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From Uche Usim, Abuja
Economic experts are worried that despite declining global appetite for fossil fuels and price volatility, Nigeria is yet to fully wean itself off heavy crude oil dependence because old habits die hard for political leaders who are already addicted to easy oil money and heavy borrowing.
However, as the dreaded COVID-19 pandemic exposed the dangers of a mono-product economy, resource-rich countries have been forced to diversify into areas of comparative advantage to broaden income generation. This, analysts say, is the best way to grow the naira, not defending it with dollars.
The naira has been battered by low productivity such that it has continued to drop in value against the dollar at the parallel market.
Unfortunately, Nigeria’s case paints a double whammy scenario as oil production, in low and high price regimes, has remained low amid blooming insurgency and theft. This has forced the country to survive on heavy borrowing.
So, moving the economy from consumption to production is no longer optional but mandatory, if the naira is to be saved from free fall and foreign reserves flattened.
This has been the position of President Muhammadu Buhari and the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, that Nigeria must consume what it produces and produce what it consumes.
That message was amplified at a recent roundtable on national issues organized by Development Specs Academy in Abuja, where experts insisted that conversations around growing the naira must be sincerely anchored on a strategic plan to increase productivity, boost export and change the consumption patterns of Nigerians.
They listed agriculture, mining, manufacturing, science and technology, ICT and other sectors as robust development enablers that could turn around the fortunes of Nigeria, while helping it reduce its debt burden.
They also noted that increasing productivity would fuel economic growth, support good jobs, raise living standards and help Nigerians provide for their families with affordable goods and services.
Speakers on the occasion included the convener, Dr. Okey Ikechukwu; former spokesperson for the Nigerian Army, Brigadier Sani Usman (rtd); Rev. Fr. George Ehusani; Prof. Jim Unsh ; Dr. Amaechi Anakwue ; Prof. Christopher Ogbogbo ; Dr. Amara Albert; Dr. Hyeladi Harusa; and Dr. Amaechi, among others.
Ikechukwu noted that the CBN has made several policy interventions to improve the value of the national currency, including the Anchor Borrowers’ Programme (ABP), which was created to enhance farmers’ access to loans.
“This initiative alone has created millions of jobs, taken many youths off the crime path and rescued many local economies. Only economy-reflating and socially impactful efforts, as seen in such initiatives, in addition to consuming what we produce and producing what we consume, will give us the prospect of bringing up the value of the national currency and keeping it up,” he said.
The speakers reckoned that tackling hunger and social service deficits will go a long way in reducing insurgency, banditry, kidnapping, cultism and other crimes that spring from poverty and unemployment.
The roundtable called on youths to leverage several initiatives packaged by the CBN to legitimately enrich themselves, while creating jobs and developing the economy.
According to the Minister of State, Petroleum Resources, Chief Timipre Sylva, the oil and gas sector accounts for about 10 per cent of Nigeria’s gross domestic product (GDP) and 86 per cent of total export earnings, while the actual government revenue from the sector is 40 per cent as the balance is consumed by expenses.
The port manager for the Lagos Port Complex, Funmilayo Olotu, said Nigeria needs more export activities to boost foreign exchange, as it is needed to enhance economic growth and development and save the naira.
She said Nigeria being an import-dependent country was not helping the nation’s economy in terms of productivity, which is why the Nigerian Ports Authority (NPA) has designated the Lilypond Container Terminal as the final processing centre for all export cargoes to go into the vessels at the port corridor for immediate exportation
Some of the intervention programmes of the CBN are the Anchor Borrower’s Programme; N1 trillion Real Sector Facility (RSF), Real Sector Support Facility (RSSF), Anchor Borrowers’ Programme (ABP), Commercial Agriculture Credit Scheme (CACS), Non-Oil Export Stimulation Facility (NESF), and Textile Sector Intervention Facility (TSIF).
The ABP was launched by President Muhammadu Buhari on November 17, 2015, in Kebbi State to create a linkage between anchor companies involved in the process of selecting key agricultural commodities and small holder farmers (SFHs). At harvest, the SHF supplies his/her produce to the agro-processor (Anchor) who pays the cash equivalent to the farmers.
Some of the commodities captured under ABP are cassava, cotton, fish, groundnut, maize, poultry, rice, soya beans, wheat, cattle, sorghum, ginger, castor seed, sesame, tomato, cocoa, yellow pepper, oil palm, cowpea and onion. All intervention loans attract only 5% interest and some moratorium.
Under the N1 trillion Real Sector Facility, the Bank has released a total of N1.4 trillion to over 331 real sector projects in agriculture, manufacturing, mining, and services sectors. Under its Real Sector Support Facility (RSSF), the CBN has disbursed N166.21 billion to 25 projects.
There is also the 100 for 100 Policy on Production and Productivity (PPP); an intervention programme targeted at financially fortifying local private companies with bankable projects to fund. They can apply for as much as N5 billion under the scheme and anything above that shall require the special approval of the CBN management.
The programme was also designed to discourage massive importation and foreign exchange depletion by bolstering local capacity to meet local demands; create massive jobs, galvanise sustainable economic growth via exports, accelerate structural economic transformation and ultimately promote diversification and productivity.
According to Emefiele, selection criteria for participation were purely based on the businesses’ capacity and capability to swell the nation’s economic fortunes. He added that in selecting the companies, evidence-based, transparent and measurable criteria are deployed and once the apex bank can clearly determine that the private company has a substantial impact on the economy through “Performance Indicators (KPIs)”, it would be picked. Thereafter, the CBN would then screen and finance eligible private sector companies in 100 days, and roll over every 100 days.
The initiative is being funded from the CBN’s Real Sector Support Facility-Differentiated Cash Reserve Requirement (RSSF-DCRR) window and applicants can access it via an online.
The initiative, which would be bank-led, will be rolled over every 100 days (quarterly) with a new set of companies selected for financing under the initiative.
Monthly interests on the facility shall be amortised and transferred quarterly with principal repayments to the CBN. The interest rate under the intervention shall not be more than 5.0% p.a. (all-inclusive) up to 28th February 2022, thereafter, interest on the facility shall revert to 9% p.a. (all-inclusive) effective from 1st March 2022.
Emefiele urged manufacturers in critical sectors that seek to engage in greenfield projects or in expanding their existing facilities will have access to cheaper forms of credit at single digit rates, as well as foreign exchange to procure plants and machineries every 100 days.
In several outings, the Minister of Labour and Employment, Dr. Chris Ngige has hailed the CBN for the various initiatives, even as he admonished beneficiaries to remain highly productive as productivity remains the backbone of the country.
“Without productivity, you lag behind and this initiative is consistent with President Muhammadu Buhari’s plan to lift 100 million Nigerians out of poverty.
“We have no choice than to key into this initiative. We have a youthful population and we must use this to our advantage.
“We have a problem. The youths from 18-40 years are highly unemployed. We can see them join Boko Haram, Avengers, IPOB, etc. They’re jobless. They are doing nothing. We’re sitting on a keg of gunpowder and we need to address this challenge using initiatives like the 100 for 100 policy.
“Again, we’ve not adequately diversified the economy. For a mono economy relying heavily on crude oil receipts, we are still in danger. We know we have the CBN playing several roles but it’s good to keep the economy going. The fiscal and monetary authorities are like Siamese twins. They work together” he explained.
At a recent CBN event, the President, Manufacturers Association of Nigeria (MAN), Mr Mansur Ahmed said that the President Muhammadu Buhari’s mantra of ‘producing what we eat and eating what we produce’ was commendable, calling for a multi-stakeholder approach to ensure it succeeds.
The Secretary to the Government of the Federation (SGF), Mr Boss Mustapha, also applauded CBN’s interventions, saying they remains germane in helping eradicate poverty, ensure wealth creation and provide jobs.
He urged the beneficiaries to maximally use the opportunity to breathe fresh air into the economy.
From the banks’ perspective, the Group Managing Director of Access Bank and Head, Body of Bank CEOs, Mr Herbert Wigwe called on banks and other stakeholders to take responsibility in supporting economic development.
According to Professor Uche Uwaleke, Nigeria’s first professor of the capital market, the overall objective of these interventions is to promote financial inclusion in the country, tackle unemployment, insecurity and other social challenges.
