Sequel to the new policy adopted by the Central Bank of Nigeria (CBN), the Nigerian economy has been buoyed up with foreign remittances to the tune of $25 million weekly. The revelation was made recently by the CBN governor, Godwin Emefiele in Lagos.
Emefiele said the increase was consequent to measures taken to increase the flow of diaspora remittances into the country using formal channels.
“In December 2020, we instructed all international money transfer operators (IMTOs) to provide remitters with the option of sending foreign exchange to beneficiaries in Nigeria. This new measure has helped to reduce the diversion of forex by some IMTOs, who had thrived from arbitrage arrangements, rather than on improving transactions volumes to Nigeria.
“Indeed, we have already seen remittances improve from a weekly average of about US$5 million before this policy, to over US$30 million per week. We believe this measure will help to significantly boost inflows of FX and create much more liquidity in that space,” Emefiele said.
The apex bank governor also enumerated several positive developments going on in the economy due to new policy and interventionist measures by the monetary authority following the recent economic recession.
In this vein, Emefiele said domestic financial conditions have remained supportive to growth, due to measures being implemented by the CBN. “Aggregate domestic credit grew by 17 percent between January and December 2020, highlighting the effects of the CBN’s intervention programs, our LDR policy and accommodative lending rates by the banks. Non-performing loan ratios have fallen from 6.5 percent in January 2020 to 6.0 percent as of December 2020.
“In the equities market, the Nigeria Stock Exchange has continued to record positive performance, as the All-Share Index increased from 20,098 in April 2020 to 40,270 by December 2020. The rise in the index is due to positive sentiments arising from improved earnings and output by several listed corporates on the exchange.
“These measures have helped to mitigate the effects of the COVID-19 pandemic on the economy. As a result, Gross Domestic Product (GDP) growth had a swift rebound in the 4th quarter of 2020, as it expanded by 0.11 percent, after two consecutive periods of negative growth,” he stated.
He also stated that the rebound in growth was driven by Agriculture and ICT, as these sectors grew by 3.42 percent and 14.7 percent, respectively in the 4th quarter of 2020. Contraction in the manufacturing sector declined to 1.5 percent from 8.78 percent in the 2nd Quarter of 2020. This result is similar to the Manufacturing Purchasing Managers Index, which stood at 49.6 points in December 2020, indicating a recovery in manufacturing activities relative to a low of 43 points in April 2020, even though it still remained below the 50-point benchmark.
The governor said, “In 2021 it is imperative that the CBN continue to provide accommodative monetary policy measures that will enable faster recovery of the economy, through improved flow of credit to households and businesses in key sectors of the economy such as Agriculture, ICT and Manufacturing.
“These measures are essential if we are to return our economy to a sustainable growth path, while reducing our exposure to volatility in commodity prices. While accommodative monetary policy measures that will support growth remain paramount in our priorities for 2021, we would continue to pay attention to trends in inflation, as price stability is critical in guiding savings and investment decisions by households and businesses,” the governor stated.