$40bn drained from external reserve in 10 years, says CBN
The Central Bank of Nigeria (CBN) has cried out that about $40 billion had been depleted from the nation’s external reserves in 10 years due to the taste for imported goods by Nigerians.
To stem the hemorrhaging of the external reserve the CBN has strongly advocated for Nigerians to begin to process raw materials so as to get more value and earn more foreign exchange.
According to the CBN governor Mr Godwin Emefiele, “exported raw materials such as crude, wood, cocoa amongst others whose end products are later imported, are being sold cheaply and bought back at more expensive rates” He said the level of the external reserve will be significantly beefed up if fuel which takes up 20 per cent of Nigeria’s import bill is locally produced.
Defending the decision of the CBN to support the real sector, Emefiele said the apex bank “is convinced that the sector has sufficient employment capabilities, high growth potentials, contributes significantly in accretion to foreign reserves, expands the industrial base and diversify the growth potentials of the economy.”
Emefiele noted that Nigerians “must, by now have been tired of hearing people talk about the potentials of Nigeria, now is the time to live that dream, we can achieve our goals and give Nigerians the chance to live longer, better and more fulfilled lives.”
To make this possible, the CBN governor appealed “to Nigerians to patronize locally made products to encourage the manufacturers to remain in business, interventions by the bank are centered around agriculture, Micro, Small and Medium Enterprises (MSMEs) and Infrastructure intervention.”
The CBN governor also disclosed that in order to make the real sector attractive to the banking industry, the apex bank has injected over N1.3 trillion into the sector.
Speaking at the annual finance corespondent sand business editors seminar in Ibadan yesterday, the CBN Governor Mr Godwin Emefiele said the desire to revive and stimulate credit to the real sector was what informed the bank’s efforts to pump such huge amount of financial resources into the real sector.
Represented by the by deputy governor, Corporate Services, Adebayo Adelabu Godwin Emefiele noted that by injecting funds and subsidizing rates, and through relevant policies, the CBN has assisted in growing the economy and promoting the growth of the different sectors of their economies.
According to Emefiele, the interventions that culminated in the over N1.3 trillion support for the real sector include “the Agricultural Credit Guarantee Scheme Fund (ACGSF),the Commercial Agricultural Credit Scheme (CACS), the Agricultural Credit Support Scheme (ACSS), the N300 billion Real Sector Support Facility (RSSF), the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF), the Small and Medium Enterprises Refinancing and Restructuring Facility (SMERRF), the N75 billion Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL), the N213 billion Nigeria Electricity Market Stabilization Fund and only recently, the Anchor Borrowers’ Programme launched by President Muhammadu Buhari.”
The CBN is also supporting the Nigeria Export Import Bank (NEXIM) with N50 billion export refinancing and restructuring facility as well as N500 billion as non-oil export stimulation facility. “If you add all these it is in excess of N1 trillion that have been deliberately injected into the system to ensure that they are fully resuscitated and they become attractive for commercial banks” Emefiele said.
The CBN governor however stated that credit injection to the real sector was not intended “to crowd out the financial institutions in the space of credit delivery but to provide incentives that will stimulate lending at reasonable rates by banks to the real sector.” In addition, the reduction of the CRR of DMBs he noted “has freed almost all the resources that the banks can lend to finance projects under the real sector.”
Reacting to recent criticisms that the CBN has gone beyond its mandate, the CBN Governor responded that “many central banks in emerging economies, in carrying out their primary mandate, go a step further in directly supporting different sectors of the economies of their respective countries.”
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