Emefiele: Driving growth with intervention programmes

From Uche Usim, Abuja 

Mr Godwin Emefiele assumed duties on June 4, 2014, as the 11th Central Bank of Nigeria CBN Governor and its 10th indigenous head, with a firm promise to operate a people-oriented monetary policy administration.

At his maiden world press conference, on June 5, 2014, Emefiele unveiled a 10-point agenda, insisting on running a central bank that is professional, apolitical, and people-focused.

“I want a central bank that spends its energies on building a resilient financial system that can serve the growth and development needs of our beloved country, Nigeria”, he said.

He went ahead to walk the talk but was soon confronted with global economic tremors which precipitated a 60 per cent slump in crude oil prices and a dig into the nation’s purse. 

Soon after, the country slumped into a recession, the first time in a quarter of a century.

Confronted with these litany of challenges, Emefiele designed a bouquet of intervention programmes aimed at strengthening the Micro Small and Medium-sized Enterprises (MSMEs).

The programmes were designed in such a way that political interference was minimal to ensure they succeeded.

This firm stand on driving policies that won’t be hijacked by politicians makes him a reformer that has been mostly misunderstood.

Given his pedigree, Emefiele was brought on board critical reforms at the Bank and built on the policies of his predecessors and chose development financing as his focal point.

To him, the CBN was to act as a financial catalyst by targeting strategic sectors that could create jobs on a huge scale and reduce the country’s import bills. 

In June 2015, the Central Bank of Nigeria (CBN) excluded 43 hitherto imported goods from accessing foreign exchange at the Nigerian foreign exchange markets.

But many ill-informed analysts tagged it corporate rascality and a veiled plot to run genuine importers out business.

Emefiele, who was undeterred, said there was no way the apex bank could sustain funding food imports for a population of over 200 million, when there is in-country capacity to grow the food items.

That was how the Anchor Borrower’s Programme (ABP), an intervention scheme aimed at solving the food insufficiency nightmare and creating massive employment, was born.

However, with the twin-blight of the COVID-19 pandemic and the Russia-Ukraine war, which have disrupted global supply chains and shrunk food productivity, Emefiele is now being applauded as a visionary leader who saw tomorrow and prepared for it.

This is because many countries have been forced to limit export of food items to meet local demands, having recorded a shaky exit from COVID-19-induced recession and its concomitant shutdowns.

The unsavoury development puts any import-reliant country in dire straits as getting food supplies has become a tough order and obviously more expensive, with a heavy strain on foreign reserves.

So, in line with the incumbent administration’s mantra of   growing what the nation consumes and consuming what it grows, the ABP has recorded progress in the local cultivation of over 10 crops, including rice, other grains and oil palm. 

Between January and February 2023, the Bank disbursed N12.65 billion to three agricultural projects under the Anchor Borrowers’ Programme (ABP), bringing the cumulative disbursement under the Programme to N1.09 trillion  to over 4.6 million smallholder farmers cultivating or rearing 21 agricultural commodities on an approved 6.02 million hectares of farmland across the country.  

The bank also released the sum of N23.70 billion under the N1.0 trillion Real Sector Facility to eight (8) new real sector projects in agriculture, manufacturing, and services. Cumulative disbursements under the Real Sector Facility currently stands at N2.43 trillion, disbursed to 462 projects across the country, comprising 257 manufacturing, 95 agriculture, 97 services and 13 mining sector projects. Under the 100 for 100 Policy on Production and Productivity (PPP). The Bank also released N3.01 billion under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital and operational expenditure of distribution companies (Discos) aimed at improving their liquidity status and aid their recovery of legacy debt. This brings the cumulative disbursement under the facility to N254.39 billion.

Indeed, Emefiele, having survived many banana peels and corporate bullets since assumption of office, is faced with a similar situation today, as lobbyists salivating over his position in the incoming administration are working assiduously to taint his image by skirting around the reforms he has executed at the CBN. 

Many are hammering on the recent naira redesign policy which  has come with loaded benefits after the initial pain.

As a country battling terrorism, banditry and other crimes, it is very important to run on modern banking templates that dwarfs cash usage because illicit financial inflows, terror financing and tracking spending would be easier.

Besides, the CBN, in its examination of the economy, realised that as at December 2022, N2.7 trillion out of N3.2 trillion currency in circulation was outside the banks.

The CBN, while driving the initiative, began by redesigning the old naira notes (N200, N500 and N1,000) and unveiled the new ones in December 2022. It also pegged weekly cash withdrawals by individuals and corporate bodies at N500,000 and N5 million, with effect from January 9.

The apex bank said the redesigned naira notes would be rationed to encourage the public, regardless of location and social ranking, to use digital platforms for transactions.

These are; internet banking, mobile banking, domestic card (AFRIGO), USSD, PSBS, POS, eNaira app and 1.4 million mobile banking agents spread across the country to attend to the informal sector and those in far-flung settlements.

Experts note that while the naira redesign project has loads of economic goodies, some sections of Nigerians, apparently those addicted to cash spending, unfortunately, have not considered the gains but have detonated the policy and tried to stir public objection.

Critics of the cashless policy have argued that it would further impoverish Nigerians and create unemployment in the financial value chain. But they lacked evidence to buttress their rejection.

It is not surprising that most of the objections to the central bank policies are by those who currently benefit from the rot in the system – politicians, and other corrupt public officials who take undue advantage of the opaque system of administration that does not allow for transparency in government business.

But just like the Minister of Labour and Employment, Chris Ngige aptly noted, implementation of such a policy comes with challenges and resistance.

The cash crunch is part of the cashless policy. It was the implementation that ran into a hiccup, it was not smooth; so the CBN had taken steps to smoothen it out.

Ngige said, “They said it was about N3 trillion and they want to cut it down. Cutting it down is part of that cashless policy. Some of us that travel abroad, when you bring out cash, people would be staring at you as if you are coming from Mars, because they are not used to people bringing out cash.

“If you are bringing out huge cash abroad, you are either a drug peddler or you are not doing clean business. In fact, they regard anybody bringing out cash as somebody doing money laundering. Since the cashless policy commenced, there has been temporary relief we have gotten from banditry, from kidnapping and people asking for N50 million cash to release kidnapped victims.

“All those have abated. So, it is not a bad policy. It is the implementation; it should be done gradually. There is no way we would go back to the old way, where people carry N100 million cash and bring it into the market. Cash should be for low volume and low value transactions.”

Also, as part of efforts to stimulate infrastructural development across the country, the Emefiele-led CBN, working with the fiscal authorities also established a N15 trillion infrastructure development company (Infraco).

According to the CBN spokesman, Dr Isa Abdulmumin,  under the 100 for 100 Policy on Production and Productivity (PPP), designed to fast track productive activities in priority sectors, the central bank has also supported a lot of local manufacturers. 

To deepen financial inclusion, the Director, Development Finance Department of CBN, Mr Yusuf Yila said Nigeria targets to get 95% of the over 200 million population financially included by 2024. 

Weighing in on various initiatives of the CBN, Nigeria’s first professor of capital markets, Prof Uche Uwaleke said that the cash withdrawal limit is an integral part of currency redesign meant to reduce the amount of currency circulating outside the banking system.

He said it will have no negative impact on these businesses given the many alternative payment platforms available to them.

“Rather, the impact will be positive as it reduces the risk associated with carrying huge cash such as armed robbery. The incidence of money laundering is equally likely to reduce.

“In place of cash transactions,  these businesses can use more reliable and safer channels such as POS, Debit cards, eNaira and electronic transfers”, he said.

For analysts, the policy is part of a broader strategy for the CBN to control FX demand.

However, on insinuations that the new naira and the accompanying rules were designed to hurt politicians who have stacked up the old notes for politicking, the CBN Governor, Mr Emefiele, said there was no such motive as CBN interventions are woven around economic exigencies and not the interest of politicians, since the regulatory body remains fully non-partisan.

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