The Central Bank of Nigeria (CBN) has been firing on all cylinders since the turn of 2021 in a bid to ramp up growth and put the economy on a path of recovery following the sharp recovery from the COVID-19-induced recession.
Daily Trust in this report attempts to synchronise these decisions in a bid to evaluate its collective impact on the economy.
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Disbursement of N1.2tr to agric and SMEs
The CBN, since the turn of 2021, has continued the use of its intervention mechanism to deploy funds to output-stimulating and employment-generating sectors of the economy such as the Targeted Credit Facility, AGSMEIS, agriculture and manufacturing.
To date, Daily Trust finding indicates that it has disbursed N1.198 trillion to this cause.
The apex bank disclosed at its last Monetary Policy Committee (MPC) meeting that aggregate credit at the end of May, 2021, stood at N24.23tr, compared with N22.68tr by December 2020. This represents a year-to-date increase of N1.55tr.
CBN also granted N756.51 billion to 3.773 million smallholder farmers cultivating 4.6m hectares of land; N120.24bn of it was extended for the 2021 wet season to 627,051 farmers for 847,484 hectares, under the Anchor Borrower Programme (ABP).
N121.57bn was disbursed for the Agribusiness/Small and Medium Enterprises Investment Scheme (AGSMEIS) to 32,617 beneficiaries while N318.17bn was released to 679,422 beneficiaries, comprising 572,189 households and 107,233 SMEs under the Targeted Credit Facility (TCF).
Under the National Youth Investment Fund (NYIF), the bank released N3bn to 7,057 beneficiaries, of which 4,411 were individuals and 2,646 SMEs. Under the Creative Industry Financing Initiative (CIFI), N3.22bn was disbursed to 3,565 “confidential” beneficiaries across movie production, movie distribution, software development, fashion and IT verticals.
N15tr InfraCo takes off Q3
The N15tr Infrastructure Company Limited (InfraCo), created by the federal government to bridge the nation’s huge infrastructure gap, is to take off in the third quarter of the year, the Governor of the CBN, Mr Godwin Emefiele, recently disclosed.
Speaking at a webinar designed to showcase the investment opportunities in Nigeria, Mr Emefiele said the federal government had approved KPMG as the financial adviser to InfraCo, adding that the firm was expected to commence operations in the third quarter of 2021.
Investors in the N15tr InfraCo include the CBN, Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation (AFC).
eNaira to debut October
Another significant announcement by the apex bank is the launching of the pilot phase of the digital currency otherwise known as eNaira starting October 1.
The announcement has elicited huge interest among the youthful population who have been disenchanted over earlier moves to restrict cryptocurrencies.
In an update, Emefiele at the latest MPC meeting in Abuja, said, “We believe transactions will be cheaper and more efficient as there will be less conflict.”
On how the eNaira will work, Emefiele said, “If you choose to convert some of the naira in your account to e-wallet or digital currency, we will support that.
“When this starts the CBN will move some of the balances in CBN to those banks into digital currency. You go to your bank, you decide to move N2m from the N10m you have in your account to digital currency. They will debit your account and move it into your e-wallet. Then you have N2m digital currency which you can spend across countries.”
President of Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), Senator Iyere Ihenyen, said “It will be a hybrid Central Bank Digital Currency (CBDC). This means the eNaira will be combining both the retail and wholesale capabilities.”
He noted that this means the issuing of the eNaira will not be disruptive to the operations of intermediaries such as banks and other financial institutions.
Why CBN cancelled forex sales to BDCs
The CBN recently took a bold step to end the foreign exchange (forex) sales to Bureau de Change (BDC) operators and the registration of new players.
Emefiele had accused BDC operators of rent-seeking behaviour and involvement in money laundering activities, adding that the authority received about 5,000 fresh applications monthly.
Emefiele said the MPC noted with disappointment and great concern that the BDCs, which is to serve the retail end-users who needed $5,000 or less, had defeated their purpose of existence to provide forex to retail users, but instead, had become wholesale and illegal dealers.
He said the commercial banks would be monitored to provide forex for the legitimate use of Nigerians.
Members of the Manufacturers Association of Nigeria (MAN) have strongly supported last week’s decision of the CBN.
Chief Economist, Africa and the Middle East, Global Research of the Standard Chartered Bank, Razia Khan, said the financial authorities must ensure that the new policy did not fuel the growth of more parallel markets in the country.
Holding erring banks to account
About three months ago, Nigeria’s apex bank sacked board members of First Bank of Nigeria (FBN), citing the board’s decision to implement “changes” without alerting regulatory authorities, poor corporate governance and insider dealings.
The CBN said its decision to wield the big stick on First Bank with 31m customers and its holding company, FBN Holdings Plc, was in the interests of its minority shareholders and depositors.
“The sacking of the board was done in order to preserve the stability of the bank, so as to protect minority shareholders and depositors,” said Emefiele.
Chief Executive, Global Analytics Company, Mr. Tope Fasua, commented thus: “With the move from the CBN, we pray First Bank finds some peace. But more generally, we hope that our smart people who run banks will understand the sheer enormity of the licenses they owe and never get it into their heads to throw it all away in some flight of fancy.”