The Central Bank of Nigeria (CBN) has injected more than than N8.8 trillion into the economy since the advent of COVID-19 in March last year.
Its Governor Godwin Emefiele who dropped the hint in Abuja at the end of the of the first Monetary Policy Committee (MPC) meeting for the year, however cautioned against locking down the economy.
It warned that another round of wholesome lockdown would be “catastrophic on everybody and the economy”.
According to the apex bank boss, N6.8 trillion credit facility was given to the Federal Government to boost the fight against COVID-19.
Emefiele said the bank committed additional N2 trillion to mitigate the impact of the pandemic.
At the end of the meeting in Abuja, the bank decided to retain all its policy parameters. By an unanimous vote, the Committee decided retain the Monetary Policy Rate (MPR) at 11.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the Cash Reserve Ration (CRR) at 27.5 per cent; and retain the Liquidity Ratio at 30 per cent.
Emefiele said that despite the second wave of the pandemic, shutting down the economy must not be considered as a feasible option.
He said locking down the economy for the second time will have wide-ranging negative impacts, which could be more damaging to the economy and citizens.
Emefiele said the apex bank has decided to extend by 12 months again the interest rate of five per cent on its intervention facilities.
According to him, at the end of the MPC meeting, the Committee urged the CBN to sustain its current drive to improve access to credit to the private sector while exploring other complementary initiatives, in collaboration with the Federal Government, to improve funding to critical sectors of the economy.
He said the decision to extend the five per cent interest rate on CBN intervention facilities would result in losses to the apex bank but that is CBN’s contribution to ensure that interest rates particularly for interventions which are targeted to either household, SMEs, Agric and health sectors that will stimulate consumer spending remain constant.
Reacting to Fitch rating agency’s criticism of the CBN’s credit to the Federal Government, Emefiele stated that it is “very unfortunate that Fitch which is known to be a first-class company and first-class rating agency will hold such views on what we are doing and therefore pass judgement regarding the size of credit that the CBN has granted to the federal government.”
He defended the bank’s action, insisting that “the CBN is banker to government, second let it be known that the CBN is a lender of last resort not just to government but also even to our banks when they run into short term liquidity problems.”
Using other countries and the European Union as examples of entities that extended credits to their governments, Emefiele revealed that “in Nigeria just 4.5% of the GDP amounting to about $18 billion or N6.822 trillion” was extended as credit to the Federal Government to address the COVID-19 challenges.
Emefiele said some this money was used to “support measures which included outright purchase of debt by the Central banks in order to improve the ability of fiscal authorities to fund recovery efforts”.
According to him, “the efforts of the central bank are not different that’s the only thing I can say from what is being witnessed in other climes all over the world as we all share the same objective considering both conventional and unconventional measures that will support faster economic recovery in light of reduced revenue reset been faced by this fiscal recovery authorities”.
The CBN boss went on: “In the light of the on-going synchronised efforts by the monetary and fiscal authorities to mitigate the impact of the COVID-19 pandemic, the Bank has committed substantial amount of money towards this objective. Indeed, total disbursements as at January 2021, amounted to N2 trillion.
“COVID-19 Targeted Credit Facility (TCF) meant for household and small businesses, wherein we have disbursed N192.64 billion to 426,016 beneficiaries.
“We have also disbursed N106.96 billion to 27,956 beneficiaries under the Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS), while in the Health Care Support Intervention Facility, we have disbursed N72.96 billion to 73 project that comprise 26 pharmaceutical projects and 47 Hospitals and Health Care Services Project in the country.
To support the provision of employment opportunities for the Nigerian youth, the CBN provided financial support through the Creative Industry Financing Initiative and Nigerian Youth Investment Fund amounting to N3.12 billion with 320 beneficiaries and N268 million with 395 beneficiaries, respectively.
On enhancing power supply, the CBN said it had provided N18.58 billion for the procurement of 347,853 electricity reading meters to DisCos in support of the National Mass Metering Programme (NMMP).
Regarding the near moribund Nigeria Commodity Exchange (NCX), Emefiele said: “We have found in the market that the activities of private commodities exchange have not helped our country and it is time for the Nigeria Commodity Exchange to be repositioned, restructured to perform the role which by law is has been empowered to.”
The CBN, he said, has written to the president and has received the approval to restructure and reposition the Nigeria commodity exchange.
Emefiele said: “It will operate like standard commodity exchanges that you can find in any part of the world which includes stabilizing of food prices generally, we will be coming up with the agenda and framework for the restructuring and repositioning of the Nigeria commodity exchange and we will do so in a manner that prices must be stable in Nigeria.
“The apex bank will not allow some self-seeking private exchange commodity to be holding agriculture produce and be creating problems for prices because price stability is the cure mandate of CBN and we cannot shy away from the responsibility, luckily the CBN owns 60 percent of Nigeria Commodity Exchange and we will take control of it and will run it the way commodity exchanges are supposed to be run in any part of the world that is one way that we would work to stabilize prices in Nigeria.”
