Emefiele: CBN Will Not Rest Until Nigeria Achieves Sustainable Growth

MONDAY INTERVIEW

Central Bank of Nigeria Governor, Mr. Godwin Emefiele has assured Nigerians that the central bank will continue to implement policies that would help the economy attain sustainable growth. Emefiele, who said this while receiving the Forbes’ 2017 ‘Best of Africa Achievement’ award in Washington D.C., also urged global investors to come and invest in Nigeria.  Kunle Aderinokun, Chika Amanze-Nwachuku, Obinna Chima and Nume Ekeghe present the excerpts:

Recalling the Turbulent Times

I want to thank Forbes for finding me worthy of receiving this award on behalf of the Central Bank of Nigeria tagged: “Best of Africa”. But I think what is most important here is to thank Nigerians for standing with us particularly during the very difficult times. I say difficult times then, although I make bold now to say we are out of it.

Like you all know, the last three years have been tumultuous not just for Nigeria, but the global economy, arising largely from the external shocks that hit, particularly the commodity exporting countries.

The shocks no doubt led to the plummeting of Nigeria’s reserves as crude oil price fail to a point where it dropped by February 2016 to as low as $28 per barrel. If you compare this price to the time when it averaged $100 per barrel for five straight years from 2009 to middle of 2014, you will all agree with me that we have gone through a lot.

Another shock that hit Nigeria like other countries was the United States normalisation to the point that in the last quarter of 2016, about $40 billion left emerging and frontier markets back to US.

Geo-political tensions also affected flow of funds, including Nigeria and these climaxed when we recorded negative growth. It also got to a point in the third quarter of 2016, where we got negative 2.3 per cent. We also saw inflation hitting us badly. By January 2016, inflation was just nine per cent, but by January 2017, prices have gone up and inflation had hit us up to 18 per cent and Nigerians no doubt became uncomfortable.

We, at monetary policy committee, felt that at this level, something needed to be done. In a study at CBN, we came to a conclusion that at the level it would be difficult to stimulate growth. So we decided to take inflation head on. We are happy today that we are doing about 16 per cent now and will be tamed with other policies in place.

It is also important to talk about what happened to our reserves. By June 2014, Nigeria’s reserves stood at about $37 billion. As a result of the shock, by October 2016, with all the measures we have taken, it dropped to about $23 billion. We felt that having taken all the measures so far -currency adjustments three times, from N155 to N168 to N197 and above N200- and February this year, a section of the market hit N525- we said something had to be done. But I am happy today that we are here. We also want to thank our friends, who have shown confidence in us. The foreign investor community has also been very supportive. We took some of the decisions that they didn’t like, but I know that we have taken one this time around that excited them. The opening of the investors and exporters fx window has been particularly exciting to them.

Where We are Today

And I must say that in six months, we have seen about $10 billion in inflows into Nigeria as a result of the opening of that window. We feel so grateful to them for showing the confidence in Nigeria again. But I think all this also is because President Muhammadu Buhari has always said that: we had unfortunately been hit by this exogenous shock and it had resulted in inflation and plummeting in reserves, but that we needed at some point to look at the items Nigeria imports into the country.

Nigeria is a big market, no doubt, 180 million people growing at an average population rate of three per cent annually. It is certainly a big market. But then, it is important to cast our mind back and begin to ask ourselves: There was a time in Nigeria when we produced everything we were eating. We were producing rice, palm oil etc. Nigeria was the highest producer and exporter of palm oil in the world with over 40 per cent market share sometimes in the 60s and 70s. But unfortunately because we found oil, we decided to take things easy. What we are saying is that: the President said we had tested this before, we had done it before, it is not about re-inventing it again.

Still on the 41 Items

Our climate is good, let us fold our sleeves and begin to feed ourselves again, and save our reserves for some of those items that we cannot produce as a country. And that has led to where we are today. We are delighted we put forex restriction on 41 items. We were castigated and I was reading in the Economist magazine that what we did was to just move around the home and pick items including toothpicks. I think it is important to know what we are doing. If you go to China, where they are producing the toothpicks, those things can be produced in a place that is less than a quarter of a room. How much does it involve to invest in the equipment that is used in producing toothpicks. We were importing toothpicks. Bamboo is what is used in producing toothpicks. And there is a company in Nigeria today, where people come out of school and are now producing toothpicks, creating jobs for our people.  That is what is found in the spirit of Nigerians. A couple of weeks ago, I picked up a toothpick that is being produced by a Nigerian. That toothpick is stronger than the one that is being imported from China. But I think as far as we are concerned, it is about creating jobs for our people. Nigeria is the largest producer of cassava. We were importing starch and glucose. Nigerian companies that could produce starch and glucose would go to companies that needed starch and glucose and all the companies were telling them was our stock levels are high. They said they would visit them when their stock levels go low. But unfortunately, their stock level did not go low until we imposed the forex restriction on these items. Their stock level went low and they started to now patronise Nigerian companies that were producing starch and glucose. Today, companies that require starch and glucose for their pharmaceuticals and formulations patronise Nigerians. This has created jobs for us. That is the spirit of Nigerians. This is part of the reasons the President said we needed to patronise Made-in-Nigeria and I am happy that we are doing this. But I think it is also important that we thank everybody, particularly Nigerians.

Exiting Recession

Yes, we have just managed to exit the recession with a fragile growth of 0.5 per cent; we have seen inflation trending downwards, we have seen exchange rate and reserves looking stronger and firmer. But I think we are determined to continue to push further to see to it that Nigeria returns to its historical growth path. 0.5 per cent or two per cent is not the historical growth path for Nigeria. Nigeria is a country that must grow at a rate that is at least twice the population growth rate (six per cent or seven per cent). And until we achieve that, we are not going to rest on our oars. To see that Nigerians are happy again and that we grow the country. God has bestowed us as leaders; he has given us the opportunity to serve our people. God has put these in our hands and we do owe them the responsibility to ensure that we put policies in place that will make Nigeria good for everybody.  We want to continue to join hands with our friends in the foreign investment community to do that.

Nigeria Ripe for Investment

Nigeria has a lot of potential. The environment is good, the climate is good. Nigerians are hospitable and good people. That is why we make bold to say Nigeria is good for business. There are very big countries in the world you will visit today and say you want to invest. The returns are not as high as you have in Nigeria. We want to invite you and that for me is the message we have here today. Come to Nigeria, Nigerians will receive you. Come to Nigeria, you will be happy in Nigeria. We are battling with unemployment in Nigeria, and that is the reason again the President called on the Federal Ministry of Agric, CBN, Minister of Employment, Labour and Productivity, and some important stakeholders including the governors together and said there is a need to start thinking about how we can create jobs for our people through agriculture; that agric should not be seen as business that is meant for the poor, that you can make money from agriculture.   Countries that have progressed have done so because they took the agric sector very seriously. We are determined to make agric the sector where people make money and we have decided to put in place the Anchor Borrowers Programme. Before we introduced the ABP, farmers go to farm rice and all the yield they were getting was one to 1.5 metric tonnes per hectare. After we started the ABP, today we are beginning to see farmers getting yield as high as eight metric tonnes per hectare, reducing their costs and making it possible to make their money in rice cultivation. We have seen that there is a need for us to think about how we improve the wealth of our rural community. We started that journey and through rice, we have achieved that. The Nigerian government is confident that through agriculture, the wealth of our people can be boosted. And that is the journey we are on.  We want to invite all of you, our friends and foreign investor friends; I heard the President of the Corporate Council for Africa talked about the fact that there are foreign investors that are interested in agriculture in Nigeria. We welcome you. Come, Nigeria will receive you.