CNPP, political parties disown PDP over call for Emefiele's sack

Set to fund 400 strategic firms in 12months

By Emeka Anaeto, Business Editor

The Central Bank of Nigeria (CBN) is set to offer special funding and other strategic support to about 400 selected strategic manufacturing enterprises across the country in the next one year with effect from today, under a new real sector intervention scheme.

The scheme is driven by the new financial instrument known as “The 100 for 100 PPP – Policy on Production and Productivity” (100-For-100), which the apex bank announced last week.

Speaking at the launch of the Central Bank Digital Currency (CBDC), known as the eNaira at the State House, CBN Governor, Mr. Godwin Emefiele, said the scheme would “advertise, screen, scrutinize and financially support 100 targeted private sector companies in 100 days, beginning from 01 November 2021, and rolling over every 100 days with new set of 100 companies, whose names will be published in National Dailies for Nigerians to verify and confirm.”

He said the new scheme will also be anchored in the CBN’s Development Finance Department under his direct supervision.

The CBN governor pointed out that the initiative was the best and most sustainable way to address the Naira’s value – whether in hard currency or digital eNaira – through production, production and more production.

He said, ”Working through banks, the financial instrument will be available to their customers in critical areas to boost the production and productivity, and to immediately transform and jumpstart the productive base of the economy.

“After these 100 projects by companies in the first hundred days from November 1, we will take the next 100 companies/projects for another 100 days beginning February 1, 2022, and then another 100 companies for another 100 days beginning from May 1, 2022.”

Consequently, by end of October 2022, the apex bank would have on-boarded a total of 400 companies under the new scheme.

He said the purpose of the instrument was to take further steps to reverse the country’s over reliance on imports.

The 100-For-100 rationale

Explaining the rational for the initiative Emefiele stated: ‘‘We believe that if we target and support the right companies and projects, we will see a significant, measurable and verifiable increase in local production and productivity, reduction in certain imports, increase in non-oil exports, and improvements in the FX-generating capacity of the economy.”

The scheme is anchored on the need to strengthen the domestic economy towards self-reliance and even global competitiveness, in the circumstance of structural defects in the economy.

The quest for a self-reliant economy cannot be over emphasized. Just a look at the fiscal balances would literally frighten any serious public minded individual, where the over externalization of the economy has led to dependence on funding of budgets through foreign loans just as every aspect of public and private sector consumption is import dependent. While the first externalisation – external borrowing, has pressured the nation’s debt service ratio at over 95 percent, one of the world’s highest, the second externalisation – import dependency, has put the balance of payment and balance of trade on permanent negative over the years despite the huge oil export and even the growing non-oil exports.

There is also the pass-on inflationary effect of the weak local productive base of the Nigerian economy which the 100-For-100 seeks to redress. A major component of the inflation basket is external driven while the domestic has been hinged on low output in the critical segments of the real sector. Consequently demand pressures on the constrained output and supply value chain elevates retail prices.

The gory picture of the structural imbalance and external dependency of the economy shows very clearly in the international trade features. About 80% of cargo ships and planes that bring goods to Nigeria (for which USdollars are paid) leave the country empty, implying we do not have near equivalent exports to balance with USdollars earnings from potential exports of goods they would have carried.

The other ugly picture of the structural imbalance points to a worsening situation over the years where, instead of industrialization Nigeria has been going through de-industrialisation where local manufactures of both consumer and industrial goods have become near comatose.

In the 80s and 90s, the typical basket of food Nigerians ate was almost totally made in Nigeria. The clothes were in-country with cotton from the agro-enterprises, the local farmers, textiles from the local mills and embroidery from the local tailors.

Even highly technical products like automobiles were on the long list of domestic manufacture. Vehicles ranging from cars to trucks were manufactured in-country; the Peugeot in Kaduna, the Volkswagen in Lagos, the trucks of Leyland in Ibadan, Mercedes in Enugu amongst others. And they all used tires made in-country.

Today, Nigeria spends billions of USdollars annually importing anything and everything! The 100-For-100 is set for a reversal of this tragedy. 

Need for complementary policies

The fiscal side of the national development efforts need to kick-start immediately to further amplify the impacts of the CBN’s Development Finance schemes. What is the government’s plan to reverse the de-industrialisation malady? The government can begin by requiring that over the next 3-5 years, all government vehicles be made in Nigeria by Innoson Motors or any other car manufacturers. If we can reverse up to 40%, the Naira would strengthen to N70/$1.

The government should get more serious in addressing the perennial complaint of many potential exporters about the gridlock at the Ports and the myriad of illegal charges levied by a multiplicity of agencies at the Ports.

Government should compel the Nigeria Custom Service to re-orientate itself back to its mandate of trade facilitation agency instead of the corruption-based revenue generating front they now mount. If they are a trade facilitation agency, as they claim, let them bring out their strategic plans to improve Nigeria’s international trade and ability to earn FX.

What is the Government’s budget and plans for the Nigerian Export-Import (NEXIM) Bank? A bank that was set up to specifically finance non-oil exports. NEXIM’s balance sheet is less than 10 percent of the balance sheet of the EXIM banks of Malaysia, India, Indonesia or Turkey. What is the country’s plans to improve this?

The country’s problems are significant but fixable. The solutions are staring us in the face, and one of such is the 100-For-100. Let all be committed to supporting and making it work.

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