CBN’s ‘unconventional’ policy and rise in entrepreneurship

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.

In terms of employment opportunities, 100,000 indirect employments, through retail outlets have been estimated.

Emefiele, on a tour of the facility recently, accompanied by the Deputy Governor, Financial System Stability, CBN, Mrs. Aisha Ahmad; President of the Dangote Group, Alhaji Aliko Dangote; top officials of the company, as well as project engineers, said the emergence of such project is transformational to the economy.

He also said when the refinery takes off in the first quarter of 2020, Nigeria would not only be self-sufficient in the production of refined petroleum products, but would join the league of countries that export petroleum products to other countries.

“You all will attest to the fact that this is certainly a transformational project for Nigeria. And to put it in proper perspective, by the time you dimension the size of foreign exchange that we use in importing petroleum products into the country today, it is at least one third of the foreign exchange that the central bank spends to import items today.

“By the time we also add the 42 items that we have, which of course, we are going to increase, maybe to 50 in due course and the savings from the production and export of petroleum products, close to 55 or 60 per cent of what government spends in funding the foreign exchange operations would have been reduced.

“I am truly looking forward to being alive the time this comes to fruition. We need to thank the President of Dangote Industries, for this gigantic project. Iím sure that if he knew the scope of the project that he was going into at the time he conceived it, with the kind of stress he goes through today in trying to actualise this project, he probably would not have gone into it.

About 18 months ago when I came here, I said that we would support anybody, any Nigerian company that takes priority in manufacturing and agricultural items, along the entire value chain,î he said.

He restated the support of the CBN for any local company that is interested in diversifying the Nigerian economy and joining government in making sure that they equally help the government in restructuring the base of the Nigerian economy.

This support, he said, would come both in the form of funding and in providing the foreign exchange required for the importation of manufacturing items needed for the project.

While noting that the country stands to gain from the venture, Emefiele stressed that the projects would create millions of jobs for Nigerians.

He however, disclosed that the CBN contributed almost about N75 billion to support the refinery project, and that the project was also being supported by foreign banks.

You will imagine, N75 billion is just a drop compared to about $9billion that this project is costing. But we will continue to show support to individuals and companies that display the determination to support the government and CBN in restructuring the base of this country,î he added.

Africa ís top entrepreneur, Dangote, said: ìMore important is the moral support that weíre actually receiving from CBN-led Emefiele, encouraging us to make sure that we continue with these transformative projects.

Most likely, people donít understand what these projects mean, but what they mean is the transformation of the Nigeriaís economy.

The biggest problem is that Nigeria imports more than what it produces, like any other African country. But by the time we finish the fertilizer plant, I think Nigeria will be the largest fertilizer exporting country in Africa, not even in sub-Saharan Africa.

We will also be the largest exporter of petrochemicals, maybe head-to-head with South Africa and then, we will be the biggest actually in Africa in exporting petroleum products.

So there would be change in terms of importing 90 per cent of what we consume and also exporting about one third out of the country.

So itís a major transformation, and also the gas pipeline, which we want to do is actually three billion-scope, which is equivalent to NLNG today, and these are all projects that I believe will transform the economy of Nigeria.î

He added that currently, more than 26, 000 people have been employed and that by the time the projects picked up fully, especially with the establishment of filling stations, almost 80,000 people would have been employed in the facilities.