Nine Years in the Saddle, Emefiele Trudges on

Obinna Chima highlights some of the remarkable interventions of the Central Bank of Nigeria under the leadership of Godwin Emefiele after nine years superintending the nation’s apex bank. 

Sunday, June 4, 2023, made it exactly nine years Godwin Emefiele assumed the position of the Governor of the Central Bank of Nigeria (CBN). Despite the mounting challenges, he has continued to trudge forward and has remained focused on delivering the mandate of the central bank.

Today, he is the only central bank governor that is known to have served under three presidents. Appointed by former President Goodluck Jonathan in 2014, he served out his first five-year term under the immediate past-President, Muhammadu Buhari, who thereafter reappointed him in 2019, for another term of five years. He is presently serving as governor under President Bola Tinubu.

Emefiele has weathered several storms in the past nine years and continues to face more as persons eyeing his position in the new administration are doing everything possible to put him down with all manner of propaganda.

Despite the challenges the economy has faced in the past nine years, largely due to its weak fiscal space, the Emefiele-led central bank has continued to support the federal government.

Through its interventions, the CBN has massively supported the private sector which is the engine of growth for any economy.

Since Emefiele came on board, the CBN has supported non-oil sectors such as agriculture, manufacturing, healthcare, education, power and aviation and other allied economic value chains

The building of a more sophisticated economy anchored on agriculture, Micro, Small and Medium Enterprises (MSMEs), industrial and manufacturing concerns has become the major component of the bank’s monetary policy, in view of the recent challenges posed by the impact of Covid-19 and the Russia invasion of Ukraine.

As stated earlier, the Emefiele-led CBN saw weakness on the part of the fiscal authorities because the fiscal space was narrow and the space to release money to catalyse the economy on the fiscal side was slim, prompting the apex bank to increase its intervention in the economy.

For instance, the recent inauguration of the Dangote Refinery which has immense ramifications for the economy particularly in resetting the country’s wobbling macroeconomic indices including unemployment, inflation, Gross Domestic Product (GDP), and exchange rate among others, was one of the companies that have benefitted immensely from the CBN’s interventions.

The completion and inauguration of the Dangote Refinery and the funding support the project enjoyed from the apex bank demonstrated the character of Emefiele in matching words with action about the bank’s support to the real sector, to also help achieve the aim of monetary policy and better the lives of Nigeria through its avowed ‘people-centered’ policy by the bank.

According to Emefiele, the initial estimated cost of the refinery was about $9 billion, of which $3 billion was projected as equity investment by the Dangote Group and the balance financed through commercial loans.

However, due to an array of factors, the project was eventually completed with a total of $18.5 billion with funding distributed into 50 per cent equity investment and 50 per cent debt finance.

He said, “I am proud to state that the commercial loan component of the project was financed majorly by our domestic banks with the balance sourced from foreign banks.

“The Central Bank of Nigeria also partnered, as always, with the Dangote Group in ensuring the successful completion of the project by providing about N125 billion, to cover domestic currency requirements for the venture.”

Emefiele also disclosed that with the refinery, Nigeria will cease to import petroleum products, fertiliser and petrochemical that drained over $26 billion in import bills in 2022.

The foregoing further demonstrated the huge role the CBN has continued to play in stimulating growth and encouraging domestic output to the benefit of the overall economy.

The CBN has also supported the real sector to boost local production and export. This was the reason behind the Race to $200 billion in foreign exchange (FX) repatriation programme (RT200) of the bank that has boosted repatriation of funds into the country by 40 per cent in 2022. In the first quarter of 2023, the country recorded $1.7 billion inflows due to the non-oil export initiative.

Also, in May this year, the CBN has disbursed the sum of N25.6 billion under the N1 trillion Real Sector Facility to eight new real sector projects in manufacturing packaging, pharmaceuticals, plastic and cosmetic products. Cumulative disbursements under the Real Sector Facility currently stands at N2.56 trillion disbursed to 462 projects across the country, comprising 257 manufacturing, 95 agriculture, 97 services and 13 mining sector projects as of last month.

Under the 100 for 100 Policy on Production and Productivity (PPP), the Bank disbursed the sum of N13.81 billion to three projects in the manufacturing sector. This brings the cumulative disbursement under the facility to N173.31 billion, disbursed to 81 projects comprising 45 manufacturing, 23 agriculture, five healthcare, and eight services sector projects with an estimated 23,343 direct jobs created.

Under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital, and operational expenditure of distribution companies (Discos), the central bank disbursed N11.82 billion to ease liquidity constraints and support the recovery of legacy debt. Under the scheme so far, the CBN has disbursed a cumulative sum of N254.39 billion.

In 2020, Nigeria was well commended in the manner in which it handled the COVID-19 pandemic, which came into the country.

The pandemic once more exposed the economy’s weak underbelly, necessitating response from the government.

The Emefiele-led central bank then acted swiftly, almost when the first case broke out in the country by unveiling a rash of measures to moderate the impact of the virus on households, businesses as well as the economy. Measures such as the extension of the moratorium on the apex bank’s interventions programmes, interest rate reduction, creation of a N100 billion targeted credit facility; N100 billion health sector intervention facility and N1 trillion for the manufacturing sector, among others.

In addition, Emefiele was also instrumental to the formation of the private-sector-led Coalition Against COVID-19 (CACOVID), which was able to mobilise billions of naira and had immensely supported the country’s COVID-19 fight by setting up healthcare facilities across the country as well as in distributing palliatives to states.

Also, as part of efforts to stimulate infrastructural development across the country, the CBN, working with the fiscal authorities also established a N15 trillion Infrastructure Development Company (Infraco).

The Anchor Borrowers’ Programme was also introduced in 2015, to support small holder farmers. Some of the commodities that have received support under the Anchor Borrowers’ Programme include rice, wheat, cowpea, millet, maize, cotton, fish, soya bean, poultry, cassava, groundnut, ginger, sorghum, oil palm, cocoa, sesame, tomato, castor seed, yellow pepper, onions, and cattle/dairy.

The programme which was introduced by the Emefiele-led CBN has contributed significantly to increased national output of focal commodities, with maize and rice peaking at 12.2 million metric tonnes and 9.0 million metric tonnes in 2021 and 2022, respectively, as the Director, Corporate Communications, CBN, Dr. Isa Abdulmumin, told us recently.

According to the CBN spokesman, the programme had also helped to improve the national average yield per hectare of these commodities, with productivity per hectare almost doubling within the eight years of the programme’s implementation.

“Nigeria has largely depended on the oil sector for revenue generation over the past four decades and the sustained decline in crude oil production continues to negatively undermine the performance of the economy.

“Thus, there is the urgent need for a conscientious effort to diversify to other non-oil sectors. “As I have often said, it is important that we work to create an economy that will enable us feed ourselves, create jobs for our teeming youths and improve the standard of living of our people.

“With our population growing by over three percent per annum over the past seven years, against a less than steady growth in output since 2019, expanding the production and industrial capacity of the economy must be given special attention to ensure overall macroeconomic stability,” Emefiele stressed recently.

He explained: “In the agriculture sector, we found that the big problem we have is the movement of goods from farm to market. It is a logistics and transportation problem. We got approval from the Presidency to reposition the Nigeria Commodity Exchange which plays a pivotal role in the movement of goods from farm to market. Another important move is the creation of the Infraco. You all know that infrastructure has been a problem in Nigeria.”

The CBN also invested over N120 billion across the Cotton, Textile and Garment (CTG) value chain since the inception of its intervention programme in the industry. Through its development finance initiatives, over 320,000 farmers have been financed between 2018 to date. This was expected to enhance the production capacity of the ginneries in producing over 102,000 metric tonnes of cotton lint, which should meet and surpass the cotton lint requirement of the textile industry in the country.

In the area of financial system stability, while it is on record that some developed countries have recorded bank failures in recent times, the Nigerian banking sector has remained safe and sound.

The global economy is now characteried by rapid digitalisation across all sectors, particularly the financial system where Nigeria remains the leader of innovation and out-of-the-box thinking. As part of the apex bank’s efforts in entrenching a resilient payments system, it has over the years established strategic initiatives and policies in the financial sector such as the Payments System Vision 2020 (2007), National Financial Inclusion Strategy (2012, 2018), Cash-less Policy (2012), Framework for Regulatory Sandbox Operations (2018, 2021), Open Banking Initiative (2021), among others.

Under the National Digital Economy Policy and Strategy (2020 – 2030), the industry is poised to accelerate the private sector-led efforts towards building a nation where digital innovation and entrepreneurship are used to create value and prosperity for all.

Consequently, the Nigerian payment ecosystem has witnessed tremendous improvement over the years. To consolidate its efforts towards engendering a digital economy, the Bank deployed the eNaira, Africa’s first Central Bank Digital Currency (CBDC) in preparation for the payment landscape of the future, given the potential benefits that will accrue to a digital economy.

The eNaira provides Nigerians with a cheap, generally accepted, safe and trusted means of payment and seeks to enhance financial inclusion, support poverty reduction, enable direct welfare disbursement to citizens, support a resilient payments ecosystem, improve availability and usability of central bank money, facilitate diaspora remittances, reduce the cost of processing cash, and reduce cost and improve efficiency of cross-border payment among others.

Nevertheless, the Emefiele-led CBN would have to redouble its efforts in the area of price stability as well as do more to boost forex flows in order to guarantee exchange rate stability and boost the external reserves. This is because with inflation at 22 per cent as of April 2023, it leads to income redistribution and brings about weak purchasing power. That is why CBN needs to continue to take steps to cage inflation.