At the backdrop of the slide into the second recession in five years, fiscal and monetary authorities are indicating that efforts are on all fronts to ensure early exit from the recession.
While the Federal Government has indicated that implementation of its N2.3 trillion Economic Sustainability Plan, ESP, has started, the Central Bank of Nigeria, CBN, is saying that in addition to all its major economic stimulus measures, it was also mobilising banks to back the government efforts.
Speaking at the Chartered Institute of Bankers’ annual dinner at the weekend, CBN Governor, Godwin Emefiele, hinted that all the economy recovery measures of the apex bank are already at advanced stages of implementation with some positive results already recorded.
He stated: “The fiscal and monetary authorities took unprecedented measures to prevent any long-term damage to the growth prospects of our economy. “Our first objective was to restore stability to the economy by providing assistance to households and businesses that had been severely affected by the pandemic. “In addition, we sought to stimulate economic activities through targeted interventions in critical sectors such as agriculture, manufacturing, electricity and construction.
“Some of these measures we took include: A cumulative reduction of the monetary policy rate from 13.5 to 11.5 percent between May and September 2020 in order to spur lending to the economy; A 1-year extension of the moratorium on principal repayments for CBN intervention facilities; Regulatory Forbearance was granted to banks to restructure loans given to sectors that were severely affected by the pandemic; Reduction of the interest rate on CBN intervention loans from 9 to 5 per cent and; Strengthening of the Loan to Deposit ratio policy, which has resulted in a significant rise in loans provided by financial institutions to banking customers.”
Other elements of the economic stimulus packages already being implemented, according to him, are: “The over N738 billion provided as credit to manufacturing related activities by the banks. Creation of N150 billion Targeted Credit Facility (TCF) for affected households and small and medium enterprises through the NIRSAL Microfinance Bank. Already, N149.21 billion has been disbursed to 316,869 beneficiaries.”
He added, “Given the resounding success of this program and its positive impact on output growth, we have decided to double this fund to about N300 billion, so as to accommodate many more beneficiaries and boost consumer expenditure which should positively impact output growth; The Bank also disbursed AgriBusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS) (N92.90 billion to 24,702 beneficiaries), Anchor Borrowers Program (ABP) by the sum of N164.91 billion to 954,279 beneficiaries ; Mobilization of key stakeholders in the Nigerian economy through the Coalition against COVID19(CACOVID), which led to the provision of over N28billion in relief materials to affected households, and the set-up of 39 isolation centers across the country; and creation of a N100 billion intervention fund in loans to pharmaceutical companies and healthcare practitioners intending to expand and strengthen the capacity of our healthcare institutions.”
Results of our interventions
Emefiele, said : The impact of these measures along with the removal of restrictions on movement and resumption of international travel, led to improvement in key indicators of the economy, as several economic activities returned to positive growth. Äccording to him : “A sectoral assessment of economic activities in the third quarter indicates that the economy witnessed positive growth in key sectors such as Information and Communications Technology, Agriculture, Classified as Confidential Health, Construction, Finance and Insurance and Public Administration. The Agricultural sector continued to record positive growth supported by productivity gains in the sector, interventions by the government, and improved demand for local produce. “The Manufacturing Purchasing Managers Index, in the month of November stood at 50.2 points, indicating an expansion in manufacturing activities after six months of contraction. A total of 18 sectors recorded positive growth in the third quarter relative to 13 sectors in the second quarter, which reflects significant improvement in economic activity. “Furthermore, 36 out of the 46 economic activities tracked by NBS, reflected positive improvements in growth, which includes activities that recorded negative growth. “In the Investors and Exporters Window, close to $150m is being traded daily as a result of our measures to sanitize activities in the foreign exchange market. In addition, the Nigerian Stock Exchange All Share index rose by 65 percent between April and November 2020, reflecting improved sentiments by investors on the fundamentals of publicly listed companies. “As a result of these measures, GDP growth in the third quarter, improved to -3.6 per cent from -6.1 per cent in quarter two, even though the economy fell back into a recession. “We however expect that Nigeria would emerge from the recession by the first quarter of 2021, due to high frequency data that indicates continued improvements in the non-oil sector of our economy.”