Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has painted a beautiful picture of the Nigeria’s economy despite the crippling effects of coronavirus.
According to him, the country’s combined stimulus measures have so far hit about $18 billion, “which is close to 4.5 percent of the Gross Domestic Product.
“Contrary to expectations by some analysts that the covid-19 pandemic would lead to a prolonged downturn in the global economy, they did not quite envisage the proactive forcefulness with which policymakers could respond to the crisis. Indeed, the unprecedented amount of stimulus, along with the successful development of several vaccines, and easing of movement restrictions, helped to support a robust and faster-than- expected recovery in the 2nd half of the year.”
The CBN boss, who spoke today, February 27 at a one-day special summit on the economy by bank chief executive officers with theme: “CBN/ Bankers’ Committee’s Initiative for Economic Growth,” said that the agriculture sector has been the key driver in taking the Nigerian economy away from negative growth in the 4th quarter of 2020.
“It is important that we not only sustain measures aimed at increasing productivity of the sector, but also ensure that we continue to produce items that can be produced locally rather than resorting to imports of these items.”
Emefiele said that the apex bank did envisage that the closure of border shall be in perpetuity even though the bank advocated for the closure of borders because of some of the unfortunate incident of smuggling of goods into our economy, that were undermining the growth of the local industries.
He said that the CBN will remain at forefront, to fight smugglers in this country, stressing: “we will not allow smugglers of goods that are banned or goods produced in the country, to be imported into the country.”
According to Emefiele, the drop in crude oil earnings and associated reduction in foreign portfolio inflows significantly affected the supply of foreign exchange into Nigeria. In order to adjust for the decrease in supply of foreign exchange, the naira depreciated at the official window from N305/$ to N360/$ and now hovers around N410/$.
“With the decline in our foreign exchange earnings and subsequent adjustments in the value of the naira vis-à-vis the US dollar, the CBN has continued to implement a demand management framework, which is designed to support improved production of items that can be produced in Nigeria, and further conservation of our external reserves.”
He said that such measures have helped to prevent a significant decline in the nation’s reserves.
“Our external reserves currently stand at over $35 billion and are sufficient to cover more than seven months of import of goods and services, even though the international rule of thumb is for reserves to cover about three months of imports.”
He said that domestic financial conditions have remained supportive to growth, due to measures being implemented by the CBN, saying that aggregate domestic credit grew by 17 percent between January and December 2020
He highlighted the effects of the CBN’s intervention programs, the country’s LDR policy and accommodative lending rates by the banks.
He said that with the discovery and deployment of vaccines, 2021 will be a year of massive global recovery and Nigeria must not be left out.
In order to drive and sustain this recovery therefore, Emefiele said that Nigeria needs to sustain the accommodative fiscal and monetary policy measures aimed at improving access to finance to households and businesses.