MPC: Banking sector credit hits N43.67trn — Emefiele
…Disburses N1.49trn to agriculture programmes
…9 DisCos get N33.45bn to drive National Mass Metering Programme
…LCCI urges focus on foreign exchange policies
By Kayode Tokede
The Governor Central Bank of Nigeria (CBN), Mr. Godwin Emefiele on Tuesday disclosed that banking system credit to the economy increased by 1.75 per cent to N43.67 trillion in February 2021 from N42.92 trillion in January 2021.
He attributed the growth to the ongoing broad-based monetary and fiscal stimulus to various sectors of the economy.
Members voted to retain policy parameters with Monetary Policy Rate (MPR) at 11.5 per cent, Cash Reserve Ratio (CRR) at 27.5 per cent, and Liquidity Ratio at 30 per cent.
Speaking at the end of the 278th Monetary Policy Committee (MPC) meeting in Abuja, the CBN governor enjoined the Bank to maintain its current drive to improve access to credit to the private sector, while exploring other initiatives with the fiscal authorities to improve funding to critical sectors of the economy.
He noted that persistent inflationary pressure fuelled largely by continued uptick in food prices, stressing that the Committee noted the Bank’s interventions to boost food production particularly through its various Agricultural programmes.
According to him, “Other complementary measures included, increase in disbursement for the dry season agricultural programme to increase output, the adoption of high yield seeds to improve productivity and the adoption of harvested produce as a means of loan repayment, which has stemmed hoarding and the activities of middlemen and rent seekers.
“The establishment of the strategic grain reserves for staple crops has also helped in addressing seasonality of agricultural commodities.
“In terms of funding, the Committee noted that the Bank has disbursed funds under its various agricultural interventions towards improving food supply in Nigeria.”
He stated that the Committee noted the disbursement of N107.60 billion to 548,109 farmers cultivating 703,619 hectares of land between fourth quarter (Q4) 2020 and first quarter (Q1) 2021 to boost dry season output in support of agricultural value chain development.
According to the CBN governor, “Total disbursements as at end-February 2021 amounted to N1.487 trillion under various agricultural programmes, of which N686.59 billion was disbursed under the Commercial Agricultural Credit Scheme (CACS) and N601.75 billion under the Anchor Borrowers Programmes (ABP) to 3,038,649 farmers to support food supply and dampen inflationary pressures.
“Under the Targeted Credit Facility, the Bank has disbursed N218.16 billion to 475,376 beneficiaries, of which 34 per cent of beneficiaries are SMEs.
“Under AGSMEIS, N111.62 billion has been disbursed to 28,961 beneficiaries, 70 percent of which are in the agricultural sector.
“Under the Creative Industry Financing Initiatives mainly targeted at youths, N3.19 billion has been disbursed to 341 beneficiaries, of which 53 percent is to the movie industry.”
He disclosed that under the National Mass Metering Programme, N33.45 billion has been disbursed to nine distribution companies for the procurement of 605,852 meters, while N89.89 billion has been disbursed under the Nigeria Electricity Market Stabilisation Facility (NEMSF 2) to 11 distribution companies to improve the electricity supply industry in Nigeria.
According to him, the MPC noted the performance of the Financial Soundness Indicators (FSIs) of the DMBs which showed a Capital Adequacy Ratio (CAR) of 15.2 per cent, Non-Performing Loans (NPL) ratio of 6.3 per cent and Liquidity Ratio (LR) of 40.5 per cent, as at February 2020.
“On non-performing loans (NPLs), the MPC noted that the ratio remained above the prudential benchmark of 5.0 per cent and urged the Bank to sustain its regulatory measures to bring it below the prudential benchmark,” he explained.
He said the medium-term outlook for both the domestic and global economies indicates cautious optimism, stressing that it is premised on the expectation of sustained policy support and successful deployment of the COVID-19 vaccines around the globe and its effectiveness in ensuring herd immunity.
According to him on economy outlook, “Available data and forecasts for key macroeconomic variables for the Nigerian economy suggest further rebound in output growth for the rest of 2021.
“This is predicated on the sustained, as well as additional interventions by the monetary and fiscal authorities to keep up the recovery momentum in the economy, favourable upsurge in crude oil prices, foreign exchange market stability and successful deployment of the new COVID-19 vaccines that could further stimulate economic activities and ultimately boost output growth.
“Given the potential rebound in output growth, bolstered by the resumption of economic activities post COVID-19, inflationary pressure in the economy is projected to moderate in short-to-medium term.
“The underlying risks of the efficacy of the COVID-19 vaccines against known and newly emerging strains of the virus, the uncertainty that the existing vaccines could lead to herd immunity and unequal access to COVID-19 vaccine, however, are some of the headwinds that could undermine this forecast.”
However, Director-General, Lagos Chamber of Commerce and Industry (LCCI), Dr Muda Yusuf in a statement said the sustained intervention efforts of the CBN would further enhance credit flows to the real economy, stimulate output growth and ultimately moderate inflationary pressures.
According to him, “The LCCI notes the decision of the Monetary Policy Committee of the Central Bank of Nigeria to retain policy parameters during its March 2021 meeting.
“The LCCI appreciates the dilemma which the current stagflation condition presents to the monetary authorities.
“We note the imperative of striking a balance between stimulating output growth and curbing intensifying inflationary pressures.
“We endorse the position of the MPC on need for fiscal authorities to expedite actions in addressing these challenges and other investment climate issues constraining the supply side of the economy and fuelling inflationary pressures,” he said.
He explained that the MPC members reiterated its concerns on the activities of persons and groups causing security challenges in the food producing areas of the country, as this has contributed to the major uptick in food prices across the country.
The LCCI DG, however, requested that the MPC should focus most of its deliberations on the foreign exchange policy because of its profound implications for economic performance and the confidence of investors.
According to him, foreign exchange policies are as important as liquidity management concerns.
He noted with concern the divergent positions of both the fiscal and monetary authorities on the country’s foreign exchange policy framework.
Yusuf stressed that the lack of coherence among policymakers sent a negative signal to the investment community, aggravated uncertainty and undermined the confidence of investors.
“Foreign exchange framework is key to the price stability mandate of the CBN.
“It is important for the fiscal authorities, CBN and Economic Advisory Council to be on the same page as far as the country’s foreign exchange policy framework is concerned,” he said.
