The Governor of, the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has said that the intervention schemes and other monetary policy initiatives of the apex bank helped in sustaining the productive capacity of the economy amid COVID-19 and the recessions that occurred in recent times.
Emefiele said this in his address at the 57th Annual Bankers’ Dinner with the theme, ‘Radical Responses to Abnormal Episodes: Time for Innovative Decision-making’, held in Lagos.
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He observed that the economy is battling with headwinds occasioned by external shocks and called on members of the Bankers’ Committee to devise ingenious strategies that would provide appropriate policy choices in dealing with the situation.
He said, “Given Nigeria’s fundamental vulnerabilities, it is imperative to find sustainable ways of insulating the economy from continued exogenous challenges.
“In addition to the relentless waves of abnormal shocks that are battering the global economy, domestic conditions are exposed to spillovers from the impulsive reactions in some key economies.
“It, therefore, behooves us to adequately identify and understand the likely implications of these undercurrents on the Nigerian economy.”
He said that the various intervention schemes initiated by the apex bank in response to specific economic challenges constituted a major success factor in the recoveries seen in the economy in previous quarters and the impact on the real sector, especially agriculture.
He said the strategic role of agriculture in driving economic growth was a major reason for the monetary policy rates’ upward adjustments in recent quarters towards curbing inflation which is significantly driven by the high cost of food as the oil sector records negative growth.
“The agriculture sector remained the critical factor behind the continuing resilience of the domestic economy.
“This is an affirmation of the success of the CBN’s development finance initiatives in the non-oil sector, particularly in the agriculture sector, which has helped to boost domestic output and create jobs locally”, he stated.
He noted that the economy had recorded eight consecutive quarters of positive output with domestic growth rates improving from negative 1.92 percent in 2020 to 3.40 percent in 2021 and further to 3.54 percent as of the first quarter of 2022, with a significant contribution by agriculture.
“The agriculture sector remained the critical factor behind the continuing resilience of the domestic economy,” he said.
He noted that the strategic importance of food as a critical component of the agriculture sector is linked to the high rate of inflation in recent times.
“Food remains the major component of the domestic consumer price basket.
“The annualized uptick in headline inflation mirrors the 6.21 percentage points upsurge in food inflation to 23.34 percent in September.
“During this period, core inflation also resumed an upward movement from 13.87 percent in January 2022 to 17.60 percent.
“In addition to harsh global spillovers, exchange rate adjustments and imported inflation; inflation was also driven by local factors such as farmer-herder clashes in parts of the food belt region.”
He also stated that food remains the major component of the domestic consumer price basket, pointing out that the annualized uptick in headline inflation mirrors the 6.21 percentage points upsurge in food inflation to 23.34 percent in September.
“During this period, core inflation also resumed an upward movement from 13.87 percent in January 2022 to 17.60 percent. In addition to harsh global spillovers, exchange rate adjustments, and imported inflation; inflation was also driven by local factors such as farmer-herder clashes in parts of the food belt region.
“Noting the adverse effect of spiraling inflation on inertia and expectations, the CBN understands the need for supply-side interventions in critical sectors to minimize excess demand gaps.”
On private sector credit, the apex bank boss disclosed that the recent drive of the CBN to channel cheaper lending to the real sector had led to the marked growth of banking system credits to the private sector.
He added that, in support of domestic productivity, credit to the core private sector of the economy has more than doubled, in the last five years, expanding from N13.2 trillion in end-2018, to N16.2 trillion in end-2019, before surging to N27.7 trillion in September 2022.
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In support of domestic productivity, Emefiele disclosed that credit to the core private sector of the economy has more than doubled, in the last five years, expanding from N13.2 trillion in end-2018, to N16.2 trillion in end-2019, before surging to N27.7 trillion as of September 2022.
He said the manufacturing sector — micro, small and medium enterprises (MSMEs), and the services sector need to be reinforced too, not only supporting domestic needs but also becoming internationally competitive.
This is given the massive supply chain disruptions that exposed the dependence and vulnerability of many emerging market development economies to overseas economies.
