Godwin Emefiele, Governor, CBN.

By OKEY ONYENWEAKU

As the Coronavirus pandemic continues to ravage the world, every country, city and locality has deployed every acceptable strategy known to them to prevent it from spreading further and shattering their economic plans and projections.

Despite frantic efforts, both local and international, to contain the deadly virus, infections are rising with the speed of fire by the day. Even at that, the numbers of infections and deaths are scary as new incidences are reported every day.

Already, Johns Hopkins University reveals that as at Wednesday June 24, 2020 over 9.2 million confirmed cases and 477,000 deaths have been recorded with 4.7 million recoveries.

Whereas the United States of America and Brazil reportedly have the highest infections and deaths so far, Nigeria has also recorded over 21,371 thousand confirmed cases, over 533 deaths and over 7,333 thousand  recoveries. This has generated panic and fear all over the world, Nigeria not an exception.

Since late last year when the deadly virus broke out in China and spread to every part of the world, many Countries including Nigeria have been grappling to save lives and their economies which are suffering from the harsh effect of lockdowns that disrupted supplies, shrank production lines and halted most business activities.

However, countries have frantically adopted strategies ranging from giving palliatives, waiving taxes, waiving interest on loans, waiving rents among others to help make life a little bearable for the masses as well as assuage their pains. Business Hallmark research reveals that The United States of America government paid over $1.200 to her citizens after agreeing to purchase up to $1tn (£830bn) of corporate bonds.

“The handouts are part of a wider $850bn stimulus package the Trump administration is negotiating with Congress, said the US Treasury secretary, Steve Mnuchin who added that the White House also planned to allow individual taxpayers to defer payments of up to $1m and for companies, up to $10m, in steps that could cost the government as much as $300bn.

Similarly, the British finance minister Rishi Sunak, said Britain’s government would pay those self-employed people who have been adversely affected by the Coronavirus a taxable grant worth 80% of their average monthly profits over the last three years, up to 2,500 pounds ($3,000) a month.

 At home in Nigeria, where it is feared the economy would dip by about -5% this year, according to the World Bank projections, government has also moved to extend palliatives to some of her citizens to cushion the harsh effect of Coronavirus.

  President Mohammadu Buhari had in one of his addresses on the subject, while announcing an extension of the lockdown orders for the Federal Capital Territory, and Lagos and Ogun States; affirmed the sustenance of the palliative measures that had been issued by the Federal Government of Nigeria (FGN) in the COVID-19 Regulation 2020 in the form of moratoriums for (a) TraderMoni, MarketMoni, and FarmerMoni loans  and (b) FGN funded loans issued by the Bank of Industry, Bank of Agriculture and the Nigeria Export Import Bank. Earlier, he had also announced an expansion of the number of households that would benefit from the direct distribution of food/cash by the FGN from 2.6 million households to 3.6 million households. This did not exclude the voluntary efforts of some individuals who had also made efforts – as their financial muscle could carry them – to help alleviate the hardship of their people.

However, the Central Bank of Nigeria which seems to effectively have been supporting the Nigerian economy in several ways possible decided to take up the gauntlet once again to offer huge and far reaching measures in order to touch lives.

As a result, the apex bank rolled out measures to help businesses survive this hard times caused by the Covid-19 pandemic which ravaging the economy.

On its part specifically, the CBN introduced the following incentives:

(a)    extension of moratorium on all principal repayments of its intervention facilities for one year, effective from 1st March, 2020 (for those whose contractual moratorium is still effective as of date, the additional one-year moratorium will take effect for them from the end of the contractual moratorium);

(b)   reduction of interest rates on all CBN intervention facilities from 9% to 5% per annum for one year effective 1 March 2020;

(c)  creation of a N50 billion targeted credit scheme for households and small- and medium-sized enterprises that have been particularly hard hit, including but not limited to hoteliers, airline service providers, healthcare merchants, etc.;

(d)   provision of N100 billion credit support for the healthcare industry particularly pharmaceutical companies, hospitals and health practitioners, that want to start new or expand existing drug manufacturing or healthcare facilities;

(e)  regulatory forbearance in the form of leave granted to Deposit Money Banks (“DMBs”) to consider temporary and time-bound restructuring of the tenor and loan terms for businesses and households adversely impacted;

(f)   strengthening of the CBN Loan to Deposit Ratio (LDR) policy by supporting industry funding levels to maintain DMBs’ capacity to direct credit to individuals, households and businesses and by indicating readiness to consider additional incentives to encourage extension of longer tenured credit facilities; and

(g)  provision of N1 trillion in loans to boost local manufacturing and production across critical sectors.

Speaking at a media briefing, the apex bank boss, Mr. Godwin Emefiele announced the creation of a N50 billion targeted credit facility through the NIRSAL Microfinance Bank for households and small- and medium-sized enterprises (SMEs) that had been particularly hard hit by Covid-19, including but not limited to hoteliers, airline service providers, health care merchants, among others.

“As many Nigerians now realise, the Corona Virus (COVID-19) pandemic is having significant adverse consequences for both the global and the Nigerian economies.

“It has already led to unprecedented disruptions in global supply chains, sharp reduction in crude oil prices, turmoil in global stock and financial markets, widespread cancellations in sporting, entertainment and business events, lockdown of large swaths of movements of persons in many countries, and intercontinental travel restrictions across critical air routes in the world.

“These outcomes have had serious adverse implications for key sectors including but not limited to oil and gas, airlines, manufacturing, trade and consumer markets.”, he said.

The CBN, in a circular signed by the Director, Financial Policy and Regulation Department, Mr. Kevin Amugo, and posted on its website recently, said CBN intervention facilities obtained through participating OFIs – Microfinance Banks (MFBs), Primary Mortgage Banks and institutions, among others, would be given a further one-year moratorium on all principal repayments, also effective March 1, 2020.

 OFIs, the circular also noted, have also been granted leave to consider temporary and time-limited restructuring of the tenor and loan terms for households and businesses affected by COVID-19, subject to the recently issued guidelines for restructuring affected credit facilities in the OFI sub-sector.

  Explaining the decision of the bank  further, the Director, Corporate Communications Department, Isaac Okoroafor, stressed that the approval was in line with the bank’s desire to alleviate momentary strain on households, businesses and regulated institutions triggered by the lockdown due to COVID-19.

He said that the CBN would also continue to monitor developments and implement appropriate measures to safeguard financial stability and support stakeholders impacted by the COVID-19 pandemic.

Analysts and other stakeholders have commended the apex bank for coming to the rescue of enterprises among others including the agribusiness sector to survive the difficult moment of the novel virus outbreak and low oil price.

 “The food sector is the most critical for our economy, especially at this time of low oil prices and the Coronavirus outbreak,” said Ibrahim Kabiru, national President, All Farmers Association of Nigeria (AFAN).

“The CBN’s support is very crucial at this time and we commend them for the recent reduction of interest rate on intervention funds from nine to five percent,” Kabiru said.

In the same vein, Hassan Aliyu Jibril, another commentator had twitted, “the intervention is timely and the rate is commendable.

 MPC had at its meeting in March resolved to allow its interventions on COVID-19 to permeate the economy and had retained MPR at 13.5 per cent.

The committee had left both the Cash Reserve Ratio (CRR) and Liquidity Ratio unchanged at 27.5 per cent and 30 per cent respectively. MPR is the rate at which CBN lends to commercial banks and often determines the cost of borrowing in the economy.

CBN Governor, Mr. Godwin Emefiele, had also explained that the decision to keep all monetary policy tools unchanged was to allow previously announced interventions “time to permeate the economy and allow the pandemic to wear out itself.”

Undoubtedly, the CBN’s passion for the growing economy has resulted in her massive support for agricultural development and Agric- related businesses in the country. Aside encouraging diversification of the economy to stimulate growth in the agriculture sector, the CBN evolved an innovative Agric credit plan in line with the plans of President Mohammadu Buhari. The anchor borrowers programme has elicited many testimonies of growing domestic products leading to food sufficiency.

The Anchor Borrowers Programme has transformed and increased Agric sector production in the country. The yield of rice from the farmers has increased from 1.5 metric tonnes per hectare to about eight metric tonnes per hectare, reducing their costs and making it possible to make their money in rice cultivation. Local producers of many products have also benefited hugely from the closure of the border in addition to enriching many local farmers. Emefiele, in support of value addition, also saw to the restriction of forex to dealers in 43 items. ‘’As in October 2018, a total number of 862,069 farmers cultivating about 835,239 hectares, across 16 different commodities, had so far benefited from the programme, which had generated 2,502,675 jobs across the country’’, said Emefiele.

As it is said, the taste of the pudding is in the eating. It remains to be seen then how much real impact the Emefiele intervention would have in the days and months ahead. But for the beneficiaries today, they clearly know that every help is welcome at a time like this. And that indeed may be half the verdict.