The CBN governor assures Nigerians of the bank’s determination to help the nation’s industries to grow and create jobs
The Central Bank of Nigeria, CBN, has reinstated its commitment to supporting measures that would wean Nigeria from its dependence on imported goods. Godwin Emefiele, governor, CBN, said the bank is committed to creating wealth and putting in place strong policies for creating jobs for the growing youth population.
Speaking at the 2018 annual dinner of the Chartered Institute of Bankers of Nigeria, CIBN, in Lagos, Emefiele said the apex bank is ever more committed to promoting a more stable and resilient financial system. Emefiele, who spoke on the topic: ‘Strengthening the Economic Recovery Process in Nigeria’, said the CBN will always act in good faith, with the best available information and in cognisance of current economic conditions.
According to him, the bank will continue to pursue price and financial system stability, support job creation on a massive scale and ensure a more inclusive growth in the economy. He said after a wave of scathing criticism that trailed some of the bank’s past policies, many of these measures are today being widely applauded as brilliant and conscientious actions.
“As policymakers, our perspectives are typically different from many talking heads, as our data, information sources and outlook remains superior. Given the structure of our economy, CBN’s attention is primary focused on three factors, including; rising trade tensions between the US and China could taper global growth, and by extension demand for commodities such as crude oil.
“Secondly, how to ensure that Nigeria’s economy is insulated from the adverse consequences facing emerging and frontier markets, due to rising rates in the United States. Third, what is the likely impact on the crude oil market from the sharp rise in US oil production, which currently stands at 11.7 million barrels per day and is likely to rise to over 14 million barrels in two years?
“As you may recall, Nigeria’s political-economy experienced significant challenges over the last few years revealing its structural deficiencies particularly with regards to its dependence on crude oil, as a major source of its revenue and foreign exchange, as well as over dependence of our people on imported items even when these goods could be produced locally. The 60 percent decline in crude oil prices between 2015 and 2016 helped shape the trajectory of our economy, ultimately triggering the economic recession in first quarter of 2016,” he said.
Emefiele regretted that the country’s overdependence on crude oil for foreign exchange, FX, revenue meant that shocks in the oil market were transmitted entirely to the economy through the FX markets. This, according to him, means that manufacturers and traders, who required forex to purchase their inputs as well as goods, were faced with a depleting supply of foreign exchange in the country.
He said the impact of the decline on the country’s reserves was evident in the rise in the value of the US Dollar relative to the Naira; and a rise in the Consumer Price Index, CPI, due to the increase in the cost of imported inputs and goods. He said: “In a bid to contain rising inflation and to cushion the impact of the drop in FX supply on the Nigerian economy, the Bank took three bold steps: First, the CBN tightened money supply in order to contain inflation while improving yields in local bonds, which attracted the attention of foreign investors.
“Second, we analysed our import bill and encouraged manufacturers to consider local options in sourcing their raw materials, by restricting access to foreign exchange on 41 items. Third, the Investors and Exporters FX, I&E, window was introduced, which allowed investors and exporters to purchase and sell foreign exchange at the prevailing market rate.
“The impact of these three measures led to an increase in foreign exchange inflows into the country; transactions in the I&E FX window reached $24 billion ($6 billion net inflows) in 2017 and Nigeria’s foreign exchange reserves rose to over $48 billion at the end of May 2018 from $23 billion in October 2016.”
– Dec. 3, 2018 @ 13:57 GMT |