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Saturday,
November 30, 2019 / 07.07PM /
By Innocent Ogbe / Header Image Credit: CIBN
Highlights
The
Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has listed the
Bank's priorities for 2020 to include support for greater economic growth,
price stability and low inflation, even as he hinted on the continued tight
monetary policy stance of the Bank and the establishment of a Bankers' Charitable Endowment Fund.
Mr.
Emefiele unveiled the bank's plans for the next year while delivering the
keynote address titled: "Strong Sustainable growth for the Nigerian Economy" at
the 54th Annual Bankers' Dinner organized by the Chartered Institute of Bankers
of Nigeria (CIBN) in Lagos on Friday, November 29, 2019.
The
Governor announced the establishment of a Bankers' Charitable Endowment Fund
that will fund a major charitable initiative every year starting in 2020.
According to him, the Bankers' Charitable Endowment will directly fund
strategic social programmes in states and local communities across Nigeria. He
expressed the hope that the Fund would spur a trend across other industries and
sectors to collaborate and work together to better the lives of all Nigerians.
Speaking
on the developments in the country's economic and financial sector, over the
past year, and how they affect the macro-economic outlook for 2020, he said in
spite of the positive growth the economy experienced, growth had remained slow
due to "some structural constraints" in the economy.
According
to him, the pace of growth, given Nigeria's growing population, exposed the
economy to shocks, such as changes in the oil price, and sentiments in the
global financial markets.
Disclosing
plans by the CBN to support the economic recovery and enable stronger growth
for the country's Gross Domestic Product (GDP), Mr. Emefiele said that the Bank
would continue its current tight stance, particularly in view of rising
inflation expectations.
"Though
we will act to appropriately adjust the policy rate in line with unfolding
conditions and outlooks, the CBN will continue to ensure that the policy
interest rate is delicately set to balance the objectives of price stability
with output stabilization," he explained.
Doing
a recap of the highlights for 2019, Mr. Emefiele recalled that the country's
GDP had remained positive, adding that the positive growth in GDP had been
driven by improvements in Agriculture, Oil and Gas, Manufacturing and ICT as
well as the intervention programmes of the CBN, along with sustained supply of
foreign exchange and stability of the naira.
He
also attributed the decline in inflation to the Bank's maintenance of a tighter
monetary policy rate at 13.5 percent, and its efforts at improving local
production of key staple items.
Speaking
further, he said the Nigerian financial system was now stronger due to the fact
that capital buffers and liquidity in the banking system have continued to
improve.
According
to him, industry-wide Capital Adequacy Ratio (CAR) had increased from 10.2
percent in December 2017 to 15.5 percent in September 2019. He added that the
percentage of non-performing loans in the banking sector had reduced from a
high of 14.7 percent in January 2017 to under 7 percent as at October 2019.
He
equally disclosed that credit conditions in the banking system had improved
supported by the CBN's new policy measures announced in June 2019, which
require banks to maintain a minimum 65 percent loan to deposit ratio.
Furthermore, he said banks in the country are now able to recover delinquent
loans from customers' accounts in other banks, adding that the measures now
placed Nigerian banks in a much better position towards supporting a stronger
economic recovery. This, he added, had increased gross credit by N1.16 trillion
between May and October 2019.
On
the country's External Reserves, the Governor said the Bank's effort at
supporting domestic production in the agriculture and manufacturing sectors
among other policies, had continued to encourage foreign exchange inflows into
the Nigerian market. According to him, over $60 billion worth of transaction
had taken place since the inception of the Investors' and Exporters' window in
April 2017, adding that Nigeria's foreign exchange reserves were above $40bn as
at October 2019, compared to $23bn in the same period in 2016.
The
Governor also highlighted the Bank's effort in development financing, which he
said the CBN had sustained in order to help support growth in critical sectors
of the economy such as agriculture and the manufacturing sectors, through programmes
such as the Anchor Borrowers' Programme, the Commercial Agriculture Credit
Scheme and the Bankers Committee Agri-Business/Small and Medium Enterprises
Investment Scheme(AGSMEIS).
Alluding
to the economic face-off between some countries, as well as the likely
challenges the economy could face due to moderate oil prices, he stressed the
need for Nigeria to build up the necessary buffers that would protect the
economy from pressures in the global market. He then restated the need to boost
local production and diversify the country's export base.
"We
should encourage Nigerians to consume goods that can be produced in Nigeria,
knowing full well that a time will come when we may not have the foreign
exchange to aid such activities, if we continue to rely on earnings from the
export of crude oil," he emphasized.
Recalling
the country's economic glorious past when the economy was heavily reliant on
agriculture, with increased cultivation and exports of primary products such as
cocoa, palm oil, cotton and groundnut, Emefiele posited that it possible to
envision a productive Nigerian economy that is not reliant on exports of crude
oil.
The
Governor urged all stakeholders to believe in Nigeria's greatness, stressing
that the country was blessed with abundant human and natural resources, which
if truly harnessed would propel Nigeria into one of the world's top 20
economies.
"We
must redouble our efforts to continue to support actions by the monetary and
fiscal authorities to diversify the base of the Nigerian economy through
encouragement of made in Nigeria products.
"We
must also consume what we produce and produce what we consume. We must
discourage the propensity to import what can be produced in Nigeria. This is
because if we do not reduce import, the same imports will kill us knowing full
well that such activities do not aid our efforts to create jobs and support the
growth of our local industries.
"If
we choose to follow the trend of supporting imports of goods that can be
produced in Nigeria, we will lose jobs, our industries will die and insecurity
and other social vices in our land will continue to increase. We must choose
this alternative path of improving domestic production, which will support
growth of our local economy," he charged.
As
part of the Bank's priorities for 2020, he said the CBN was determined to
maintain its stable exchange policy stance in the near to medium term given the
relatively high level of reserves. He said the Bank would also sustain these
efforts in 2020 as part of our plan to reduce our financial exclusion rate to
under 20 percent over the next year.
The
Governor said the Bank will also improve access to credit for farmers and SMES
by deepening its intervention efforts through the Anchor Borrowers' Programme,
Commercial Agriculture Credit Scheme and the Real Sector Support Funds, amongst
others. Similarly, he said the Bank, in pushing to improve access to finance
and credit, would protect them from unfair banking and lending practices by
maintaining oversight on the banks and other financial institutions.
In
addition to making sure that financial institutions support the growth of the
real sector, Mr. Emefiele said the CBN, working with the Nigerian Export Import
Bank (NEXIM), improve access to the N500bn facility designed to support the
growth of Nigeria's non-oil exports.
While
disclosing that the Bank, working with the fiscal authorities, will support the
recovery of the economy, the CBN Governor reiterated that Nigeria was open to
business and urged investors to take advantage of the investment opportunities
in Nigeria. He assured that investments in Nigeria would be duly protected by
the authorities.
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