At the time Mr Godwin Emefiele assumed office as Governor of the Central Bank of Nigeria (CBN) in June 2014, he was almost immediately confronted by high inflation, falling oil revenue as well as value-eroding local currency as speculators and round-trippers held sway. In fact, the country was slipping into recession.
Indeed, the situation called for a pragmatic solution, even unconventional one. That was exactly what the new CBN helmsman did, a step consistent with his mission to lead a central bank that channels its energies vital energy into building a resilient financial system that can serve the growth and development-oriented needs of the country.
With a clear vision to ensure that the Central Bank of Nigeria is more people focused, his policies and programmes were geared towards diversifying the economy, supporting job creation, reducing the high level of import bills, especially food imports, improving access to credit for Micro Small Medium Enterprises (MSMEs), deepening the bank’s intervention programme in the agricultural sector, and building a robust payment system infrastructure that will help drive inclusion in the economy generally.
The core of Emefiele’s innovative stance at the CBN has been development financing. He has creatively implemented strategies necessary to diversify the productive base of Nigeria’s economy, thus, creating thousands of jobs in agriculture and conserving foreign exchange.
To him, the CBN was to act as financial catalyst by targeting strategic sectors that could create jobs on a mass scale and reduce the country’s import bills.
He declared that the CBN would deploy developmental initiatives to create an enabling environment with appropriate incentives to empower innovative entrepreneurs to drive growth and development.
So far, Emefiele has lived up to his promise. The innovative policies he initiated such as Anchor Borrowers’ Programme (ABP) launched by President Muhammadu Buhari in November 2015 has triggered a revolution in the value chain of agri-business. This novel development finance intervention scheme ensured that Nigeria emerged from being a net importer of rice to becoming a major producer of rice, supplying key markets in neighbouring countries. Today, the country produces nine million metric tonnes of rice per annum, enough for the country to even export.
Statistics reveal that the programme has so far financed over 3.1 million farmers to the tune of over N492 billion for the cultivation of 3,801,397 hectares across 21 commodities through 23 Participating Financial Institutions in the 36 states of the Federation and the Federal Capital Territory (FCT).
In terms of job creation, the programme has generated over three million direct and indirect jobs across the agricultural value chain.
In a bid to encourage local manufacturers to consider local options in sourcing their raw materials, the CBN, under Emefiele, restricted access to foreign exchange on 43 items. Four of these items alone, at the time, constituted over N1trillion of Nigeria’s annual import bill.
In addition to this, the Bank also established an Investors and Exporters (I&E) window, which allowed investors and exporters to purchase and sell foreign exchange at the prevailing market rate.
Other policies which the CBN introduced under Emefiele to empower the people and stimulate the economy include, the Youth Entrepreneurship Development Programme (YEDP), Accelerated Agricultural Development Scheme (AADS), the Agri-business/Small and Medium Enterprises Investment Scheme (AGSMEIS), the National Collateral Registry (NCR) and lately the Creative Industry Financing Initiative (CIFI), which is a collaboration between the CBN and the Bankers’ Committee.
Explaining the rationale for these initiatives by the CBN, Emefiele said, “We took these decisions in recognition of our role as an agent of development. They are aimed at ensuring self-sufficiency to reduce Nigeria’s excessive dependence on imports.
“We have invigorated our development finance activities. We have maintained a particular focus on supporting farmers, entrepreneurs as well as small and medium scale businesses, through our various intervention programmes such as the Anchor Borrowers Programme, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) and the National Collateral Registry.
“We recently introduced the Real Sector Support fund; a facility meant to provide cheap funding at no more than nine percent interest rate to new projects in the agriculture and manufacturing sectors. The aim is to boost output and create jobs.”
It is in light of the success of the Anchor Borrowers Programme with regard to the cultivation of rice and maize that the Monetary Policy Committee in its meeting on the 21st of November 2018 recommended that the Anchor Borrowers programme be applied to other areas such as palm oil, tomatoes and fisheries among others.
This renewed focus by the CBN to support improved growth in the agriculture and manufacturing sectors in Nigeria, is clearly in line with the federal government’s determination to diversify the base of Nigeria’s economy away from reliance on crude oil, so as to insulate the economy from the vagaries and shocks associated with volatility in crude oil prices.
Indeed, today, Emefiele is regarded as the best friend of farmers. This, of course, is because no previous CBN governor has shown as much interest in agriculture as he has done.
A public policy analyst, Mr Innocent Onyeabuchi, said the Anchor Borrowers’ Programme (ABP) of the apex bank revolutionized rice production, as it currently has over three million farmers enrolled, with over 10 million jobs created (direct and indirect).
Mr Onyeabuchi in a recent report said, “The Investors and Exporters’ Forex Window created by Emefiele attracted over $50 billion investments into the country within a spate of three years.”
Onyeabuchi further said that the CBN governor has been able to rally commercial banks’ chief executives to support his vision in growing the economy by setting aside five per cent of their annual profit to finance agriculture and the real sector to create jobs and wealth.
“By this, the CBN is promoting the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL). The Bankers’ Committee and NIPOST agreed to establish the national microfinance bank in 774 local government areas of the country to make cheap and sustainable credit at single digit interest rate available to the economic active but poor rural dwellers, particularly the farmers and petty businesses,” he said.
Also commending the creative and innovative policies put in place by the CBN governor, General Secretary of the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGWTN), Comrade Issa Aremu, at an interactive session in Lagos said, “There is availability of local rice in Nigeria. The argument of CBN concerning the 43 items is tenable. Why should we make scarce foreign exchange available for people to import products that we can produce within the country? For us today, that has protected a lot of jobs.”
In the course of Emefiele’s tenure as governor, the Bank has also introduced critical interventions such as the Nigeria Electricity Market Stabilisation Facility (NEMSF), the Nigerian Bulk Electricity Trading-Payment Assurance Facility (NBET-PAF), the Presidential Fertilizer Initiative (PFI), and the Shared Agent Network Expansion Facility (SANEF), among others, to directly support enterprises with huge potential for job creation, conservation of foreign exchange, import substitution as well as financial inclusion.
In order to fully revive textile industries across the nation, the CBN also decided to provide financial support to textile manufacturers at single digit rate, to refit, retool and upgrade their factories in order to produce high quality textile materials for the local and export market. This CBN governor has laid the foundation expected to plug the loss of over $2 billion on textile importation annually.
His engagements with Oil Palm Value Chain Stakeholders (Plantation Owners, Refiners, Research Institutes and Associations) have also been yielding fruits. Emefiele has helped to catalyze and fast-track investments across the oil palm value chain. Oil palm is on the forex excluded list. Now, official figures indicate that importation of oil palm had declined by about 40 per cent from the peak of 506,000 MTs in 2014 to 302,000 MT in 2017. Emefiele has clearly changed the narrative.
Gilbert is an economist based in Abuja