Godwin Emefiele, CBN Governor


The Central Bank of Nigeria (CBN) last week announced the disbursement of N93.2 billion out of N1 trillion intervention funds targeted at manufacturing and agribusiness sectors with optimism that it will make the impact of the COVID-19 pandemic less severe than feared.

The various CBN COVID-19 intervention funds include the N100 billion healthcare sector intervention;

the N1 trillion intervention targeted at agriculture and manufacturing firms, and the N50 billion targeted credit facility for households and small and medium enterprises (SMEs).

On the N1 trillion targeted at agriculture and manufacturing companies, the CBN disbursed N93.2bn under the real sector support fund to boost local manufacturing and production across critical sectors. This consists of over 44 Greenfield and Brownfield projects.

At the wake of the shutting down of the economy to prevent the spread of Coronavirus which crippled businesses coupled with low crude oil prices, the CBN introduced the intervention funds to, among other things, help businesses survive. The apex bank also stated that its decision to increase its intervention was to boost local manufacturing and import substitution across all critical sectors of the economy.

The COVID-19 pandemic has crippled the global economy, with millions of employers going bankrupt and millions of employees losing their jobs. The virus will have more adverse effects on developing countries such as Nigeria.

Nigeria is the 6th largest oil-producing country in the world. The country depends heavily on the commodity which contributes up to 80% of its federal budget. This year’s budget was made on the premise of an oil price of $57 per barrel and productions of at least 2.3 million barrels daily. But COVID-19 has changed all of that.

“Today oil prices have tanked below $30 per barrel average, and for Nigeria, producing more to compensate for this low prices will only put more downward pressure on prices”, Patrick Sunday, an economist told BusinessHallmark. Recent OPEC+ meeting on output cut Nigeria’s quota to 1.8 mbpd.

“Besides, the country has had to borrow up to a total of $6 billion from the International Monetary Fund (IMF) and the World Bank to finance part of the budget.”

Sunday believes that unless the debts are cancelled, the naira will further weaken and investments plummet. The implication, he said, is that the country should prepare for long, hard days ahead as oil, which is a major source of revenue for the economy, may continue to face low prices for the rest of the year.

On Thursday, the Senate passed the revised 2020 budget of N10.8 trillion, a day after members of the House of Representatives approved the same figure. A breakdown of the figure shows that the sum of N2,488,789,433,344 is for capital expenditure and recurrent non-debt expenditure has N4,942,269,241,984. The executive also allocated N422,775,979,362 for statutory transfer, while N2,951,710,000,000 was budgeted for debt service.

In his remarks after the budget was passed, Senate President Ahmad Lawan asked the Senate Committees to ensure strict oversight of projects contained in the 2020 budget. He believes getting value for money is one way of ensuring that Nigerians are impacted positively through government interventions and programmes.

“For us, this is one way of ensuring that Nigerians feel the presence of government through the various interventions, the programmes, and projects. We have done this, but we have other things waiting for us in relation to this”, Lawan said.

Expectedly, manufacturers are full of praises for the efforts of the CBN on the planned disbursement for economic recovery, post-COVID-19. Director-General, Lagos Chamber of Commerce and Industry (LCCI), Dr Muda Yususf, in an interview with NAN in Lagos, welcomed the development, describing it as apt.

Yusuf, who commended the spirited efforts of the CBN in the promotion of development finance, however, stated that many businesses have reported cases of inability to access the loan facilities to the chamber. He implored CBN to undertake a periodic impact assessment of the fund and publish the status of implementation, disbursements, number of beneficiaries and general impact of the funds.

Yusuf said: “Finance is critical to the strengthening of the real sector of the economy. Funding is necessary but not sufficient condition to transform manufacturing, agriculture and mining sectors.

“We need more active interventions from regulatory agencies, the Nigerian Customs Service, better power delivery from the electricity sector, better transport logistics, seamless cargo clearing processes and an investment-friendly bureaucracy.

“These complementary actions are desirable and important to achieve the desired outcomes of a truly diversified economy. We also implore the commercial banks to take a cue from the CBN in the promotion of economic development goals.”

Also, the Director-General, Manufacturers Association of Nigeria (MAN), Mr Ambrose Oruche, stated that the plan was a prerequisite for, and very critical to economic growth and recovery post-COVID-19.

Oruche reiterated that the manufacturing and agriculture sectors being large drivers of employment, industrialisation and economic growth, needed adequate monetary policy intervention.

“The disbursement is in line with federal government’s agenda to keep exploring options with the private sector to fund investments in infrastructure”, he said.

“This is expected to aid employment generation, support production and boost output growth and so is a very welcome development.”

Interestingly, rising from the May 2020 Monetary Policy Committee (MPC) meeting, the CBN governor, Mr Godwin Emefiele said the apex bank would rev up engagements with the participating banks “to encourage them to offer and disburse these funds to those priority sectors of the economy to stimulate aggregate demand and create more jobs.”

He also said that “the MPC expects that on the backdrop of the various stimulus packages and increased credit at lower interest rates, the impact of the COVID-19 pandemic would be relatively less severe than had earlier been expected and the reversal in growth deceleration would become more optimistic.”

There can be no better time for a stimulus package of this nature than a moment when concerns have been raised that the COVID-19 pandemic may lead to the loss of 13 million jobs in Nigeria.

According to the World Food Programme of the United Nations which projected on Wednesday, Nigeria needs urgent financial intervention to boost its economy, as millions of citizens across the country are currently suffering the harsh economic impact of the virus.

WFP’s Senior Spokesperson, Elisabeth Byrs, said in a statement from her agency that more than $182 million was needed to sustain life-saving aid to Africa’s most populous country over the next six months. She explained that over 3.8 million citizens, particularly those in the informal sector, could lose their jobs, adding that the figure could rise to 13 million if the restriction on movements persists for long.

Byrs said, “We are concerned by conflict-affected communities in North-East Nigeria who already face extreme hunger and who are especially vulnerable. They are on life-support and need assistance to survive.”

The WFP official, however, stated that her organisation was distributing two months worth of food and nutrition assistance in Internally Displaced Persons (IDP) camps and among vulnerable communities.

Byrs who noted that job losses would further increase hunger, also stated that three million vulnerable individuals in Abuja, Kano and Lagos would also receive assistance from the WFP.

“We are scaling up our operations in the North-East to serve more people in response to the new challenges of more food insecurity posed by COVID-19,” Byrs stated.