while enabling the growth of our economy in general.

I thank you for your attention.

Godwin I. Emefiele (CON)

Governor

Central Bank of Nigeria

27th November 2020

 

Emefiele To Host CEOs Of Multinational Companies Over Export Market

Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, speaks to the press about the Monetary Policy Committee meeting of June 20, 2020

 

Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has hinted on plans to meet with the Chief Executives of multinational companies in Nigeria, to discuss the revamp of Nigerian export markets.

Mr. Emefiele dropped the hint on Tuesday, during the meeting of the Bankers’ Committee, noting that the CBN is ready to encourage the revamp of Nigeria’s export sector through deliberate policies that would boost investment and job creation.

While decrying the situation where many Nigerian produce of export quality were waiting to be tapped, Mr Emefiele said the CBN, in collaboration with the Federal Ministry of Industry, Trade and Investment, would ensure the facilitation of a reboot of the Nigerian export market.

The CBN Governor reiterated that the country had no choice but to diversify its economic base away from heavy reliance on crude oil, so that Nigerians can produce what they eat and eat what they produce

The date of the meeting is yet to be disclosed, but it is expected to come up with a roadmap on how best to revitalize the export sector in order to earn foreign exchange for the country, as well as generate jobs for millions of Nigerians.

Reps Committee Investigating Privatisation Of Power Sector, Frown At Absence Of CBN Governor Again

A file photo of CBN Governor, Mr Godwin Emefiele.

 

Chairman of the House of Representatives adhoc committee which is investigating the privatisation process of the power sector, Ado Doguwa, has once again frowned at the refusal of the Central Bank governor to honour the invitation of the committee.

This is the second time the Central Bank governor has failed to honour the invitation of the committee.

Mr Doguwa says the Central Bank governor has been busy expending taxpayers’ money but has refused to appear before the committee to account for those monies.

He, however, said the committee will take all necessary actions to compel him to appear before the committee even as he questioned if the CBN governor has something to hide.

Court Summons Malami, Emefiele, Others Over National Theatre Handover

Justice Minister, Abubakar Malami and CBN Governor, Godwin Emefiele.

 

A Federal High Court sitting in Lagos has directed the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, Governor of the Central Bank of Nigeria, Godwin Emefiele, and five others to appear before it on Friday, July 24.

According to the court, they are to explain the alleged handover of the National Theatre to some developers while the structure is a subject of a pending lawsuit.

Among the five others summoned by Justice Ayokunle Faji is Access Bank of Nigeria Plc and its Managing Director, Mr. Herbert Wigwe.

Others summoned to appear before the court are the Minister, Federal Ministry of Tourism, Culture, and National Orientation, the Infrastructure Concession Regulatory Commission (ICRC), the National Theatre and the National Troupe of Nigeria Board.

Justice Faji summoned all the parties who are listed as defendant/respondents in a suit before it by a company, Topwideapeas Limited.

Topwideapeas Limited is reportedly designated as the concessionaire of the fallow land adjoining the National Theatre.

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Through its lawyer, Chijioke Okoli (SAN), the company brought an exparte application before the court asking it to reverse the handover in order to protect its interest in the property.

The senior lawyer contended that if not reversed, the handover of the structure would render the eventual decision of the court in the suit null and void.

Okoli also complained that despite pending litigation on the structure, the National Theatre was handed over to the CBN, Access Bank of Nigeria Plc, and Herbert Wigwe on July 12.

The handover was said to have been purportedly done by the National Theatre and the National Troupe of Nigeria Board, the Infrastructure Concession Regulatory Commission (ICRC), and the Minister, Federal Ministry of Tourism, Culture & National Orientation who are listed as the 1st to 3rd defendant in the suit.

Okoli, therefore, is seeking an order “suspending or staying the purported handover on or about July 12, 2020, by the 1st and 3rd defendant/respondents to the 5th-7thdefendant/respondents of the National Theatre Complex, Iganmu, Lagos and the adjoining lands, pending the hearing and determination of the applicant’s motion for an interlocutory injunction (by notice filed on December 31, 2019).”

CBN Retains MPR At 13.5 Per Cent

The Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 13.5 per cent.

CBN Governor, Godwin Emefiele, announced the decision of the Monetary Policy Committee (MPC) after the two-day meeting which held at the apex bank’s headquarters in Abuja.

According to Emefiele, all members of the committee had agreed to retain the current monetary policy stance.

“An increase in the MPR will be taken by the deposit in the money banks as an invitation to increase lending rates and this will be most undesirable at this point in time when efforts are being made to avert a recession.

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“Besides, a reduction in the MPR will not make the Deposit Money Banks (DMBs) reduce lending rates but other strategies of the CBN are making the DMBs to reduce the lending rates in furtherance of growth objectives,” he stated.

“In view of the foregoing, the Committee by unanimous vote to retain monetary policy rate at 13.5 per cent and to hold all other parameters constant,” he stated.

Emefiele explained that the committee held the Cash Reserves Ratio at 27.5 per cent, while the Liquidity Ratio was left unchanged at 30 per cent.