Again, Emefiele Banks on 100 for 100 Policy to Fight FX Crisis

Determined to shield the productive sectors from the challenges in the foreign exchange market, the Governor of the Central Bank of Nigeria, Godwin Emefiele, is leading the ‘100 for 100 Policy’, which he says will catalyse sustainable employment-led economic growth through increased domestic production and productivity, reports Festus Akanbi

From all indications, the relentless efforts of the Central Bank of Nigeria (CBN) to address the sustained shortage of foreign exchange needed for business and government transactions will begin to pay off, in a matter of time, by the time the latest plan to focus on the productive sector of the economy is carried to the letters.

The CBN Governor, Godwin Emefiele, had in an interview with ARISE NEWS Channel on the sidelines of the Nigeria International Partnership Forum in Paris, France, boasted that the 100 for 100 PPP initiative, (explained as Policy on Production and Productivity), will catalyse sustainable employment-led economic growth through increased domestic production and productivity in the near term.

The overall effect of this initiative, according to the monetary authorities, is to significantly reduce avoidable pressure from importers on the FX market.

Boosting Local Productivity

While rolling out the new financial instrument, the CBN was confident it would support companies to boost local productivity, create wealth and stave off importation responsible for Nigeria’s foreign exchange crisis.

The 100 for 100 PPP initiative will empower 100 companies in 100 days, and hundreds more in the coming months.

Emefiele said the move is to reverse the country’s over-reliance on imports.

The bank has launched several initiatives in recent years to support Nigeria’s private sector, as it battles an importation-fuelled foreign exchange crisis that has sent the naira crashing over 30 per cent in the last on year.

Fielding questions from the ARISE TV, Emefiele described the 100 for 100 initiative as another programme that came up out of the need to say that “we must support and do everything to create employment for our people.”

He insisted that the apex bank must see the measurable level of employment that would be provided by that project.

According to him, they have to be new projects and the central bank will do everything possible to provide foreign exchange to import plants and machinery so that by the time the plant or machinery are set up, the import content of raw material would be near zero and then we can begin to look at our available local raw material, rather than importing them.

“It is meant again to complement what Mr. President said, that we have to create 10 million jobs in 10 years and that is something we need to work towards. This initiative will help to reduce the level of unemployment, it will make credit available at a cheap rate and it will make credit available for a long tenure,” he stated, adding however that “In terms of the prerequisites, at least 80 per cent of the employees within these new companies’ entities would have to be Nigerian.”

Close Monitoring

On what the central bank is going to do to make sure that these companies meet those requirements and not renege on the agreement once they have gotten the support they require, Emefiele said, “We know that people would like to play some games but I can assure you that the central bank has the resources to monitor. Even our current intervention programmes, whether in agriculture or in manufacturing, those who have accessed those facilities will tell you that at least twice a year, our people go to check and investigate to know whether those projects have been set up and are meeting their objective.

“So, I don’t want to say that we will not have a few misses, but I can assure you they will be monitored and that is the reason we have been very clear that we said we will advertise, scrutinise it, monitor it so the Nigerians truly know.

“So, if for instance, you took the money, and it is not within the objective, Nigerians who are going to read your name on the pages of the newspaper will say no, this man didn’t do the right thing.”

The apex bank chief explained that the above are some of the self-censorship programmes that had to be put in place because “we need to be very truthful and honest, adopt the best level of governance in programmes like this that is meant to create jobs, reduce unemployment, and indeed help reduce the level of insecurity in our country.

“We don’t have a choice; we owe our people that. God has put us in a position and it is providence that cast on us to fend for the people. So, we have to put in place policies that would improve the lives of our people. And I dare say we don’t have a choice, we must do what is expected of us.”

CBN Won’t Subsidise Foreign Education

The CBN as an institution doesn’t believe the limited volume of foreign exchange should be released for payment of school fees abroad except it’s meant for tertiary institutions, a position that enjoys overwhelming support of the business community.

Emefiele said, “On accessing foreign exchange If we look at those who need to pay school fees abroad issue, it is very clear that they had to be tertiary institutions only. The question is what happens to parents in Nigeria who send their children abroad for secondary school?

The CBN Governor said it is unrealistic to expect the government to subsidise foreign education, especially at the primary and secondary school levels given the present situation.

Going down memory lane, Emefiele said, “Again, I go back to what I said about what Nigeria’s education was when I was born. I was born in Nigeria. I went to primary school in Nigeria. I did my secondary school and my university in Nigeria. Indeed, people were coming from other parts of the world to attend universities in Nigeria.

“What has happened for us to now begin to think about our children going to secondary school abroad.

“This is not about a popularity contest, it is about the fact that if you can afford it, good for you. I think what we should be doing is to improve educational standards and educational institutions so that people can go to secondary school in Nigeria. And when we begin to achieve that, then I will begin to think that Nigeria is coming back to the Nigeria of my birth.”

Criteria for Selection

Listing its criteria for the initiative, the apex bank had explained that the selection for participating businesses would be based on the immediate impact the business has on economic growth, jobs creation, and social impact.

It stated, “These are projects that must catalyse sustainable employment-led economic growth through increased domestic production and productivity in the near term.

“The projects for consideration shall be new projects in existing companies requiring new machinery and other support and must have the greatest potential to achieve significant scale in their in-country production and for domestic consumption and exports,” it stated.

The bank stated that it listed criteria to ensure the operational framework for a robust and transparent process for identifying and selecting high-impact companies and projects under its 100 for 100 PPP.

The CBN added that the instrument shall provide naira intervention funding under existing CBN intervention processes and complete foreign exchange funding for new machinery.

“This instrument is for only new projects; [it] will not cover any refinance of existing facilities and will be subject to an independent evaluation by international audit firms.

“All intervention under this project will be made public and published in national dailies. The CBN will work with fiscal authorities to facilitate power sector, port, and export reforms as well as ease of doing business to improve competitiveness in Nigeria to complement and propel this initiative.

“Candidate companies with satisfactory performance are invited to apply through their banks effective, today November 01, 2021, to the CBN Department of Development Finance, Office of CBN Governor,” it added.

Dollars Shortage

The problem of shortage of foreign exchange can be better appreciated when one recalls that back in 2013, Chairman of the Dangote Group, Aliko Dangote, was able to easily raise $3.3bn from a consortium of 12 Nigerian banks to finance the construction of the Dangote Refinery.

On completion, the plant will be able to refine about 650,000 barrels of crude oil per day. The deal was part of a $6.75bn debt financing arrangement to augment the equity contribution in the project by the group.

However, there are indications that banks are now finding it difficult to fund clients seeking to acquire oil assets put on sale by the Royal Dutch Shell Plc. This was confirmed by the CEO of GTBank, Segun Agbaje, who was quoted as saying that the banks were unlikely to be able to raise the estimated $2.3bn needed for purchasing the Shell assets.

“Such a deal would require a syndication of up to $1.8bn and it will be very tough to raise such funding locally at the moment because of dipping dollar liquidity in the banks,” he was quoted as saying.