By PETER EGWUATU
The Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC) have shown its commitment towards the development of the real sector of the economy in recent time following the numerous initiatives and programmes aimed to accelerate the overall growth of the country.
One of the four pillar policy framework adopted by the CBN after its rigorous auditing of both quoted and unquoted banks in the country in 2009 was the task imposed on the financial sector in ensuring that it contributes to the growth of real sector of the economy.
The CBN, like other banks in a developing economy cannot restrict itself to monetary policy alone. The development and sustenance of vibrant real sector is germane to the efficacy or otherwise of monetary policy tools; hence quest by the CBN to striving to develop the real sector.
It should be noted that the CBN in conjunction with the SEC placed a limit to banks’exposure to capital market as a step in ensuring that banks focus on core banking and provide the necessary funds to the real sector of the economy.
The Director General of the SEC, Ms Arunma Oteh had at various fora stated the need for the SMEs to take advantage of the capital market arm of the financial system to raise long term funds for developmental purposes.
Moreover, the CBN Act 2007 explicitly provided and mandated the CBN to play the developmental roles in the economy.
In view of this, the CBN has been involved in many developmental roles geared towards revamping and growing the economy.
These include: Establishment of N200 billion Small and Medium Scale Enterprises (SMEs); Establishment of Commercial Agricultural Credit Guarantee Scheme (CACS) by the CBN in collaboration with the Federal Ministry of Finance & Water Resources to finance agricultural value chain; Provision of N200 billion Refinancing and Restructuring Facility (RRF) to create credit and support for the development of the real sector; and Establishment of N500 billion power and Airline Intervention Fund (PAI), a facility for investments in a debenture issued by the Bank of Industry (BOI).
Specifically, the CBN in 2010 established SME Guarantee Scheme with the aim of promoting access to credit by SMEs in Nigeria . This intervention fund of N200 billion is being managed by the BOI for the for purpose of fast tracking the development of the manufacturing sector of the Nigerian economy by providing access to credit as well as providing guarantee for credit from banks to SMEs to manufacturers, among other objectives.
The fund was meant to complement other special initiatives of the CBN in providing concessionary funding for Agriculture such as ACGS which was mostly for small scale farmers, interest draw back scheme, Agricultural Support Scheme, etc. The economic benefit of this scheme was the improved lending rate to the real sector.
The entrepreneurs under this scheme enjoyed cheap source of finance (7 per cent) and easy access to credit. It further empowered the SEMEs by providing access to funds. As such jobs that would have been lost were stable as a result of intervention.