Assessing gains, prospects, challenges of CBN’s economic intervention blueprint

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Assessing gains, prospects, challenges of CBN’s economic intervention blueprint

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 Mr. Godwin Emefiele assumed office on June 4, 2014, with a pledge to run a people-oriented apex bank.

Six years down the line, the CBN under his watch has rolled out many economic intervention programmes to battle recession and plant the economy on a success path.

 The bulk of them centre on fortifying players in the micro, small and medium enterprises (MSMEs) space with requisite skills and finance, so they are in a good shape to create jobs and fertilise the economy for growth.

Unfortunately, not all areas have met set targets, as insecurity has constantly played the spoiler. Incessant farmers-herders’ clashes and other onshore socio-political tensions have retarded the momentum of growth.

Emefiele came in the saddle when global oil prices were slowly receding, triggering alarm bells of a possible recession in the future, unless the economy was diversified. Part of his early economic diversification plank was the Anchor Borrowers’ Programme (ABP), launched by President Muhammadu Buhari on November 17, 2015, in Kebbi State, to create a link between anchor companies involved in the process of selecting key agricultural commodities and small holder farmers (SFHs). At harvest, the SHF supplies his/her produce to the agro-processor (Anchor) who pays the cash equivalent to the farmer.

 At the launch, he wooed state governors to urgently invest in agriculture to make them more prosperous and gradually wean them off the monthly federal handouts from the Federal Account Allocation Committee (FAAC).

Some of the commodities captured under ABP are cassava, cotton, fish, groundnut, maize, poultry, rice, soya beans, wheat, cattle, sorghum, ginger, castor seed, sesame, tomato, cocoa, yellow pepper, oil palm, cowpea and onion. All intervention loans attract only 5 per cent interest and some moratorium.

However, the programme was still at the infant stage when weaker global oil prices, widespread and rising geopolitical tensions along critical trading routes in  the  world and normalization of monetary policy by the United States’ Federal Reserve System resulted in the 2016 recession.

Prior to the recession, Emefiele had on several occasions warned about the dangers of relying on solely on crude oil receipts, with its inherent volatility, as Nigeria’s only breather, rather than diversifying the economy and boosting export to earn foreign exchange. He listed agriculture, mining, manufacturing, science and technology, ICT and other sectors as robust development enablers that could turn around the fortunes of Nigeria, while helping it reduce its debt burden.

With a fiscal wing constantly finding comfort in rising crude oil receipts, Emefiele constantly nudged it to reality by relentlessly singing the diversification tune, anchored on a broad implementation template.

The CBN governor has urged all restive youths to drop their arms and embrace the ABP, as it is capable of solving food insufficiency and unemployment nightmares, which are two main factors fuelling insecurity.

For the healthcare industry, records show that the CBN, on Emefiele’s watch, earmarked a N100 billion intervention facility for it.

So far, applications have been received for 222 projects valued at N177.424 billion. Out of the 222 projects, 91 projects, representing 40.99% of the total Healthcare Special Intervention Facility (HSIF) applications, valued at N97.444 billion, have been approved and disbursed as at May 28, 2021.

Of the approved HSIF projects, six projects valued at N12 billion were new (Greenfield), while 85 projects valued at N85.444 billion were expansionary (Brownfield).

A breakdown of the approved 91 HSIF projects is given below:

Funding for cancer treatment centres (two projects) valued at N2.436 billion; funding for funeral service (one project) valued at N0.075 billion; funding for six projects in medical laboratories/diagnostics valued at N4.958 billion; funding for 26 pharmaceuticals projects at N36.838 billion; funding for state government’s health institutions (12 projects) valued at N22.5 billion; funding for 42 private sector hospital/other healthcare services projects valued at N29.121 billion; funding for one local assembly of ambulance project valued at N1.5 billion and a dental service project valued at N0.016 billion.

In the retail agriculture sector, N631,408,779,670 has been released as at May 28, through 23 Primary Financial Institutions (PFI) to all the 36 states and the FCT to cultivate 21 commodities.

Unity Bank disbursed N275,294,461,734.9;

KeyStone, N114,286,258,406.4; Bank of Agriculture, N106,276,823,728; NMFB, N32,223,169,674; NIRSAL, N38,885,123,890.48; and 15 other PFIs, N64,442,942,237.26.

Loan repayment stands at N177,641,040,572 and total amount outstanding is N453,767,739,097. The farmers funded projects are 3,107,949, while number of hectares are 3,801,696. Number of direct jobs created so far  are 11,405,090.9.

For real sector funding, N1 trillion was set aside. Under this facility, 234 real sector projects valued at N857,644,332.70 were approved and funds disbursed from November 2018 to May 28, 2021.

Of the 234 projects, 155 real sector projects valued at N614,612,616,904.95 were financed from January 2020 till May 28, 2021; 78 manufacturing projects gulped N255,991,800,593.50; 36 agricultural projects received N84,481,444,941.05; 30 services projects  got N190,639,371,370.40; and 11 mining projects got N83,500,000,000.

For the Nigeria Youth Investment Fund (NYIF), disbursements as at May 28, 2021, showed that South West got N719,350,000, representing 94%; South South, N443,227,500,00 (14.75%); South East, N320,450,000 (10.67%); North West, N696,557,500 (23.18%); North East N307,700,000 (10.24%); North Central, N517,270,000 (17.22%).

For the creative industry, six movie distribution companies got                                       N1,722,075,438.20;

Software development got N310,                                920,480,000; movie production,                                      N251,300,000; and Fashion,                                                        N175,056,000, among others. In all,                                      N3,198,911,438.20 has been disbursed.

According to experts, the aforementioned interventions were responsible for the quick exit of the predicted 2020 recession induced by the COVID-19 lockdown, global supply chain disruptions and crashed crude oil prices.

The apex bank has consistently supported various ailing sectors of the economy, especially small and medium enterprises (SMEs) via intervention programmes, to realise its economic sustainability and diversification goal.

Interestingly, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, and the CBN governor have, at different fora, assured Nigerians of dedicated efforts to strengthen the economy as it recovers from the wounds of two recessions within four years.

On the fiscal wing, the minister noted that the government has since developed an economic sustainability plan to cushion the effect of COVID-19 pandemic.

“Government will activate the economy by undertaking growth-enhancing and job-creating infrastructure investments in roads, rails, bridges, solar powers as well as communication technologies.

“Promoting, manufacturing and local production at all levels and advocating the use of made in Nigeria goods and services as well as creating job opportunities

“Achieving self-sufficiency in critical sectors of our economy and curbing unnecessary demand for foreign exchange which put pressure on the exchange rate.

“Extending protection to the very poor and vulnerable including women, persons living with disabilities through proper spending” she stated.

Economic watchers have hailed the apex bank for readily injecting a cocktail of conventional and unconventional economic stimulation strategies to get things back on track like it did in 2016 and 2020 recession seasons.

They insist that the apex bank seems to be the only government establishment, from the monetary policy wing, willing and ready to face the economic challenges headlong.

The Vice President and Head of the National Economic Council, Prof Yemi Osinbajo, at a recent forum emphasized that the government was committed to working in synergy with the private sector to foster equitable growth and boost national development.

Nonetheless, Emefiele is of the view that no part of the economy should be left vulnerable to shocks, even in a pandemic.

More so, to deepen the presidential metering initiative, the CBN has disbursed N14.35 billion to electricity distribution companies to procure 263,860 meters for electricity consumers in the country.

Again, the bank disbursed N10 billion to revive at least 50 distressed companies in Kano that succumbed to the suffocating impact of the COVID-19 pandemic.

Since the outset of COVID-19 last year, the Central Bank of Nigeria gave a one-year extension of a moratorium on principal repayments for CBN intervention facilities. Others were; strengthening of the Loan to Deposit Ratio policy, which has resulted in a significant rise in loans provided by financial institutions to banking customers.

Loans given to the private sector have risen by over 21 percent over the past year.

More so, the CBN engaged in development finance in order to address the credit needs of the sectors critical to improving livelihoods, reducing poverty, and promoting inclusive growth.

The goals have become doubly important in light of the significant shocks to the economy following the ongoing COVID-19 pandemic. In pursuit of transparency, the CBN usually publishes disbursements made under these activities in its economic reports.

According to Professor Uche Uwaleke, Nigeria’s first professor of the capital market, the overall objective of these interventions is to promote financial inclusion in the country, tackle unemployment, insecurity and other social challenges.

Some of the CBN intervention schemes are; Non-Interest Guidelines for Accelerated Agriculture Development Scheme (AADS); Non-Interest Guidelines for Intervention in Textile Sector; Guidelines for the operation of the Agri-business, Small and Medium Enterprise Investment Scheme (AGSMEIS) for Non-Interest Financial Institutions; Non-interest Guidelines for Non-oil Export Stimulation Facility; Non-interest Guidelines for Anchor Borrowers’ Programme; Non-interest Guidelines for Real Sector Support Facility Revised Guidelines; Non-interest Guidelines for the operation of the Credit Support for the Healthcare Sector, Modalities for the implementation of the Creative Industry Financing Initiative (Non-interest version).

Interestingly, the intervention schemes were designed with specific targets and purposes.

The AADS, for instance, is aimed at reducing unemployment in Nigeria by funding agriculture production initiatives that will engage as many as 370,000 youths over the next three years.

Similarly, the Non-Interest Guidelines for Intervention in the Textile Sector is intended to resuscitate Nigeria’s textiles industry by providing “a N50 billion special mechanism for restructuring of existing facilities and provision of further facilities for textile companies with genuine need for intervention.”

A 2019 effort by the CBN to revive the cotton, textile and garment (CTG) industry has led to the creation of 620,000 direct and indirect jobs in the last two years,  while over 278,500 hectares of cotton farm was financed by the apex bank in 2019 and 2020, with over 90,000 MT of cotton seed harvested. Over N44 billion was disbursed between 2019 and 2020 across the CTG value chain to up the ante in the sector.

Some of the eligibility criteria for accessing these non-interest schemes are that beneficiaries must be Nigerian youths from 18 to 35 years.

They are to sign an undertaking to abide by the terms of agreement of the scheme and meet other documentation requirements.

Moreover, any textile company with an existing facility in the books of Bank of Industry (BOI) under the Cotton Textile and Garment (CTG) scheme is eligible to apply. Again, textile companies with existing facilities in DMBs/NIFIs can apply. Textile companies that are not participating under the SME/RRF can also apply.

Other non-interest guidelines issued by the CBN were for the Anchor Borrowers’ Programme: the Credit Support for the Health Sector;  Intervention in the Textile Sector; the Real Sector Support Facility (RSSF) revised guidelines (V3); the Real Sector Support Facility (RSSF) through CRR; Non-Oil Export Stimulation Facility (ESF) and the Creative Industry Financing Initiative (CIFI).

Beneficiaries of the facility, who spoke with Daily Sun, hailed the apex bank for its numerous interventions. Joan Johnson, an entrepreneur, told Daily Sun that she was a beneficiary of the CBN household loan under the Targeted Credit Facility meant to cushion the effect of the COVID-19 pandemic.

“I saw the news in the media and I applied online. I was called for an interview and eventually I was given. I got N350,000. It was indeed a dream come true because I’ve started a small makeup business

“I’m likely to pay back this loan in 12 months. I’m excited,”  she said.

Another beneficiary, Kalu Abba, said he got a N550,000 TCF loan last month and used it to buy additional tools for his automobile repair business.

“I added money and bought a diagnostics machine for the latest model of cars. It’s scarce in Dutse. I can now diagnose vehicles and make money from it. If the owner wants, I’ll repair the vehicle after the diagnosis but diagnosing alone is N10,000. I am very happy”, he said.

Also appreciating the apex bank for its interventions, the Presidents of the Rice Farmers Association of Nigeria (RIFAN)- Alhaji Alhaji Aminu Goronyo; National Cotton Association of Nigeria (NACOTAN) – Mr. Anibe Achimugu; Maize Association of Nigeria (MAN); Maize Association of Nigeria (MAAN) – Alhaji Bello Abubakar; and the Maize Growers, Processors, and Marketers Association of Nigeria (MAGPMAN) – Dr. Edwin Uche, attested to the success of the CBN ABP, which they noted had enhanced the value chains of their respective commodities.

However, the President of the Nigerian Textiles Manufacturers Association, Folorunsho Daniyan, has appealed to the CBN to fulfill its promise to ensure larger domestic patronage to drive growth in the sector and increase job opportunities.

He has also urged the apex to intervene in the area of production cost, adding that this will enable the sector become competitive and contribute significantly to the nation’s GDP.

“If these infrastructure are not improved, definitely we can’t employ, and something needs to be done for us to compete locally and internationally.”

“We just have the name but we are not contributing to the GDP of the country, our contribution formerly amounted to 25% of the GDP. But now our contribution is insignificant.”

Speaking on the guidelines issued by the CBN on various intervention programmes, the acting director, Corporate Communications Department, Osita Nwanisobi, said the establishment of the non-interest windows had opened more opportunities for eligible beneficiaries to be considered for funding under all the bank’s initiatives.


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