JUST IN: At last, Emefiele appears before Reps panel
Godwin Emefiele, CBN governor


The manufacturing sector has been a major beneficiary of the Central Bank of Nigeria (CBN) interventions in the critical sectors of the nation’s economy, available records have shown.

This is in appreciation of the fact that given the strong and direct link between a thriving manufacturing industry and a prosperous economy, when manufacturing investments are strong, a multiplier effect ripples across the economy, creating jobs and growth in other industries.

Experts have noted that manufacturing has the highest employment multiplier effect for the domestic economy. They professed that each $1 worth of goods manufactured creates another $1.3. And that no nation could emerge as economic power without manufacturing.
There are three stages in the concentric rings of economic growth and development, namely: factor-driven stage, efficiency-driven stage and innovation-driven stage. Factor-driven economies depend mostly, and compete on the basis of raw materials and unskilled labour. Efficiency-driven economies compete on the basis of more efficient production processes while innovation-driven economies compete on the basis of intensive research and innovations.

Most advanced economies started as factor-driven and developed through the efficiency stage to the innovation stage. As they progressed, agriculture and natural resources contributed a smaller per cent of their national income, while earnings from the value chains and exports grew.

The top five manufacturing nations in the world are China, USA, Germany, Japan and India. China is noted as the “world factory”. It overtook USA in 2010 and accounting for 30 percent of global manufacturing.

Some of China’s top industries are consumer goods and services, technology, specialist engineering, industrial machinery. Others include gas and chemicals, infrastructure, water supply, sewerage etc. USA imports from China totaled $539.5 billion in 2018 as against $340 billion in 2017. Also in 2018, U.S imports from China accounted for 21 percent of its overall imports.

India witnessed a big push, jumping from the 11th position in 2016 to the fifth spot. It is noted as the third biggest economy in buying power parity after USA and China, and has a huge population of designers and assembly line labourers and with a ‘’regarded licensed innovation.”

Experts have noted that competitiveness in manufacturing is enhanced by investments in high skills, innovation ability, research and development, funding and putting resources into top colleges.

Nigeria has potential to emerge as the manufacturing hub of Africa, a position South Africa presently occupies. As an efficiency-driven economy, South Africa is technologically advanced with top grade infrastructure and well established financial markets. It exports vehicles, machinery, transportation equipment, iron and steel, diamond, gold among others.

Manufacturing in Nigeria is dominated by the production of cement and building materials, food and beverages, fertilizers, textiles, wood among others. The economy is still largely factor-driven, with exports dominated by crude oil, cocoa beans, tobacco, beverages, processed leather, spirit and so on.

Problems of manufacturing in Nigeria include poor infrastructure, poor power supply, irregular taxes, poor business development, low interest in listing on the stock market and inadequate funding.

CBN to the rescue

But the CBN in bridging the funding gap through a number of intervention facilities that have overtime proven fruitful. In 2019, CBN established the Real Sector Support Facility (RSSF), which made it possible for manufacturing and agriculture to get funds at a single-digit interest rate of nine percent for up to 10 years, with a moratorium of two years.

The CBN, Director, Corporate Communications Department, Osita Nwanisobi, while speaking during “CBN Special Day” at the 33rd Enugu International Trade Fair in April, disclosed that the apex bank had disbursed N1.452 trillion to 337 large real sector projects in agriculture, manufacturing, services, and mining under the RSSF as part of the effort to diversify the nation’s economic base.

Also, it mandated banks to increase their loan-to-deposit ratios or risk a fine. The development triggered greater credit inflow to the manufacturing sector. Lending to manufacturing companies totaled N459.7 billion ($1.3 billion) from May- October 2019, the highest in two decades.

In 2020, CBN set up a N1trillion facility aimed at supporting growth and expansion of manufacturing firms. According to the CBN Governor, Godwin Emefiele, about N300 billion of the amount had been disbursed to 76 manufacturing firms.

Last year, the World Bank commended the development finance initiatives of CBN and noted: “Thus far, the CBN’s policy initiatives and development finance interventions have helped prevent a severe credit crunch in the private sector. The CBN cut its monetary policy rate by 100 bps in May 2020 and by another in September.

‘’Regulatory forebearance for the restructuring of pandemic-affected exposures is now in effect until 2022. The CBN has softened the terms of its development finance interventions, and the new terms have been extended through March 2022; it has also launched a range of new development finance initiatives at subsidized interest rates in an attempt to ease the impact of Covid-19 on households and SMEs.

‘’It is also helping pharmaceutical companies, health practitioners, and SMEs respond to the pandemic by injecting up to N400 billion in loanable funds. The new funding is equivalent to about two percent of private sector bank credit.”

While delivering a paper titled, “The Role of Central Banks in Managing Economic Downturns” at the 40th

Anniversary/Convocation lecture of Ekiti State University, Ado-Ekiti in March, Emefiele reiterated that the focus of the apex bank was to stabilise the macroeconomic sector.
Represented by CBN’s Deputy Governor in charge of Corporate Services, Mr Edward Adamu, Emefiele said the CBN had created various initiatives geared toward building a strong, stable and resilient economy that was self-sustaining and able to weather unanticipated shocks.

According to Emefiele, the Act establishing the CBN envisaged the role of development finance, which the Nigerian context presently demands.

“The intervention of central banks in development financing is not new as it dates back to the 1920s,” he said.

“Many central banks in advanced, emerging and developing economies during the recent COVID-19 pandemic supported their fiscal authorities. The aim is to aid recovery of their economies following the significant decline in global growth occasioned by the pandemic.

“These central banks, particularly in developing countries, intervene in the real economy to enhance the transmission mechanism of monetary policy actions as well as facilitate the development of financial markets through the creation of easy access to credit for investment and production.”


A Professor of Banking and Finance at Chukwuemeka Odumegwu Ojukwu University, Awka, Professor Jackson Ikeora, said the CBN intervention in the manufacturing sector should be seen for what it is: to encourage that sector which is part of the real sector, the sector for growth.

Ikeora said: “I regard the CBN’s intervention as a Daniel come to judgment. Its interest rate is always reasonable. It will enable the manufacturing sector to plan properly and invest. Look at the multiplier effect of their investments: the higher their investment the higher the number of people they employ.

“It will do something to reduce unemployment and at the same time increase productivity in the economy. There is also a forward and backward linkage that will help to boom the economy. It grows the economy, increases productivity, and grows aggregate demand and consumption. It will increase aggregate supply and finally economic growth will be achieved.

“Therefore, the CBN’s intervention in the manufacturing and real sector wins my kudos for Emefiele. It is one of those measures that enabled the country to survive COVID-19 and the recessions.”

The former chief economist at the African Continental Bank said the intervention funds were in line with the broad objectives of the CBN, which included ensuring growth in the economy.

However, a retired Professor of Finance at the University of Lagos, Professor Winifred Iyiegbuniwe, is of the view that the Federal Government should introduce complementary measures that would strengthen the good intentions of the CBN’s interventions in the real sector of the economy.

“We need infrastructure like electricity and rail connecting the east and west sections of the country that have a lot of economic activities. Government policies need to be harmonised to complement each other. Money is just one part of the production curve, cost of raw materials and the cost of distribution are all part of it,” he said.


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