The Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele has expressed worry that the country’s manufacturing sector contributed less than 15 per cent of the Gross Domestic Product (GDP) while lamenting the continuous importation of many commodities which Nigeria had capacity to produce and export.
According to a statement from CBN’s Corporate Communications Department, Emefiele while delivering a paper at the 40th Anniversary/Convocation lecture of Ekiti State University, Ado-Ekiti on Monday said, “To address this challenge, we have accepted the charge of President, Muhammadu Buhari for the country to produce what it eats and eat what it produces.”
The topic of Emefiele ‘s paper delivered on his behalf by CBN’s Deputy Governor in charge of Corporate Services, Mr Edward Adamu, was “The Role of Central Banks in Managing Economic Downturns”.
He said, “The CBN, working with Deposit Money Banks and participating financial institutions, is focused on critical areas such as the agricultural and manufacturing sectors.
“We have granted more than N3 trillion in intervention loans that have aided economic recovery and employment generation.
“Given the limited fiscal space due to the significant drop in government revenue, the CBN has had to intervene with development finance tools and some monetary policy innovations to aid recovery without jeopardising price stability.”
Emefiele further said that different categories of Nigerians, particularly women and youth, had benefitted from various CBN intervention programmes.
He listed the programmes to include the Anchor Borrowers’ Programme (ABP), Targeted Credit Facility, and Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS).
He expressed commitment of the bank to continue leading a “people-focused” central bank that would promote macro-economic objectives such as low inflation and stable exchange rates.
Emefiele said the bank would also focus on promoting inclusive growth and reducing unemployment in the country.
“With an annual population growth rate of close to 2.8 per cent, it is important that all efforts are made to ensure that employment opportunities are available for Nigerians,” he said.
“Particularly in sectors that have the potential to absorb the youth.”
He said that the CBN had created various initiatives geared toward building a strong, stable and resilient economy that was self-sustaining and able to weather unanticipated shocks.
According to Emefiele, the Act establishing the CBN envisaged the role of development finance, which the Nigerian context presently demands.
“The intervention of central banks in development financing is not new as it dates back to the 1920s,” he said.
He said that some central banks in more advanced economies got directly involved in the financing of government programmes/projects in their early days.
He said that central banks in both advanced and emerging markets embraced quantitative easing.
This according to him is to support their economies toward recovering from the global financial crisis of 2008/2009, and the associated economic downturn triggered by the COVID-19 pandemic.
“Many central banks in advanced, emerging and developing economies during the recent COVID-19 pandemic supported their fiscal authorities.
“The aim is to aid recovery of their economies following the significant decline in global growth occasioned by the pandemic.
“These central banks, particularly in developing countries, intervene in the real economy to enhance the transmission mechanism of monetary policy actions.
“As well as facilitate development of financial markets through the creation of easy access to credit for investment and production.
“It is thus undeniable that development finance interventions are frequently an integral part of the recovery strategy in most countries,” he said.
Emefiele said that the philosophy behind central banks’ interventions in the real economy was to indirectly influence cost of production for firms and affect prices positively by improving the flow of credit.