With a few weeks to the next meeting of the Monetary Policy Committee (MPC), the last for the year, governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has said there is a high possibility that a downward review of interest rates will be considered in view of declining inflation trend in the economy.
Speaking at the annual bankers’ dinner hosted by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos during the weekend, Emefiele said monetary policy stance could change when the underlying fundamentals become supportive.
“If the pace of disinflation becomes adequate and we see inflation at predicted levels, I am very optimistic that MPC may begin to see strong justification for an easing of monetary policy, which may further accelerate the recovery process,” he explained.
The CBN governor said he expects re-doubling of strong policy co-ordination, collaboration and co-operation between policy makers which flourished during the very difficult times.
“To sustain our recovery, the need is greater now than ever for a
robust policy co-ordination between the key aspects of economic policymaking space.
“In Nigeria, this would include fiscal, monetary, exchange, and trade policies, which must be targeted at protecting farmers to boost agricultural outputs, support local companies and enhance manufacturing and industrial capacities, with a view to diversifying the economy away from oil and fossil fuels,” Emefiele said.
Commenting on the effects of the CBN policies on the Nigerian economy, he said: “The pains that were associated with some of the CBN’s policies have become major gains in our economy. We have seen many manufacturers bounce back from near comatose to running shifts. We have seen many farmers smiling to the bank and going back to their farmlands in due seasons.
“We have seen some young Nigerians entering the rice-farming sphere rather than wait for ‘white-collar’ jobs. And we have seen palm-oil corporations declare unprecedented profits because of CBN’s policies.
On these and other bases, I believe we can build the Nigeria of our dreams.”
He called on the stakeholders to set aside their complaints, differences and distractions, and collaborate with the apex bank so that together they would create a Nigeria of balanced growth and shared prosperity.
Emefiele noted that the dogged implementation of the apex bank’s policy, which restricts importers of certain items from access to foreign exchange from the Nigerian foreign exchange market, has led to improvements in the domestic production of those items and a reduction in Nigeria’s import bill.
Asserting that local manufacturers were recording profits and major boosts to their revenue due to the policy, he said in spite of opposition to the introduction of the policy restricting 41 items from
Nigeria’s foreign exchange market, the faithful implementation of the policy had led to a considerable decline in Nigeria’s import bill.
According to him, from an average of about $5.5 billion, the nation’s monthly import bill has fallen consistently to $2.1 billion in 2016 and $1.9 billion by half year 2017.
He cited the example of Psaltry International Limited (PIL), an agro-allied company based in Oyo State, which, he said, the introduction of the forex restriction policy had reversed its fortunes through starch making activities.
Emefiele noted that prior to the policy, psaltry had only few customers and a huge backlog of inventory. However, due to the policy, the company now has over 50 multinational clients, including Nestle and Unilever, thereby saving the country $7 million in foreign exchange drawdown over the two years of the policy.
While also asserting that the forex access restriction policy had freed Nigeria from the perennially embarrassing importation of toothpicks, the CBN governor disclosed to the delight of the audience that as part of the gains from the policy and in line with an agreement reached with Unilever, which moved its production facility
to another country a few years ago, the company had agreed to commission a new Blue Band factory in Agbara, Ogun State, before the end of 2017.
Emefiele further disclosed that the implementation of the policy had also boosted local rice production in Nigeria. He recalled that Nigeria, in 2012, imported about 1.2 million metric tonnes of rice from a trading partner, but that in 2016, one full year of implementation of the policy, rice exports to Nigeria had fallen by 99 percent to only 784 metric tonnes.
“These are clearly verifiable successes of government’s attempts to create jobs locally, improve the wealth of our rural population, improve industrial capacities and ultimately attain economic growth in Nigeria,” he said.
The CBN governor also disclosed that, till date, the apex bank had committed close to N45.5 billion under the Anchor Borrowers’ Programme with active participation across 30 states of the federation.
He said the apex bank was committed to doing more to boost the production of targeted crops such as rice, maize, palm oil, sorghum, and tomatoes among others.
According to him, “To consolidate on the gains of the Anchor Borrowers programme and reach more deserving small holder farmers nationwide, the CBN is forming strategic partnerships with agricultural commodity associations.
“These strategic partnerships have already started yielding results with the commencement of the Rice Farmers Association of Nigeria (RIFAN) Anchor Borrowers programme where about 300, 000 rice farmers across 20 states will be supported under the upcoming dry season cultivation.
“An additional two million metric tonnes of paddy rice is expected to be produced under the RIFAN Anchor Borrowers programme. This is in addition to the various private sector and state governments’ collaborative initiatives being implemented.
“In Kebbi State alone, over 78,000 smallholder farmers are now cultivating about 100,000 hectares of rice farms since 2016. It is expected that over two million metric tonnes of rice will be produced in that state alone annually.
“We have also seen a sharp drop in imports of rice from several countries. To give one example, data from Thailand’s Rice Exporters Association indicate that, in 2012, about 1.2 million metric tonnes of rice was exported to Nigeria. However, by 2016, which was the first full year of implementation of our policy, rice exports to Nigeria had fallen by 99 per cent to only 784 metric tonnes.
“This significant reduction in imports of rice from Thailand represents a saving of over $600 million to Nigeria in 2016 alone. It is heart-warming to note that this fall in imports has been largely filled by a boost in local rice production.
“For example, employees at Labana Rice Mills in Kebbi State are trying to keep pace with demand, processing 320 tonnes of rice a day, a 250 per cent increase from the previous year.
“From Kano, UMZA rice has expanded its milling capacity substantially to the extent that, with the recent bumper paddy harvest, the company
today takes delivery of over 100 trucks of paddy rice daily.”
The CBN governor maintained that there are clearly verifiable successes of government’s attempts to create jobs locally, improve the wealth of rural population, improve industrial capacities and ultimately attain economic growth in Nigeria.