As Nigerians become more and more concerned about the fortunes of the economy. Balance Magazine in this special report takes a look at efforts of the Apex Bank in rejuvenating the economy.
The Central Bank of any nation and the person who sits behind its wheels in the capacity of Governor and ipso facto, the quality of policies such apex bank , from time to time, churns out can to a large extent, determine whether the country’s economy will remain afloat or sink, whether there will be growth or recession. This point cannot be overemphasized.
In Nigeria, as in many other climes, the Central Bank has responsibility for the formulation of monetary policy, regulation of the banking industry, Banker to the Government, Lender of last resort and is responsible for the printing and minting of national currency.
The Central Bank of Nigeria under the leadership of Mr. Godwin Emefiele has demonstrated its passion for the deepening and growth of the national economy. It has shown by several examples that it cares about the banking industry and would do its best to ensure its survival and profitability, and is willing to ensure inclusiveness for all and sundry.
Rather than lay back in the cocoon of supervising the monetary policy, this CBN administration has chosen to engage hands-on some of the economic challenges such as unemployment, food security and poverty.
One of its boldest and most pragmatic moves so far is the introduction of the Anchor Borrowers Scheme which was launched in 2016 by President Muhammadu Buhari. Through the program, about N190 billion naira (inputs and labour) has been disbursed to over a million small holder farmers (SHF) over the last five years resulting in enhanced production of such crops as rice, sorghum, barley, maize, millet as well as livestock and poultry. To prevent labour loss the farmers are connected to processors otherwise called off-takers or anchors who buy the harvests off the farmers.
As with any human policy, the programme has elicited both praise and criticism from various sections of the divide. While enjoying rave reviews as a very creative policy, the poor repayment rate of the loan beneficiaries, which in many cases arises from the non-chalant attitude of some Nigerians who believe such grants to be their own privileged piece of the national cake, has drawn the ire of critics and rightfully so. The bank will just have to step up its loan recovery strategies as a way of ensuring the sustainability of the scheme.
But of course the loan beneficiaries whose lives and statuses have improved substantially, who have crossed not just from joblessness to employment but also becoming entrepreneurs (employers of labour) cannot but continually commend the wisdom behind the programme.
Besides, the enhanced local production of rice coupled with the policy of closure of land borders to frustrate the smuggling in of the product from neighbouring countries has helped in no small measure to shore up our national foreign reserves.
Prior to this policy combo, food importation topped the list of items of expenditure that gulped our scarce resources constantly endangering the health of our economy but that suffocating leakage has been blocked for good.
Still in the push towards ameliorating the scary unemployment situation and to avert the looming danger it portends, the apex bank recently issued guidelines for the operation of Non-Interest Financial Institutions (NIFIs) in response to the growing demand by investors desiring to provide this class of banking services. Leveraging on the provisions of the BOFIA, the CBN defines Non- Interest Financial Institutions as “a bank or other Financial Institution which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with any established non-interest banking principles”. It categorises the institutions into two: those based on Islamic commercial jurisprudence and those based on any other established non-interest principle.
This is an alternative window for fund seekers who are unable to cope with the stringent demands of the traditional money deposit banks which rely mainly on the interest they generate from their loans to continue profitably in business.
The impact of this policy is expected to show in increase in small and medium enterprises and expansion of existing ones in the weeks and months ahead leading to more employment opportunities for the teeming unemployed who are mostly youths. It is hoped that production capacity will be substantially improved as the programme takes root.
The introduction of Loan to Deposit Ratio (LDR) which compels banks to provide funds for business loans to a given percentage of their total deposits is a huge intervention that seeks to facilitate and amplify the scope of businesses particularly in the real sector. Tope Fasua calls it a “genius idea”. The guideline comes with a serious sanction for failure to comply and the apex bank did bare its fangs when some banks failed to comply leading to huge fines which were later reversed but the message had been passed to the effect that there will be consequences for non-compliance and that the CBN will not brook any such defiance. Certainly with this development, access to funds by businesses has been greatly improved. The banks may not have been too comfortable with this initially but it stands to reason that in the long run, it will most likely turn out a win-win for all stakeholders.
Indeed, it is about time that our banks are redirected to carry out their core banking functions of lending especially to businesses as well as providing technical assistance which will lead to economic growth and reduced unemployment. There is no overemphasizing the point that the more people are gainfully employed the less their chances of engaging in crime and criminality because as they say the idle mind is the devil’s workshop.
The CBN’s COVID-19 stimulus package is another talking point which has won the bank many admirers and supporters. In the eye of the COVID-19 storm, the apex bank proved to be a dependable bulwark for the Nigerian people deftly churning out tailor- made intervention packages to soothe the effects of the emergent existential challenges. The apex bank has gone to great lengths to mitigate the effect on businesses, households and the economy in general. It is to this end that CBN provided a N100 billion stimulus package for the health care sector, N50 billion for households and 1.2 trillion stimulus for SMEs. Economic analysts agree that this is a major step in the right direction and indeed commend the CBN”s dynamism but insist that the size of the stimulus needs to be substantially increased. Rislanudeen Muhammed weighs in by saying, “even though it is not enough, one has to appreciate that there is a stronger effort”. Tope Fasua adds “, what’s the percentage of the stimulus that we’re putting out in general. It’s still less that 5%. But if we look at a country like the United States, doing almost 15% of its GDP for stimulus, and the U.K giving about 12%. I think we need to be looking at doing 20% of our GDP.”
One very heartwarming aspect of the intervention which promises to leave a lasting positive impact on the country’s health sector is the challenge thrown by the CBN governor to Nigerian scientists to put on their research caps and produce a Nigerian COVID-19 vaccine with a promise that the bank will bankroll it. The challenge has since been taken up and over 20 proposals requiring about N67b funding have been submitted to the bank. In walking the talk, the bank recently set up the Body of Experts for Scheme under the Chairmanship of the Director-General of the National Agency for Food and Drug administration and Control (NAFDAC), Professor Mojisola Adeyeye, to assess and evaluate the submissions. A breakthrough in this area will be a truly big and beautiful feather in the cap of the CBN leadership of the bank as well as a significant, landmark achievement for our dear nation.
On the concern in many quarters that all these interventions will fuel inflation, Dr. Fasua says “We’re going to suffer huge inflation, but this is the time, it’s just like the post-world war time in Germany where inflation rose to 200%. Inflation is what we have to suffer in the interim until things settle down. But we must ensure that we are directing these monies towards productive measures”. Dr. Rislanudeen also concurs with this view as he says “It may be inflationary but it doesn’t matter because the CBN will withdraw that money by all means what is technically called quantitative easing which essentially means printing money, drawing from the balance sheet of the bank. And the balance sheet of the Central Bank is strong enough to allow for that.”
Still in the march against the pandemic, the Central Bank mobilized members of the Bankers’ committee and the Organised Private Sector as well as high net worth individuals to raise funds towards combating it. Within a month or thereabout, the Private Sector Coalition Against COVID-19 otherwise known as CACOVID was able to raise over N20 billion naira. The funds were later taken over by the Federal Government. It is unclear whether the take-over of the funds was in line with the CBN’s original vision behind raising the funds or whether it had its own plans of how to apply the fund but was suddenly overruled. Whatever be the case, the spontaneity and size of the response to the apex bank’s call for funds is a salient endorsement of the CBN leadership and demonstration of trust in its integrity.
Consistent with its drive for inclusiveness, the bank has at various times reached out and provided accommodation within the system to various stakeholders through moral suasion, policy tweaks and assurances. Recently Emefiele reached out to Conglomerates in the country reassuring them that as much as possible the bank and the Nigerian government will continue to support them. While maintaining the stance that the CBN will not support the importation of items that can be produced in Nigeria, The Governor pledged the Bank’s willingness to provide foreign exchange to companies that required such for raw materials and that cannot be obtained in the country. At the virtual meeting held with the Chief executives of the Conglomerates, Emefiele further assured that the Bank will collaborate with the relevant government agencies to nip smuggling in the bud in addition to collaborating with other fiscal authorities to improve the ease of doing business in Nigeria, with a view to simplifying their import and export processes.
Further, in the heat of the pandemic, the bank instructed a new regime of rates crashing it from 9% to 5% on all its intervention facilities being handled by Other Financial institutions (OFIs) such as Microfinance banks, Primary Mortgage Institutions and a rescheduling of terms and conditions to provide a breather from the suffocating impact of the disease on the economies of both businesses and individuals alike.
Another commendable directive which the apex bank gave to the money deposit banks is the one that insists on shorter timelines for reversing all atm and POS terminal errors. With this development, failed “On Us” ATM transactions are to be reversed instantly no longer within three days while Failed “NOT-ON-Us” ATM transactions are now to be resolved within a maximum period of 48 hours instead of the 5 working days it used to a take. This directive which became effective from June 8th, 2020 has considerably reduced the hardship of bank customers.
Also when the banking sector was about to retrench a good number of staff in order to weather the COVID- 19 storm, the Bank came to the rescue asking that it should be carried along before any such action is carried out. This singular intervention may be what has kept some bank staff in employment till today.
Asked to comment on the performance of the apex bank under the leadership of Mr. Godwin Emefiele , Dr. Rislanudeen Muhammed has this to say, “I think he understands the dynamics of the Nigerian Economic situation. He became very bullish in terms of development financing. He came up with this issue of Anchor Borrowers Programme, massive support for NIRSAL and other development finance institutions and he became very focused in ensuring that he meets up with the presidential agenda of producing what we eat, eating what we produce. At the start of this COVID-19 he became proactive first, by setting up funds of 100 billion to support healthcare, 50 billion to support people in NIRSAL and then 1.2 trillion stimulus package to support SMEs. To my mind, in the circumstance that Gov. Emefiele found himself, he has done well.”
Dr. Tope Fasua says, “Well I think the CBN, right now has been very maverick, and when I say maverick the fact that they are intervening in several sectors though (some) people blame them for that. If the Central Bank is doing just its monetary policy, the monetary policy alone will not get it done because the monetary policy involves juggling interest rates, inflation, liquidity ratio and monetary policy rates. So I think the Central Bank is not doing badly, if he continues to get criticized, then of course you know that when there’s one champion in a whole community you can expect that he will be under criticism.”
Someone once said, if you are a minister, minister well, if you are a governor govern well, if you are a driver, drive well etc.
Against the background of all the foregoing, in the very harsh business environment, with COVID-19 on the prowl, you can be the judge whether the Governor of the Central Bank, Mr. Godwin Emefiele has governed well or whether the bank under his leadership has “Centrally banked” well.
The Central Bank of any nation and the person who sits behind its wheels in the capacity of Governor and ipso facto, the quality of policies such apex bank , from time to time, churns out can to a large extent, determine whether the country’s economy will remain afloat or sink, whether there will be growth or recession. This point cannot be overemphasized.
In Nigeria, as in many other climes, the Central Bank has responsibility for the formulation of monetary policy, regulation of the banking industry, Banker to the Government, Lender of last resort and is responsible for the printing and minting of national currency.
The Central Bank of Nigeria under the leadership of Mr. Godwin Emefiele has demonstrated its passion for the deepening and growth of the national economy. It has shown by several examples that it cares about the banking industry and would do its best to ensure its survival and profitability, and is willing to ensure inclusiveness for all and sundry.
Rather than lay back in the cocoon of supervising the monetary policy, this CBN administration has chosen to engage hands-on some of the economic challenges such as unemployment, food security and poverty.
One of its boldest and most pragmatic moves so far is the introduction of the Anchor Borrowers Scheme which was launched in 2016 by President Muhammadu Buhari. Through the program, about N190 billion naira (inputs and labour) has been disbursed to over a million small holder farmers (SHF) over the last five years resulting in enhanced production of such crops as rice, sorghum, barley, maize, millet as well as livestock and poultry. To prevent labour loss the farmers are connected to processors otherwise called off-takers or anchors who buy the harvests off the farmers.
As with any human policy, the programme has elicited both praise and criticism from various sections of the divide. While enjoying rave reviews as a very creative policy, the poor repayment rate of the loan beneficiaries, which in many cases arises from the non-chalant attitude of some Nigerians who believe such grants to be their own privileged piece of the national cake, has drawn the ire of critics and rightfully so. The bank will just have to step up its loan recovery strategies as a way of ensuring the sustainability of the scheme.
But of course the loan beneficiaries whose lives and statuses have improved substantially, who have crossed not just from joblessness to employment but also becoming entrepreneurs (employers of labour) cannot but continually commend the wisdom behind the programme.
Besides, the enhanced local production of rice coupled with the policy of closure of land borders to frustrate the smuggling in of the product from neighbouring countries has helped in no small measure to shore up our national foreign reserves.
Prior to this policy combo, food importation topped the list of items of expenditure that gulped our scarce resources constantly endangering the health of our economy but that suffocating leakage has been blocked for good.
Still in the push towards ameliorating the scary unemployment situation and to avert the looming danger it portends, the apex bank recently issued guidelines for the operation of Non-Interest Financial Institutions (NIFIs) in response to the growing demand by investors desiring to provide this class of banking services. Leveraging on the provisions of the BOFIA, the CBN defines Non- Interest Financial Institutions as “a bank or other Financial Institution which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with any established non-interest banking principles”. It categorises the institutions into two: those based on Islamic commercial jurisprudence and those based on any other established non-interest principle.
This is an alternative window for fund seekers who are unable to cope with the stringent demands of the traditional money deposit banks which rely mainly on the interest they generate from their loans to continue profitably in business.
The impact of this policy is expected to show in increase in small and medium enterprises and expansion of existing ones in the weeks and months ahead leading to more employment opportunities for the teeming unemployed who are mostly youths. It is hoped that production capacity will be substantially improved as the programme takes root.
The introduction of Loan to Deposit Ratio (LDR) which compels banks to provide funds for business loans to a given percentage of their total deposits is a huge intervention that seeks to facilitate and amplify the scope of businesses particularly in the real sector. Tope Fasua calls it a “genius idea”. The guideline comes with a serious sanction for failure to comply and the apex bank did bare its fangs when some banks failed to comply leading to huge fines which were later reversed but the message had been passed to the effect that there will be consequences for non-compliance and that the CBN will not brook any such defiance. Certainly with this development, access to funds by businesses has been greatly improved. The banks may not have been too comfortable with this initially but it stands to reason that in the long run, it will most likely turn out a win-win for all stakeholders.
Indeed, it is about time that our banks are redirected to carry out their core banking functions of lending especially to businesses as well as providing technical assistance which will lead to economic growth and reduced unemployment. There is no overemphasizing the point that the more people are gainfully employed the less their chances of engaging in crime and criminality because as they say the idle mind is the devil’s workshop.
The CBN’s COVID-19 stimulus package is another talking point which has won the bank many admirers and supporters. In the eye of the COVID-19 storm, the apex bank proved to be a dependable bulwark for the Nigerian people deftly churning out tailor- made intervention packages to soothe the effects of the emergent existential challenges. The apex bank has gone to great lengths to mitigate the effect on businesses, households and the economy in general. It is to this end that CBN provided a N100 billion stimulus package for the health care sector, N50 billion for households and 1.2 trillion stimulus for SMEs. Economic analysts agree that this is a major step in the right direction and indeed commend the CBN”s dynamism but insist that the size of the stimulus needs to be substantially increased. Rislanudeen Muhammed weighs in by saying, “even though it is not enough, one has to appreciate that there is a stronger effort”. Tope Fasua adds “, what’s the percentage of the stimulus that we’re putting out in general. It’s still less that 5%. But if we look at a country like the United States, doing almost 15% of its GDP for stimulus, and the U.K giving about 12%. I think we need to be looking at doing 20% of our GDP.”
One very heartwarming aspect of the intervention which promises to leave a lasting positive impact on the country’s health sector is the challenge thrown by the CBN governor to Nigerian scientists to put on their research caps and produce a Nigerian COVID-19 vaccine with a promise that the bank will bankroll it. The challenge has since been taken up and over 20 proposals requiring about N67b funding have been submitted to the bank. In walking the talk, the bank recently set up the Body of Experts for Scheme under the Chairmanship of the Director-General of the National Agency for Food and Drug administration and Control (NAFDAC), Professor Mojisola Adeyeye, to assess and evaluate the submissions. A breakthrough in this area will be a truly big and beautiful feather in the cap of the CBN leadership of the bank as well as a significant, landmark achievement for our dear nation.
On the concern in many quarters that all these interventions will fuel inflation, Dr. Fasua says “We’re going to suffer huge inflation, but this is the time, it’s just like the post-world war time in Germany where inflation rose to 200%. Inflation is what we have to suffer in the interim until things settle down. But we must ensure that we are directing these monies towards productive measures”. Dr. Rislanudeen also concurs with this view as he says “It may be inflationary but it doesn’t matter because the CBN will withdraw that money by all means what is technically called quantitative easing which essentially means printing money, drawing from the balance sheet of the bank. And the balance sheet of the Central Bank is strong enough to allow for that.”
Still in the march against the pandemic, the Central Bank mobilized members of the Bankers’ committee and the Organised Private Sector as well as high net worth individuals to raise funds towards combating it. Within a month or thereabout, the Private Sector Coalition Against COVID-19 otherwise known as CACOVID was able to raise over N20 billion naira. The funds were later taken over by the Federal Government. It is unclear whether the take-over of the funds was in line with the CBN’s original vision behind raising the funds or whether it had its own plans of how to apply the fund but was suddenly overruled. Whatever be the case, the spontaneity and size of the response to the apex bank’s call for funds is a salient endorsement of the CBN leadership and demonstration of trust in its integrity.
Consistent with its drive for inclusiveness, the bank has at various times reached out and provided accommodation within the system to various stakeholders through moral suasion, policy tweaks and assurances. Recently Emefiele reached out to Conglomerates in the country reassuring them that as much as possible the bank and the Nigerian government will continue to support them. While maintaining the stance that the CBN will not support the importation of items that can be produced in Nigeria, The Governor pledged the Bank’s willingness to provide foreign exchange to companies that required such for raw materials and that cannot be obtained in the country. At the virtual meeting held with the Chief executives of the Conglomerates, Emefiele further assured that the Bank will collaborate with the relevant government agencies to nip smuggling in the bud in addition to collaborating with other fiscal authorities to improve the ease of doing business in Nigeria, with a view to simplifying their import and export processes.
Further, in the heat of the pandemic, the bank instructed a new regime of rates crashing it from 9% to 5% on all its intervention facilities being handled by Other Financial institutions (OFIs) such as Microfinance banks, Primary Mortgage Institutions and a rescheduling of terms and conditions to provide a breather from the suffocating impact of the disease on the economies of both businesses and individuals alike.
Another commendable directive which the apex bank gave to the money deposit banks is the one that insists on shorter timelines for reversing all atm and POS terminal errors. With this development, failed “On Us” ATM transactions are to be reversed instantly no longer within three days while Failed “NOT-ON-Us” ATM transactions are now to be resolved within a maximum period of 48 hours instead of the 5 working days it used to a take. This directive which became effective from June 8th, 2020 has considerably reduced the hardship of bank customers.
Also when the banking sector was about to retrench a good number of staff in order to weather the COVID- 19 storm, the Bank came to the rescue asking that it should be carried along before any such action is carried out. This singular intervention may be what has kept some bank staff in employment till today.
Asked to comment on the performance of the apex bank under the leadership of Mr. Godwin Emefiele , Dr. Rislanudeen Muhammed has this to say, “I think he understands the dynamics of the Nigerian Economic situation. He became very bullish in terms of development financing. He came up with this issue of Anchor Borrowers Programme, massive support for NIRSAL and other development finance institutions and he became very focused in ensuring that he meets up with the presidential agenda of producing what we eat, eating what we produce. At the start of this COVID-19 he became proactive first, by setting up funds of 100 billion to support healthcare, 50 billion to support people in NIRSAL and then 1.2 trillion stimulus package to support SMEs. To my mind, in the circumstance that Gov. Emefiele found himself, he has done well.”
Dr. Tope Fasua says, “Well I think the CBN, right now has been very maverick, and when I say maverick the fact that they are intervening in several sectors though (some) people blame them for that. If the Central Bank is doing just its monetary policy, the monetary policy alone will not get it done because the monetary policy involves juggling interest rates, inflation, liquidity ratio and monetary policy rates. So I think the Central Bank is not doing badly, if he continues to get criticized, then of course you know that when there’s one champion in a whole community you can expect that he will be under criticism.”
Someone once said, if you are a minister, minister well, if you are a governor govern well, if you are a driver, drive well etc.
Against the background of all the foregoing, in the very harsh business environment, with COVID-19 on the prowl, you can be the judge whether the Governor of the Central Bank, Mr. Godwin Emefiele has governed well or whether the bank under his leadership has “Centrally banked” well.
The Central Bank of any nation and the person who sits behind its wheels in the capacity of Governor and ipso facto, the quality of policies such apex bank , from time to time, churns out can to a large extent, determine whether the country’s economy will remain afloat or sink, whether there will be growth or recession. This point cannot be overemphasized.
In Nigeria, as in many other climes, the Central Bank has responsibility for the formulation of monetary policy, regulation of the banking industry, Banker to the Government, Lender of last resort and is responsible for the printing and minting of national currency.
The Central Bank of Nigeria under the leadership of Mr. Godwin Emefiele has demonstrated its passion for the deepening and growth of the national economy. It has shown by several examples that it cares about the banking industry and would do its best to ensure its survival and profitability, and is willing to ensure inclusiveness for all and sundry.
Rather than lay back in the cocoon of supervising the monetary policy, this CBN administration has chosen to engage hands-on some of the economic challenges such as unemployment, food security and poverty.
One of its boldest and most pragmatic moves so far is the introduction of the Anchor Borrowers Scheme which was launched in 2016 by President Muhammadu Buhari. Through the program, about N190 billion naira (inputs and labour) has been disbursed to over a million small holder farmers (SHF) over the last five years resulting in enhanced production of such crops as rice, sorghum, barley, maize, millet as well as livestock and poultry. To prevent labour loss the farmers are connected to processors otherwise called off-takers or anchors who buy the harvests off the farmers.
As with any human policy, the programme has elicited both praise and criticism from various sections of the divide. While enjoying rave reviews as a very creative policy, the poor repayment rate of the loan beneficiaries, which in many cases arises from the non-chalant attitude of some Nigerians who believe such grants to be their own privileged piece of the national cake, has drawn the ire of critics and rightfully so. The bank will just have to step up its loan recovery strategies as a way of ensuring the sustainability of the scheme.
But of course the loan beneficiaries whose lives and statuses have improved substantially, who have crossed not just from joblessness to employment but also becoming entrepreneurs (employers of labour) cannot but continually commend the wisdom behind the programme.
Besides, the enhanced local production of rice coupled with the policy of closure of land borders to frustrate the smuggling in of the product from neighbouring countries has helped in no small measure to shore up our national foreign reserves.
Prior to this policy combo, food importation topped the list of items of expenditure that gulped our scarce resources constantly endangering the health of our economy but that suffocating leakage has been blocked for good.
Still in the push towards ameliorating the scary unemployment situation and to avert the looming danger it portends, the apex bank recently issued guidelines for the operation of Non-Interest Financial Institutions (NIFIs) in response to the growing demand by investors desiring to provide this class of banking services. Leveraging on the provisions of the BOFIA, the CBN defines Non- Interest Financial Institutions as “a bank or other Financial Institution which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with any established non-interest banking principles”. It categorises the institutions into two: those based on Islamic commercial jurisprudence and those based on any other established non-interest principle.
This is an alternative window for fund seekers who are unable to cope with the stringent demands of the traditional money deposit banks which rely mainly on the interest they generate from their loans to continue profitably in business.
The impact of this policy is expected to show in increase in small and medium enterprises and expansion of existing ones in the weeks and months ahead leading to more employment opportunities for the teeming unemployed who are mostly youths. It is hoped that production capacity will be substantially improved as the programme takes root.
The introduction of Loan to Deposit Ratio (LDR) which compels banks to provide funds for business loans to a given percentage of their total deposits is a huge intervention that seeks to facilitate and amplify the scope of businesses particularly in the real sector. Tope Fasua calls it a “genius idea”. The guideline comes with a serious sanction for failure to comply and the apex bank did bare its fangs when some banks failed to comply leading to huge fines which were later reversed but the message had been passed to the effect that there will be consequences for non-compliance and that the CBN will not brook any such defiance. Certainly with this development, access to funds by businesses has been greatly improved. The banks may not have been too comfortable with this initially but it stands to reason that in the long run, it will most likely turn out a win-win for all stakeholders.
Indeed, it is about time that our banks are redirected to carry out their core banking functions of lending especially to businesses as well as providing technical assistance which will lead to economic growth and reduced unemployment. There is no overemphasizing the point that the more people are gainfully employed the less their chances of engaging in crime and criminality because as they say the idle mind is the devil’s workshop.
The CBN’s COVID-19 stimulus package is another talking point which has won the bank many admirers and supporters. In the eye of the COVID-19 storm, the apex bank proved to be a dependable bulwark for the Nigerian people deftly churning out tailor- made intervention packages to soothe the effects of the emergent existential challenges. The apex bank has gone to great lengths to mitigate the effect on businesses, households and the economy in general. It is to this end that CBN provided a N100 billion stimulus package for the health care sector, N50 billion for households and 1.2 trillion stimulus for SMEs. Economic analysts agree that this is a major step in the right direction and indeed commend the CBN”s dynamism but insist that the size of the stimulus needs to be substantially increased. Rislanudeen Muhammed weighs in by saying, “even though it is not enough, one has to appreciate that there is a stronger effort”. Tope Fasua adds “, what’s the percentage of the stimulus that we’re putting out in general. It’s still less that 5%. But if we look at a country like the United States, doing almost 15% of its GDP for stimulus, and the U.K giving about 12%. I think we need to be looking at doing 20% of our GDP.”
One very heartwarming aspect of the intervention which promises to leave a lasting positive impact on the country’s health sector is the challenge thrown by the CBN governor to Nigerian scientists to put on their research caps and produce a Nigerian COVID-19 vaccine with a promise that the bank will bankroll it. The challenge has since been taken up and over 20 proposals requiring about N67b funding have been submitted to the bank. In walking the talk, the bank recently set up the Body of Experts for Scheme under the Chairmanship of the Director-General of the National Agency for Food and Drug administration and Control (NAFDAC), Professor Mojisola Adeyeye, to assess and evaluate the submissions. A breakthrough in this area will be a truly big and beautiful feather in the cap of the CBN leadership of the bank as well as a significant, landmark achievement for our dear nation.
On the concern in many quarters that all these interventions will fuel inflation, Dr. Fasua says “We’re going to suffer huge inflation, but this is the time, it’s just like the post-world war time in Germany where inflation rose to 200%. Inflation is what we have to suffer in the interim until things settle down. But we must ensure that we are directing these monies towards productive measures”. Dr. Rislanudeen also concurs with this view as he says “It may be inflationary but it doesn’t matter because the CBN will withdraw that money by all means what is technically called quantitative easing which essentially means printing money, drawing from the balance sheet of the bank. And the balance sheet of the Central Bank is strong enough to allow for that.”
Still in the march against the pandemic, the Central Bank mobilized members of the Bankers’ committee and the Organised Private Sector as well as high net worth individuals to raise funds towards combating it. Within a month or thereabout, the Private Sector Coalition Against COVID-19 otherwise known as CACOVID was able to raise over N20 billion naira. The funds were later taken over by the Federal Government. It is unclear whether the take-over of the funds was in line with the CBN’s original vision behind raising the funds or whether it had its own plans of how to apply the fund but was suddenly overruled. Whatever be the case, the spontaneity and size of the response to the apex bank’s call for funds is a salient endorsement of the CBN leadership and demonstration of trust in its integrity.
Consistent with its drive for inclusiveness, the bank has at various times reached out and provided accommodation within the system to various stakeholders through moral suasion, policy tweaks and assurances. Recently Emefiele reached out to Conglomerates in the country reassuring them that as much as possible the bank and the Nigerian government will continue to support them. While maintaining the stance that the CBN will not support the importation of items that can be produced in Nigeria, The Governor pledged the Bank’s willingness to provide foreign exchange to companies that required such for raw materials and that cannot be obtained in the country. At the virtual meeting held with the Chief executives of the Conglomerates, Emefiele further assured that the Bank will collaborate with the relevant government agencies to nip smuggling in the bud in addition to collaborating with other fiscal authorities to improve the ease of doing business in Nigeria, with a view to simplifying their import and export processes.
Further, in the heat of the pandemic, the bank instructed a new regime of rates crashing it from 9% to 5% on all its intervention facilities being handled by Other Financial institutions (OFIs) such as Microfinance banks, Primary Mortgage Institutions and a rescheduling of terms and conditions to provide a breather from the suffocating impact of the disease on the economies of both businesses and individuals alike.
Another commendable directive which the apex bank gave to the money deposit banks is the one that insists on shorter timelines for reversing all atm and POS terminal errors. With this development, failed “On Us” ATM transactions are to be reversed instantly no longer within three days while Failed “NOT-ON-Us” ATM transactions are now to be resolved within a maximum period of 48 hours instead of the 5 working days it used to a take. This directive which became effective from June 8th, 2020 has considerably reduced the hardship of bank customers.
Also when the banking sector was about to retrench a good number of staff in order to weather the COVID- 19 storm, the Bank came to the rescue asking that it should be carried along before any such action is carried out. This singular intervention may be what has kept some bank staff in employment till today.
Asked to comment on the performance of the apex bank under the leadership of Mr. Godwin Emefiele , Dr. Rislanudeen Muhammed has this to say, “I think he understands the dynamics of the Nigerian Economic situation. He became very bullish in terms of development financing. He came up with this issue of Anchor Borrowers Programme, massive support for NIRSAL and other development finance institutions and he became very focused in ensuring that he meets up with the presidential agenda of producing what we eat, eating what we produce. At the start of this COVID-19 he became proactive first, by setting up funds of 100 billion to support healthcare, 50 billion to support people in NIRSAL and then 1.2 trillion stimulus package to support SMEs. To my mind, in the circumstance that Gov. Emefiele found himself, he has done well.”
Dr. Tope Fasua says, “Well I think the CBN, right now has been very maverick, and when I say maverick the fact that they are intervening in several sectors though (some) people blame them for that. If the Central Bank is doing just its monetary policy, the monetary policy alone will not get it done because the monetary policy involves juggling interest rates, inflation, liquidity ratio and monetary policy rates. So I think the Central Bank is not doing badly, if he continues to get criticized, then of course you know that when there’s one champion in a whole community you can expect that he will be under criticism.”
Someone once said, if you are a minister, minister well, if you are a governor govern well, if you are a driver, drive well etc.
Against the background of all the foregoing, in the very harsh business environment, with COVID-19 on the prowl, you can be the judge whether the Governor of the Central Bank, Mr. Godwin Emefiele has governed well or whether the bank under his leadership has “Centrally banked” well.
The Central Bank of any nation and the person who sits behind its wheels in the capacity of Governor and ipso facto, the quality of policies such apex bank , from time to time, churns out can to a large extent, determine whether the country’s economy will remain afloat or sink, whether there will be growth or recession. This point cannot be overemphasized.
In Nigeria, as in many other climes, the Central Bank has responsibility for the formulation of monetary policy, regulation of the banking industry, Banker to the Government, Lender of last resort and is responsible for the printing and minting of national currency.
The Central Bank of Nigeria under the leadership of Mr. Godwin Emefiele has demonstrated its passion for the deepening and growth of the national economy. It has shown by several examples that it cares about the banking industry and would do its best to ensure its survival and profitability, and is willing to ensure inclusiveness for all and sundry.
Rather than lay back in the cocoon of supervising the monetary policy, this CBN administration has chosen to engage hands-on some of the economic challenges such as unemployment, food security and poverty.
One of its boldest and most pragmatic moves so far is the introduction of the Anchor Borrowers Scheme which was launched in 2016 by President Muhammadu Buhari. Through the program, about N190 billion naira (inputs and labour) has been disbursed to over a million small holder farmers (SHF) over the last five years resulting in enhanced production of such crops as rice, sorghum, barley, maize, millet as well as livestock and poultry. To prevent labour loss the farmers are connected to processors otherwise called off-takers or anchors who buy the harvests off the farmers.
As with any human policy, the programme has elicited both praise and criticism from various sections of the divide. While enjoying rave reviews as a very creative policy, the poor repayment rate of the loan beneficiaries, which in many cases arises from the non-chalant attitude of some Nigerians who believe such grants to be their own privileged piece of the national cake, has drawn the ire of critics and rightfully so. The bank will just have to step up its loan recovery strategies as a way of ensuring the sustainability of the scheme.
But of course the loan beneficiaries whose lives and statuses have improved substantially, who have crossed not just from joblessness to employment but also becoming entrepreneurs (employers of labour) cannot but continually commend the wisdom behind the programme.
Besides, the enhanced local production of rice coupled with the policy of closure of land borders to frustrate the smuggling in of the product from neighbouring countries has helped in no small measure to shore up our national foreign reserves.
Prior to this policy combo, food importation topped the list of items of expenditure that gulped our scarce resources constantly endangering the health of our economy but that suffocating leakage has been blocked for good.
Still in the push towards ameliorating the scary unemployment situation and to avert the looming danger it portends, the apex bank recently issued guidelines for the operation of Non-Interest Financial Institutions (NIFIs) in response to the growing demand by investors desiring to provide this class of banking services. Leveraging on the provisions of the BOFIA, the CBN defines Non- Interest Financial Institutions as “a bank or other Financial Institution which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with any established non-interest banking principles”. It categorises the institutions into two: those based on Islamic commercial jurisprudence and those based on any other established non-interest principle.
This is an alternative window for fund seekers who are unable to cope with the stringent demands of the traditional money deposit banks which rely mainly on the interest they generate from their loans to continue profitably in business.
The impact of this policy is expected to show in increase in small and medium enterprises and expansion of existing ones in the weeks and months ahead leading to more employment opportunities for the teeming unemployed who are mostly youths. It is hoped that production capacity will be substantially improved as the programme takes root.
The introduction of Loan to Deposit Ratio (LDR) which compels banks to provide funds for business loans to a given percentage of their total deposits is a huge intervention that seeks to facilitate and amplify the scope of businesses particularly in the real sector. Tope Fasua calls it a “genius idea”. The guideline comes with a serious sanction for failure to comply and the apex bank did bare its fangs when some banks failed to comply leading to huge fines which were later reversed but the message had been passed to the effect that there will be consequences for non-compliance and that the CBN will not brook any such defiance. Certainly with this development, access to funds by businesses has been greatly improved. The banks may not have been too comfortable with this initially but it stands to reason that in the long run, it will most likely turn out a win-win for all stakeholders.
Indeed, it is about time that our banks are redirected to carry out their core banking functions of lending especially to businesses as well as providing technical assistance which will lead to economic growth and reduced unemployment. There is no overemphasizing the point that the more people are gainfully employed the less their chances of engaging in crime and criminality because as they say the idle mind is the devil’s workshop.
The CBN’s COVID-19 stimulus package is another talking point which has won the bank many admirers and supporters. In the eye of the COVID-19 storm, the apex bank proved to be a dependable bulwark for the Nigerian people deftly churning out tailor- made intervention packages to soothe the effects of the emergent existential challenges. The apex bank has gone to great lengths to mitigate the effect on businesses, households and the economy in general. It is to this end that CBN provided a N100 billion stimulus package for the health care sector, N50 billion for households and 1.2 trillion stimulus for SMEs. Economic analysts agree that this is a major step in the right direction and indeed commend the CBN”s dynamism but insist that the size of the stimulus needs to be substantially increased. Rislanudeen Muhammed weighs in by saying, “even though it is not enough, one has to appreciate that there is a stronger effort”. Tope Fasua adds “, what’s the percentage of the stimulus that we’re putting out in general. It’s still less that 5%. But if we look at a country like the United States, doing almost 15% of its GDP for stimulus, and the U.K giving about 12%. I think we need to be looking at doing 20% of our GDP.”
One very heartwarming aspect of the intervention which promises to leave a lasting positive impact on the country’s health sector is the challenge thrown by the CBN governor to Nigerian scientists to put on their research caps and produce a Nigerian COVID-19 vaccine with a promise that the bank will bankroll it. The challenge has since been taken up and over 20 proposals requiring about N67b funding have been submitted to the bank. In walking the talk, the bank recently set up the Body of Experts for Scheme under the Chairmanship of the Director-General of the National Agency for Food and Drug administration and Control (NAFDAC), Professor Mojisola Adeyeye, to assess and evaluate the submissions. A breakthrough in this area will be a truly big and beautiful feather in the cap of the CBN leadership of the bank as well as a significant, landmark achievement for our dear nation.
On the concern in many quarters that all these interventions will fuel inflation, Dr. Fasua says “We’re going to suffer huge inflation, but this is the time, it’s just like the post-world war time in Germany where inflation rose to 200%. Inflation is what we have to suffer in the interim until things settle down. But we must ensure that we are directing these monies towards productive measures”. Dr. Rislanudeen also concurs with this view as he says “It may be inflationary but it doesn’t matter because the CBN will withdraw that money by all means what is technically called quantitative easing which essentially means printing money, drawing from the balance sheet of the bank. And the balance sheet of the Central Bank is strong enough to allow for that.”
Still in the march against the pandemic, the Central Bank mobilized members of the Bankers’ committee and the Organised Private Sector as well as high net worth individuals to raise funds towards combating it. Within a month or thereabout, the Private Sector Coalition Against COVID-19 otherwise known as CACOVID was able to raise over N20 billion naira. The funds were later taken over by the Federal Government. It is unclear whether the take-over of the funds was in line with the CBN’s original vision behind raising the funds or whether it had its own plans of how to apply the fund but was suddenly overruled. Whatever be the case, the spontaneity and size of the response to the apex bank’s call for funds is a salient endorsement of the CBN leadership and demonstration of trust in its integrity.
Consistent with its drive for inclusiveness, the bank has at various times reached out and provided accommodation within the system to various stakeholders through moral suasion, policy tweaks and assurances. Recently Emefiele reached out to Conglomerates in the country reassuring them that as much as possible the bank and the Nigerian government will continue to support them. While maintaining the stance that the CBN will not support the importation of items that can be produced in Nigeria, The Governor pledged the Bank’s willingness to provide foreign exchange to companies that required such for raw materials and that cannot be obtained in the country. At the virtual meeting held with the Chief executives of the Conglomerates, Emefiele further assured that the Bank will collaborate with the relevant government agencies to nip smuggling in the bud in addition to collaborating with other fiscal authorities to improve the ease of doing business in Nigeria, with a view to simplifying their import and export processes.
Further, in the heat of the pandemic, the bank instructed a new regime of rates crashing it from 9% to 5% on all its intervention facilities being handled by Other Financial institutions (OFIs) such as Microfinance banks, Primary Mortgage Institutions and a rescheduling of terms and conditions to provide a breather from the suffocating impact of the disease on the economies of both businesses and individuals alike.
Another commendable directive which the apex bank gave to the money deposit banks is the one that insists on shorter timelines for reversing all atm and POS terminal errors. With this development, failed “On Us” ATM transactions are to be reversed instantly no longer within three days while Failed “NOT-ON-Us” ATM transactions are now to be resolved within a maximum period of 48 hours instead of the 5 working days it used to a take. This directive which became effective from June 8th, 2020 has considerably reduced the hardship of bank customers.
Also when the banking sector was about to retrench a good number of staff in order to weather the COVID- 19 storm, the Bank came to the rescue asking that it should be carried along before any such action is carried out. This singular intervention may be what has kept some bank staff in employment till today.
Asked to comment on the performance of the apex bank under the leadership of Mr. Godwin Emefiele , Dr. Rislanudeen Muhammed has this to say, “I think he understands the dynamics of the Nigerian Economic situation. He became very bullish in terms of development financing. He came up with this issue of Anchor Borrowers Programme, massive support for NIRSAL and other development finance institutions and he became very focused in ensuring that he meets up with the presidential agenda of producing what we eat, eating what we produce. At the start of this COVID-19 he became proactive first, by setting up funds of 100 billion to support healthcare, 50 billion to support people in NIRSAL and then 1.2 trillion stimulus package to support SMEs. To my mind, in the circumstance that Gov. Emefiele found himself, he has done well.”
Dr. Tope Fasua says, “Well I think the CBN, right now has been very maverick, and when I say maverick the fact that they are intervening in several sectors though (some) people blame them for that. If the Central Bank is doing just its monetary policy, the monetary policy alone will not get it done because the monetary policy involves juggling interest rates, inflation, liquidity ratio and monetary policy rates. So I think the Central Bank is not doing badly, if he continues to get criticized, then of course you know that when there’s one champion in a whole community you can expect that he will be under criticism.”
Someone once said, if you are a minister, minister well, if you are a governor govern well, if you are a driver, drive well etc.
Against the background of all the foregoing, in the very harsh business environment, with COVID-19 on the prowl, you can be the judge whether the Governor of the Central Bank, Mr. Godwin Emefiele has governed well or whether the bank under his leadership has “Centrally banked” well.