Mohamed El-Erian, who served as chair of President Barrack Obama's Global Development Council, highlighted challenges that confront central banks globally in his book titled "The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse."
According to El-Erian, central banks have been considered "the only game in town" because they have been shouldering the majority of economic burden and could be said to have taken on the role of salvaging the global economy at the behest of their national governments since the 2008 global financial crisis.
He further pointed out that central banks today have been venturing deeper into tricky terrain of unconventional monetary policies as a matter of necessity rather than choice, which have seen them heavily intervening in the functioning of markets.
He revealed that during the financial crisis in the United States of America (USA), a myriad of emergency funding windows were opened to enable cash to be injected into the financial system, and from virtually any and all directions.
This clearly mirrors what the Central Bank of Nigeria (CBN), under the leadership of Mr. Godwin Emefiele, as its governor, has been doing in its quest to support the diversification of Nigeria's mono-economy in the past eight years.
Within these past eight years, Emefiele has steered the apex bank in that direction, by adopting various unconventional tools to wade through different challenges.
For instance, at the inception of the President Muhammadu Buhari's administration in 2015, there was a vacuum with the delay in appointing Ministers to drive the country's fiscal policy and Emefiele was the one who filled that gap.
In addition, the central bank intensified its intervention in critical sectors of the economy in line with its development finance mandate. This saw the regulator developing home-grown policies to surmount challenges that confronted the economy.
It strengthened its development finance activities with focus on supporting farmers, entrepreneurs as well as small and medium scale businesses, through various intervention programs. Some of these initiatives included the Anchor Borrowers Program (ABP), Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) and the National Collateral Registry.
Also, the CBN introduced the Real Sector Support Fund, which is a facility created to provide cheap funding at single digit to new projects in the agriculture and manufacturing sectors. The aim was to boost output and create jobs.
In the agricultural sector, the ABP has ensured that Nigeria emerged from being a net importer of rice to becoming a major producer of rice.
It was in light of the success of the ABP, with regards to cultivation of rice and maize that the CBN extended the programme to other crops such as palm oil, tomatoes, among others.
Today, the central bank's interventions aimed at stimulating productivity across the real sector ensured that between January and February 2023, N12.65 billion was disbursed to three agricultural projects under the Anchor Borrowers' Programme, to bring the cumulative disbursement of fund under the programme to N1.09 trillion to over 4.6 million smallholder farmers cultivating or rearing 21 agricultural commodities on approved 6.02 million hectares of farmland across the country.
Interestingly, total repayment under the Anchor Borrower Programme is presently at 52.39 per cent of total exposure. Some of the crops that have received support under the Anchor Borrowers' Programme included 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 respectively in 2021 and 2022.
The ABP has 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.
Notwithstanding, the central bank has continued to reiterate its commitment to stimulating access to finance for the real sector in line with its developmental mandate.
The central bank has so far also released the sum of N23.70 billion under the N1 trillion Real Sector Facility to eight new real sector projects in agriculture, manufacturing, and services. Cumulative disbursements under the Real Sector Facility currently stands at N2.43 trillion, disbursed to 462 projects across the country, comprising 257 manufacturing; 95 agriculture; 97 services and 13 mining sector projects.
The central bank has also supported a lot of local manufacturers under the 100 for 100 Policy on Production and Productivity (PPP), designed to fast track productive activities in priority sectors.
It has released N3.01 billion under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital and operational expenditure of distribution companies (DISCOs) to improve their liquidity status and aid their recovery of legacy debt. This has brought the cumulative disbursement under the facility to N254.39 billion.
Determined to address inadequate foreign exchange supply in the economy, the Emefiele-led CBN had also introduced the "Race to $200 billion in FX Repatriation (RT200FX) Programme," to stimulate non-oil exports, with a $200 billion FX income target in the next three to five years.
"We have all been witnesses to the ever-changing fortunes of oil-exporting countries. Even those that have been reputed to manage their oil proceeds well also suffer from major shocks once oil prices plummet.
"In order to avoid these sudden adjustments to our economic life, we need to focus on strategies that can help us earn more stable and sustainable inflows of foreign exchange.
"We would need to follow the best practices of other countries and ensure that we protect ourselves a little bit from factors that are beyond our immediate control," Emefiele said during the unveiling of the RT200 FX programme.
Additionally, the CBN under Emefiele's leadership, introduced the Produce, Add Value and Export (PAVE) initiative that is tailored at making Nigerians to consume what have been produced locally, add value to then and even export the surplus.
It was an initiative akin to South-East Asia's much referenced export-led industrialisation policy, which changed the economic fortunes of countries such as South Korea, Taiwan, Malaysia and Singapore.
Emefiele explained that efforts at supporting small scale farmers and SMEs was based on awareness of the critical role they play in supporting Nigeria's economic recovery and growth, as well as in creating job opportunities for millions of Nigerians.
It has become clear that the country's overdependence on crude oil for foreign exchange revenue also means that shocks in the oil market are transmitted entirely to the economy via the foreign exchange markets.
This has, however, emboldened Emefiele to continue to influence and champion the drive to support infant industries and domestic production of goods and services.
Similarly, as part of its long-term strategy for strengthening the Nigerian economy, the CBN has established initiatives that would resolve the underlying challenges to long-term Gross Domestic Product growth, economic productivity, unemployment and poverty that had pervaded the economy over the past decades.
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Part of it was the establishment of credit bureau and the National Collateral Registry that were meant to improve access to credit in the domestic economy.
Also, as part of efforts to stimulate infrastructural development across the country, the Emefiele-led CBN, working with the fiscal authorities also established a N15 trillion infrastructure development company (INFRACO).
The CBN is also at the forefront of the drive for financial inclusion in the country, which has been made urgent by fact that close to 40 per cent of adult Nigerians do not have access to financial services.
Some of these measures initiated to drive financial inclusion included the promotion of alternative banking channels, agent banking and the Shared Agent Network Facility (SANEF), all of which are intended to deepen penetration of agent networks in underserved locations across the country.
Moreover, the Payment Service Banks, the Open Banking Initiative, the restriction on cash withdrawal in line with the cashless policy, the support for the creation of digital banks and financial technology companies were all steps to support financial inclusion in the country.
The Dangote Refinery would soon become functional and is expected to help in addressing a lot of the country's foreign exchange challenges. This was made possible by the dedicated support given to the project by the Emefiele-led CBN.
Today, Emefiele has planted the consciousness among Nigerians on the need to look inwards, produce and consume locally made goods in order to create jobs locally.
Therefore, Emefiele should be commended for leading efforts to diversify the productive base of the economy and should be encouraged to sustain the efforts.
