CBN’s ‘unconventional’ policy and rise in entrepreneurship

CBN office

 By Chijioke Nelson, Asst. Editor, Finance/Economy

At the early stage of the development intervention by the Central Bank of Nigeria (CBN), amid its novelty, was regarded by many as a waste of taxpayersí fund. By 2016, the nationís real sector has been supported up to an estimated N1.36 trillion through several initiatives, with actual disbursements estimated at N732.2 billion. Today, the emulation of the so-called Western theory is saving the local economy.

As at then, there were disbursements for the Real Sector Support Facility (RSSF), which received N300 billion; the Micro-Small and Medium Enterprises Development Fund (MSMEDF), N220 billion; the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), N75 billion; and the Nigeria Electricity Market Stabilisation Fund at N213 billion.

Others include the Nigeria Export-Import Bank (NEXIM) support at N50 billion for the export refinancing and restructuring facility; and the Non-oil Export Stimulation Facility for N500 billion.
For the apex bank, despite widespread criticism, it was first, to ensure sustained credit stimulation efforts with the overall aim of enthroning a regime of ìreasonable ratesî in banks. Today, it has become a harbinger of small businesses across the country, creating employment to millions and substituting importation of some items.
Before CBN embraced the unconventional strategy in bailing out the troubled economy, top global central bankers like the Federal Reserve Bank of the United States and Bank of England have at various times, directly intervened in boosting the fortunes of their economies by injecting funds, subsidising rates and promoting the growth of different sectors.
CBN has disbursed more than N393 billion in 490 projects under the Commercial Agriculture Credit Scheme; over N56 billion under the Anchor Borrowers Programme; more than N80 billion under the MSME scheme; and more than N240 billion under the Power and Aviation Intervention Fund.
Also, more than 400,000 farmers have so far received support under the Anchor Borrowers Programme (ABP) to cultivate 12 crops, including rice, soya, maize, palm produce, cotton and cassava.
These interventions, which has been increased in recent times due to the challenging economic situation in the country, has also been part of efforts to strengthen import substitution policy, to curb the drain on the nationís foreign exchange reserves.

No doubt, the apex bankís development interventions have benefitted the new investments by Africaís richest man, Aliko Dangote, who is pioneering a state-of-the-art refinery and fertiliser plants, expected to wipe off huge import bills in the books of the country.
CBN Governor, Godwin Emefiele, said that the far-reaching objective of CBNís implementation of the schemes and programmes for the real sector is to achieve huge employment capabilities, high growth opportunities, significant accretion to foreign reserves, expansion of the industrial base and diversification of the national economy. Of course, the foreign reserves are much bigger than it was when he assumed duties.
He is optimistic that the $9 billion Dangoteís refinery and fertiliser plants, now under construction at the Lekki Free Trade Zone, when completed, would have a far -reaching positive effects on the lives of Nigerians and in the transformation of the economy.
The fertiliser plant, among which CBNís intervention has part-financed to the tune of N75 billion, would be due for inauguration in April and is twice the size of the existing Eleme Petrochemical.
Of course, the investment is part of the real sector activities that CBN has been supporting since 2014 and would be in the interest of the economy if the bankís intervention would hasten the take off of the project.
For example, the refinery, when completed, would be the largest single petroleum refinery in the world with capacity to process 650,000 barrels per day of crude oil.
It is expected to help the country conserve the foreign exchange spent on the importation of petroleum products, thereby strengthening Nigeriaís external reserves.