The Central Bank of Nigeria (CBN) has debunked rumours emanating from a recent statement by the Nigerian Economic Summit Group (NESG), which called to question some approaches taken by the apex bank to support the financial system’s stability as well as the measures embarked on for the enablement of faster economic recoveries on the backdrop of the negative impact of the coronavirus pandemic on the country.
In a statement signed by Isaac Okorafor, director of corporate communications, the CBN explained that as a result of the negative impacts of the COVID-19 pandemic, countries including Nigeria, were forced to enforce lockdown measures in order to control the spread of the pandemic. This action resulted in depressed economic activity in the first half of 2020.
The apex bank reiterated that Nigeria’s economy is not immune to the crisis on the back of the 65 per cent drop in prices of commodity, global supply chains disruptions and the unprecedented outflow of debt and equity funds from emerging markets between March and May 2020 to the tune of $100 billion, adding that these activities led to over 60 per cent decline in revenue due to the Federation Account, a significant drop in the inflows of foreign currency, which in turn resulted in the naira dollar exchange rate in the currency market and rise in inflation as a result of the exchange rate pass-through effect of imported inflation.
“The Central Bank of Nigeria like other central banks across the world had to embark on extraordinary measures in order to stabilize the economy from an extraordinary shock. We took steps to increase the flow of credit to critical sectors of the economy, in order to enable faster recovery of the economy. We also sought to prevent the economic crisis from spilling into a major financial crisis,” the statement read.
But specifically, the CBN said the following measures were deployed by it to address the challenges, namely, a one-year extension of a moratorium on principal repayments for CBN intervention facilities; strengthening of the loan to deposit ratio policy, which, it said, has resulted in a significant rise in loans provided by financial institutions to banking customers, adding that loans given to the private sector have risen by over 21 per cent over the past year; creation of N50 billion target credit facility for affected households and small and medium enterprises through the NIRSAL Microfinance Bank; creation of a N100 billion intervention fund in loans to pharmaceutical companies and healthcare practitioners intending to expand and strengthen the capacity of healthcare institutions; creation of a research fund, which is designed to support the development of vaccines in Nigeria; a N1 trillion facility in loans to boost local manufacturing and production across critical sectors; regulatory forbearance was granted to banks to restructure loans given to sectors that were severally affected by the pandemic; and mobilisation of key stakeholders in the Nigerian economy, which led to the provision of over N23 billion in relief materials to affected households, and the setup of 39 isolation centres across the country.
It said it felt compelled to inform the Nigerian public of the existing relations between the two organisations, and highlighting that the comment about CBN’s engagement in development finance, which was aimed at addressing the economic needs of critical sectors to improving livelihoods, reducing poverty, and promoting inclusive growth, noted that the bourgeoisie atop the NESG may not feel the impact of the bank’s development finance activities as many ordinary Nigerians, including smallholder farmers, households and medium-scale entrepreneurs across the country know better.
“As encapsulated in our most recent monthly economic report published on the bank’s website, a total of N38.11 billion was disbursed as loans to 44,458 beneficiaries through the NIRSAL Microfinance Bank (NMFB). This number has risen to N59.12 billion; supporting 103,189 beneficiaries as of August 2020.
“Furthermore, by alluding to the fact that money cannot address constraints in the agriculture sector, the NESG failed to realize that access to credit is listed among the three major challenges faced by farmers and businesses in Nigeria. While the Federal Government is seeking to address issues such as access to electricity and logistic constraints faced by businesses, it was vital for the CBN to address an area that we had sufficient ability to impact upon, given the nature of the crisis we faced, which is improving the flow of credit to critical sectors of the economy,” the apex explained.
The CBN expressed disappointment over the matter from the NESG, stating that the group’s current leadership has fallen short of the standard through the use of ambushed press statements, made up contrived allegations, adding that the allegations are reflective of sinister motives and malicious intent