There has been concern over some policies of the Central Bank of Nigeria, such as the multiple exchange rates; the Anchor Borrowers Programme and Monetary Policy Rate, MPR. However, Mr. Godwin Emefiele, CBN, assured that he believes in the policies being pursued and the records will speak for themselves. He spoke to journalists in Washington DC, U.S.A. Our Editor, Okey Onyenweaku, was there. Excerpt:
What do you think will be the effect of Brexit on Nigeria?
Let me say that the Brexit thing is one about immigration and also about trade opportunities. On trade, I would say that though Britain and Nigeria have trade relationship but not as strong as what we have with China and Untied States.
For instance, China is Nigeria’s major trading partner followed by the United States. And I had imagined that Britain comes quite low on the scale. So, if you look at that, you would find that, in my view, there is not going to be any adverse consequences on Nigeria but we are reviewing it to see the implication, which I would expect would naturally be positive.
What is the outcome of the recent CBN’s forex policy on the economy?
The outcomes of the recent CBN forex policy has led to stable exchange rate, forex liquidity, vibrancy in the capital market, improved supply of forex impact on Purchasing Managers’ Index , PMI , improved forex supply expected to impact positively on Gross Domestic Product, GDP growth and more companies declaring profit and offering rights issues.
There has been a boost in local production of the items of 43 items banned, adding that the policy has created domestic demand for the items concerned, employment generation, substantial forex owing to the reduction in the import bills of the country and improved domestic capacity. The CBN intervention in the area of agriculture, manufacturing, Micro, Small and Medium Enterprises (MSMEs) and infrastructure has yielded multiplier effect on the economy.
What are the challenges facing the monetary policy of the CBN?
“Monumental feats have been achieved by the CBN in various aspects of development finance, foreign exchange management, financial inclusion and payment system in the past five years, challenges remain. The foreign reserve of Nigeria has risen to $45 billion and the CBN in its quest to ensure greater accessibility to forex, established the Investors’ and Exporters (I& E) Window in April 2017 as well as the forex window for Small and Medium Enterprises, SME.”
How has the I & E Window impacted on forex?
The I & E Window allows investors and exporters to purchase and sell foreign exchange at the prevailing rate. Since its establishment, the CBN has recorded about $35 billion in autonomous inflows through this Window alone. As a result, exchange rate pressures eased considerably across all markets as the rates converged to about N360/$ and the distorted premium almost eliminated.
At the Bureau De Change segment, there has been a significant appreciation of the Naira from over N525 per dollar in February 2017 to about N360 per dollar today. Rates at the I & E Window also appreciated from nearly N382 per dollar in May 2017 to just over N360 per dollar. In addition, exchange rate pressures normally witnessed during the general election cycles.
The outcomes of the recent CBN forex policy has led to stable exchange rate, forex liquidity, vibrancy in the capital market, improved supply of forex impact on Purchasing Managers’ Index , PMI , improved forex supply expected to impact positively on Gross Domestic Product, GDP growth and more companies declaring profit and offering rights issues.”
In terms of local production, how has the CBN ban on some items impacted the economy?
The impact of the policy has been a boost in local production of the items of 43 items banned. The policy has created domestic demand for the items concerned, employment generation, substantial forex owing to the reduction in the import bills of the country and improved domestic capacity.
He disclosed that the CBN intervention in the area of agriculture, manufacturing, Micro, Small and Medium Enterprises (MSMEs) and infrastructure has yielded multiplier effect on the economy.
Can you share more light on the Anchor Borrowers Programme (ABP) initiative of CBN?
This scheme stands out as one of the major achievements of the Bank in its intervention effort. The goal of the programme is to collaborate with anchor companies involved in the production and processing of key agricultural commodities. Under the ABP, anchor firms serve as off-takers with out-growers involved in production. As at December 2018, a total sum of N174.48 billion had been disbursed through 19 participating Financial Institutions (FPIs) to finance 902,518 farmers, working with 194 anchor companies. During the priod, 2,807,775 and 8,423,325 direct and indirect jobs respectively had been created under ABP.”
It has also fostered financial inclusion. Financial inclusion is achieved when 80 percent of adult Nigerians have easy access to a broad range of formal financial services that meet their needs at an affordable cost. The results of the 2018 edition of the biennial Access to Financial Services Nigeria Survey conducted by the Enhancing Financial Innovation and Access (EFInA) revealed increase in the percentage of adult Nigerians that were included in financial services from 58.4 percent in 2016 to 63.2 percent in 2018(4.8 percentage points), The percentage of banked adult Nigerians increased from 38.3 percent in 2016 to 39.7 percent within the same period.”
Since 2017, the CBN has focused its attention on the development of payments system, with a view to migrating from cash-dominated environment to an electronic payments market. Many milestones have been achieved since that time. The level of development attained in the national payments system through the implementation of the PSV 2020, has necessitated the shift of focus to managing the risks in the payment system.