The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has affirmed that with the Nigerian economy exiting the recession, following a number of policy responses, the worst days were clearly behind the country.
Emefiele noted that based on analyses and understanding of the developments which confronted the country, the central bank took a number of measures, many of which were at the time vigorously criticised, but which helped the economy out of the recession.
Tracing the economic recession to the significant and persistent drop in commodity prices that affected the economy adversely, Emefiele said the resultant effect was depressed GDP growth, rising inflation, depreciation of the exchange rate, as well as depletion of the country’s foreign exchange (FX) reserves, and the decline in average FX inflows.
Emefiele, who delivered the 47th convocation lecture of the University of Nigeria, Nsukka (UNN) yesterday, pointed out that the vulnerabilities of Nigeria to the global shocks were amplified because of the nation’s over-reliance on the oil sector for FX revenue and for government finances.
“Even at the height of high oil prices, rather than save, we drained our buffers through an excessive dependence on imports, most of which could be produced locally.
“Based on our analyses and understanding of these developments, the Bank took a number of measures many of which were at the time vigorously criticised,” he said.
The CBN governor noted that in the realm of monetary policies, the CBN embarked on a cycle of policy tightening to rein in inflation, using the Monetary Policy Rate (MPR) and Open Market Operations (OMO).
In external reserve management, he noted that the CBN adopted demand management through essential commodities while a number of actions were taken in the area of exchange rate management to stabilise the exchange rate.
“In development finance, the Bank continued its financing activities in key high-impact sectors like power, aviation, education, MSME, agriculture, including CAC’s, ACGs, NIRSAL, the Anchor Borrowers’ Programnme, etc.
“In the light of these and other policy responses, we are delighted that the economy has turned the corner with our worst days clearly behind us,” Emefiele said, adding that gross domestic product (GDP) growth recovered after five quarters of continuous contraction while inflation dropped from a peak of 18.7 per cent in January 2017 to 15.9 per cent in November.
He also noted that the positive indicators also manifested in the areas of exchange rate appreciation, improved FX supply, recovery in FX reserves, significant boost in local production, as well as improvement in the World Bank’s ‘doing business indicator’.
The CBN chief executive, whose convocation lecture dwelt on “A Mindset for Succeeding in Today’s Nigeria”, noted that the boost in local production was important because of the demographic factors.
“Imagine that today, Nigeria is estimated to have a population of over 180 million people, and this population is predicted by the United Nations to be 398 million people by 2050, which would make Nigeria the third largest in the world by that time.
“These trends present a significant opportunity for our graduates to turn whatever challenges they may be facing into opportunities that can harness these demographic shift. Imagine what would happen if Nigeria and Nigerians cannot provide food, shelter, clothing, health, education, and other basic things for the teeming population.
“Even though these trends should already begin to bother current leaders in our country today, I believe that young Nigerians can begin today to see these trends as opportunities and think of what they can do to take advantage of the situation,” he observed.
He reeled off names of many young and successful Nigerians, who rather than complain about what the government did not do for them, identified common problems and needs of the society and created solutions that turned them into millionaires.
The CBN governor disclosed that the Bank was currently reviewing the broad framework of its development financing funds with a view to creating new channels through which entrepreneurs with great ideas can access credit without dissipating much effort.
Some of the central bank’s development financing fund initiatives include the N220 billion initiative for MSMEs, Anchor Borrowers’ Programme, and Agricultural Credit Guarantee Scheme, among others.
He disclosed that the federal government and the CBN were encouraging the Deposit Money Banks (DMBs) and other development finance institutions to create awareness through which innovative entrepreneurs could access credit with a view to creating opportunities for job creation.
Emefiele also admonished universities and other tertiary institutions across the country to focus on research, evolve innovative approaches to job creation and income generation, and form business units, assuring that the CBN was willing to provide the necessary financing.
As part of the CBN’s efforts to address the challenges of unemployment, promote entrepreneurial spirits among Nigerian youths and enhance the spread of small and medium enterprises, Emefiele stated that the central bank designed and formulated a number of policies and programmes for direct real sector intervention.
According to him the Bank’s Youth Entrepreneurship Development Programme (YEDP), which was launched on March 15, 2016 and run in collaboration with banks and the National Youth Service Corp (NYSC) had helped recently discharged corps members access concessionary financing of up to N5 million for innovative job creating ventures.
Addressing the graduating students, Emefiele, himself an alumnus of the institution, urged young graduates to embrace the philosophy of being job creators rather than job seekers by availing themselves of the Bank’s financing window through creative entrepreneurial and innovative ways.
“As you leave the university and proceed to the NYSC, I encourage you graduands to take advantage of this. In addition, there is also the N220 billion CBN initiative to support micro, small and medium scale enterprises (MSMEs). This is aimed at encouraging entrepreneurship development and creating an environment that supports business success.
“It is our firm belief that our modest contributions are already yielding the expected dividends for all to see. These schemes are set up solely for your use, please take advantage of them,” the CBN governor advised.
He, however, admitted that the government was expected to provide the impetus and enabling environment while also acknowledging that there were problems associated with the ease of entrepreneurs accessing credit.
“Let me state that the federal government, including the CBN, is encouraging the Deposit Money Banks and other development finance institutions to create awareness through which innovative entrepreneurs can access credit with a view to creating opportunities for job creation.
“At the moment, the CBN is reviewing the broad framework of its development financing funds through which entrepreneurs with great ideas can access credit with minimal effort,” he said.
Emefiele, who noted that the lecture was a noble homecoming for him, having graduated from the university 34 years ago, said he always has nostalgic feelings about his alma mater.
In his remarks, the chairman of the convocation lecture and a former governor of the CBN, Prof. Chukwuma Soludo, observed that in spite of the nation’s challenges, “there are flickers of hope”.
He told the graduating students that the message of Emefiele’s lecture was that as they graduate, they should find opportunities in the midst of adversity, noting that it may not be rosy out there for all of them.
Soludo, however, reminded the government that jobs cannot be created by applying the tools that held sway in the past decade but through creative and innovative ways.
While calling for creative thinking by all, Soludo noted that although the country has exited the recession, the development was propelled by the oil sector.
According to him, the non-oil sector still contracted based on the last GDP figures released by the National Bureau of Statistics (NBS), calling for a collective solution to the nation’s challenges.