Shoring Up Naira Value Through increased Production – The Godwin Emefiele’s Roadmap

By Gabriel Kuma

The Governor of the Central Bank of Nigeria, (CBN) Mr Godwin Emefiele has not just been an advocate of ramping up production to address the dwindling value of the Naira, but has also put action to words by encouraging production in different sectors.

It is instructive to state that for the past 7 years under the leadership of President Muhammadu Buhari, Mr Emefiele has made significant efforts at reducing the nation’s overdependence on imports for foods and industrial raw materials towards not just self-sufficiency but self-reliance also.

In line with this commitment, the Apex Bank has continues to roll out various policy, in form of interventions to finance priority sectors of the economy.

The Central Bank of Nigeria Headquarters

One of such initiatives by the Emefiele-led CBN is the launch of the 100 for 100 policy for production and productivity (PPP); an intervention that is designed to stimulate investment in Nigeria’s priority sectors with the core objective of boosting productions and productivity, which is expected to aid efforts to stimulate greater growth of the economy and create employment opportunities.

The new policy to support the private companies hopes to boost local production and help to reduce the country’s import bills, stimulate productivity in agriculture, healthcare, manufacturing, extractive industry, logistics services, trade related infrastructure and renewable energy.

Additionally, the policy on production and productivity ensures that companies in the priority sectors will be screened and 100 companies will be selected to receive CBN funding every 100 days beginning from November 01, 2021.

The poser by the CBN Governor at the official launch of the Central Bank Digital Currency (CBDC) reveals the extent of damage done to the production sector of the nation and the need to revisit production and productivity.

It is worthy of note that since the advent of the International Monetary Fund (IMF) led Structural Adjustment Programme (SAP) in 1986, and the introduction of the Second Tier Foreign Exchange (SFEM) market, the Naira has been lost its way against the US Dollar. What was at par with the USD in 1984, is now N416 to the USD.   

“Some 35 years later, we have not been able to achieve the many promises and objectives of that programme. Instead, what we have seen is widespread import dependency, which have wiped out most of our production and manufacturing bases and exported all our jobs in the process.

“What has happened to the massive textile factories across our nation such that we import almost all cotton products when we are rich in cotton?

“What has happened to our vehicle assembly plants across the nation such that we import most vehicles and have become a massive dumping ground for dying second-hand vehicles? What has happened to our rubber plantations through which we made the best tyres and rubber products in the world? What has happened to our groundnut pyramids? What has happened to our Cocoa farms? What has happened to our palm oil mills?”, Emefiele questioned.

As a means of turning back the hand of time, the Governor assured that the apex bank’s determination to shore up the productive base and reverse the country’s overdependence on imports remains unwavering.

However, to ensure transparency, eligible companies are required to submit their application to their bank after which a notification is submitted on a dedicated portal

Known for its seriousness in financing policies, several companies put forth their applications, the result of which was overwhelming for a policy which was just introduced.

“Specifically, for this first cycle of the initiative, 243 applications valued at N321.06 billion spread over key sector such as agriculture, energy, healthcare, manufacturing and services sectors were submitted on the portal. After such engagement, 79 applications were received from the banks, valued at N121.87 billion, for projects in six sectors.

“The requests were carefully screened and scrutinised against set out selection criteria, which is categorised into: production efficiency and scalability; local content capacity; job creation and human capital development; operating sector relevance and production contribution to the economic growth”, Emefiele said.

The CBN Governor while presenting cheques to the 7 participating financial institutions whose customer were selected as pioneer beneficiaries of the policy said 28 companies were qualified and when fully operational, over 20,000 jobs will be created.

He said, “I am pleased to inform you that 28 companies with projects that have clearly articulated proposals were selected for funding. These projects, valued at N23.20 billion, comprise 14 in manufacturing sector, 12 in agricultural sector and 2 in healthcare sector.

“When fully operational, these projects are expected to create over 20,000 direct and indirect jobs across multiple sectors of the economy, as well as generate close to US$128.80 million in foreign exchange”.

“We believe that if we target and support the right companies and projects, we will see a significant, measurable and verifiable increase in local production and productivity, reduction in certain imports, increase in non-oil exports, and improvements in the FX-generating capacity of the economy”, Emefiele said.

Other programmes initiated by the Emefiele-led CBN to spur production and productivity in the real sector of the economy includes Real Sector Facility (RSF), Real Sector Support Facility (RSSF), Anchor Borrowers Programme (ABP), Commercial Agriculture Credit Scheme (CACS), Non-Oil Export Stimulation Facility (NESF) and Textile Sector Intervention Fund (TSIF).

It is safe to say that the interventions have proven to be effective in expanding credit and stimulating investment in the real sector, thereby increasing production and productivity in the economy.

These interventions have helped Nigeria to reduce its huge import bills between 2015 to date. For instance, Nigeria which used to import $2.4 billion worth of rice between 2012-2015 now spends less than $100 million on rice imports;  $7.4 billion on fish, toothpicks, furniture; $22 billion spent annually on food imports have all reduced to the barest minimum through import substitution and restriction of forex for 43 items.

Interestingly, the Emefiele-led CBN has invested more in improving production and productivity in a bid to give meaning to the Naira than any other CBN Governor to have adorned this robe.

Emefiele has always told whoever cares to listen that his sole aim is to strengthen the value of the Naira, boost local production for export and consumption, and earn foreign exchange – all in a bid to shore up Nigeria’s foreign reserves.

“Our FX reserves are strong and indeed getting stronger by the day, crossing the 40 billion USD mark, and is one of the highest in Africa – and growing. But we cannot fritter our reserves away on cheap imports and currency speculators.

“If you consume cheap imports and export our jobs, we will make you pay dearly; but if you produce locally – with little or no foreign inputs beyond machinery, we will support you, and the markets will reward you abundantly”, he said.

As policies, monetary or fiscal takes time to yield the desired the desired result, it is pertinent to note that the 100 for 100 PPP remains a viable economy booster towards achieving the set goals, while also jump-starting the production sector which was nearly comatose before the assumption of office of Godwin Emefiele. 

Leave a Reply

Your email address will not be published. Required fields are marked *