By Arize Nwobu
THE Central Bank of Nigeria, CBN, has always played central and critical roles in upholding and driving the economy through monetary policies, but it is apparent that the Bank has become more vibrant, proactive, and innovative under the leadership of the present Governor, Godwin Emefiele. With every sense of responsibility, as financial market and economy enthusiast, Emefiele’s patriotic zeal, energetic burst and innovative capability is noteworthy.
CBN under his leadership has become a repository of innovative ideas and dynamism as the Bank confronts some of the toughest challenges witnessed in the Nigerian economy. Emefiele adopted the neo-liberal approach to the art of central banking having recognised the global change in the theory and practice of central banking.
According to experts, “the neo-liberal approach is idiosyncratic and dramatically different from the historically dominant theory and practice of central banking, not only in the developing world, but notably, in the now developed countries themselves.”
Central banks in developing countries frame their monetary and credit policies in such a way that larger and desired quantities of bank credit go to priority sectors such as agriculture, cooperatives, small industries and export trade. They adopt the policy of controlled expansion of bank credit, to undertake direct financing of development projects by lending liberally to those institutions which provide development finance.
CBN under Emefiele has been ‘fighting’ aggressively on virtually all fronts to reposition and restore stability and dignity of the Nigerian economy. The gains were becoming obvious before the COVID-19 pandemic which inflicted huge damages in the global economy and triggered a shift from multilateralism to individualism. Countries started fighting just for themselves and adopted stringent export restrictions on food and critical medical supplies and drugs.
According to the International Food Policy Research Institute, IFPRI, about 37 countries enacted various forms of food restrictions even in countries where average production exceeds domestic consumption. The development underscores the need for self-sufficiency at least in the production of some basic items especially food, which has been the theme song of CBN under Emefiele.
According to the CBN governor, Nigeria should “be fully transformed into a modern, sophisticated and inclusive economy that is sufficient, rewards hard work, protects the poor and vulnerable, and can compete internationally across a range of strategic sectors.”
Prior to COVID-19, CBN had evolved policy measures aimed at achieving self-sufficiency in some 43 items by restricting access to Forex for the importation of those items. The bank supports agriculture, manufacturing and other critical sectors heavily.
In response to COVID-19 pandemic, CBN provided a combined stimulus package of about N3.5 trillion targeted at households, businesses, manufacturing and health care providers to strengthen the economy and developed a three-phased “Policy Response Timeline” to “guide crisis management and reboot of the economy.”
The first phase, “Immediate-Term Policies” (0-three months), involves supporting efforts of the Federal Government by supporting hospitals and pharmaceutical industry with low-interest loans to immediately deal with public health crisis, reduction of interest rates on intervention facilities from nine per cent to five per cent and granting additional one-year moratorium on CBN intervention facilities among others.
The second phase, the “Short-Term Policy Priorities” (0-12 months), according to CBN is “for repositioning the Nigerian economic space” which entails “strengthening the manufacturing industry, expanding the bank’s intervention all through the value chain and embarking on a project that would get banks and private equity firms to finance homegrown and sustainable health services that would help to reverse medical tourism in Nigeria.” It would also entail the promotion of “Infraco PLC”- a “world-class infrastructure development vehicle.”
The third phase, “Medium-Term Policy Priorities” (0-three years) would entail CBN’s initial intervention with N500 billion over the medium term targeted at manufacturing firms to procure state-of-the-art machinery and equipment and automated models that would fast-track local production and economic rejuvenation.
Nwobu, a chartered Stockbroker and business journalist, wrote via firstname.lastname@example.org