By arize nwobu
The Central Bank of Nigeria, CBN, has been aggressive with initiatives in the pursuit of economic growth and development, especially in the agriculture sector and local manufacturing. It is using both development finance initiatives and interventionism in the pursuit and it is expected that the efforts of the apex bank will be complemented with the anticipated initiatives of the newly constituted Economic Advisory Council, EAC.
President Muhammadu Buhari has been commended for constituting the EAC comprising eight independent and reputable economists and financial experts which include Professor Doyin Salami of the Lagos Business School, LBS, as the Chairmen; a former Governor, Central Bank of Nigeria, CBN, Professor Chukwuma Soludo who initiated and clinically implemented the Banking Consolidation in 2005 which transformed the banking landscape; Chief Executive Officer, Financial Derivatives Company, FDC, Bismark Rewane and other notables.
The mandate of the team which has been described as ‘’first-class” by another former CBN Governor, the Emir of Kano, Alhaji Sanusi Lamido Sanusi is to advise the Federal Government on economic policy matters, including fiscal analysis, economic growth and a range of internal and global economic issues.
In the present circumstance, it may be necessary for the EAC to note that the economy needs greater channelisation of investible funds from surplus to deficit ends to boost entrepreneurship and job creation, energetic inflows and transformational activities, increase in aggregate demand and a balance between leakages and injections in the circular flow of money.
Others include policies that encourage local manufacturing, maximisation of the mechanism of the capital market to boost the stock of infrastructure and for faster industrial growth, job creation, spread of national wealth and inclusive growth and development of agriculture as a fundamental for food security, economic diversification, imports reduction, local manufacturing and job creation.
Agriculture has a central role to play in any efforts to redefine and reposition the Nigerian economy for growth and development. It generates greater employment and is the largest economic activity in rural areas. Agriculture and the industrial sector contributed 50 per cent of the GDP growth in 2017.
The various initiatives of CBN in the agriculture sector aim at creating new generation of farmers/ entrepreneurs and employment, assisting smallholder farmers to grow from subsistence to commercial production level, reducing the level of poverty among smallholder farmers, increasing capacity utilisation of agricultural firms, diversifying revenue base and reducing agricultural commodity importation to conserve external reserves.
The Anchor Borrowers Programme, ABP, which was launched by President Buhari in 2015 is the flagship of CBN development finance initiatives for agriculture development. Under the programme over $150 million has reportedly been disbursed to more than 250,000 smallholder farmers. With renewed focus, the Bank is working to reverse the decline in agriculture production and stop the importation of some major products such as oil palm, fish, sugar, rice, wheat, cotton and others with high import bills.
Importation of fish, rice, sugar and wheat is said to consume N1.3 trillion annually, while the import bill for oil palm is $199 million. Annual demand for oil palm is at 2.5 million metric tons while local production is 1.25 million metric tons, leaving a deficit of 1.25 million metric tons met by imports.
According to CBN, it aims to double oil palm production to supply the world market in the next three to five years and has committed N30 billion in that regard. The sum was said to have been disbursed through deposit money banks seven oil palm companies for expansion projects, namely PZ Wimar, Okomu Oil Company, Eyop, SIAT Limited, Ada Palm, Presco Oil Company and Biose Oil company.
The apex bank is also working to revive the Cotton, Textile and Garment, CTG, industry. It is supporting local cotton farmers so they can meet the need of the textile industry. It placed a foreign exchange restriction on the importation of textiles and textile materials. Banks and other dealers in foreign exchange were mandated to stop selling FX to such importers while loans are provided to the textile sector at a single-digit interest rate.
In a recent briefing of some governors and the media in Abuja, CBN noted that it is engaging 300,000 farmers to achieve 450,000 metric tons of cotton in26 states in the next three years and has started the distribution of inputs to cotton farmers in Katsina in May this year.
CBN is also making efforts to develop the blue economy by creating investment opportunities for fish production. Demand for fish is at 2.7 million tons while local production is at 0.8 million tons with a deficit of 1.9 million tons which are imported at $1.2 million annually. On poultry, CBN is partnering with tertiary institutions in the University-Based Poultry Productions Programme to boost poultry business in universities across the six geopolitical zones.
The apex bank is also supporting nomadic herdsmen to boost livestock production. According to CBN, 95 per cent of milk products (milk, yoghurt, cheese and others) are imported with an annual import bill of $1.5 billion but noted that four companies have expressed interest to invest in the Bobi Grazing Reserve in Niger state. Friedman Campina, WAMCO and Neon Agro agreed to take 10,000 hectares of land each while CHI Ltd AND Irish Dairy would develop 4,000 hectares each.
- Nwobu, a Journalist and Chartered Stockbroker wrote via [email protected]