..Says external reserve now at $45bn
By Charles Nwaoguji
The Central Bank of Nigeria, CBN, has said the Apex bank plans to implement N500 billion facility aimed at supporting the growth of non-oil exports, which would help to improve non-oil export earnings.
According the Governor of the bank, Godwin Emefiele, the bank would launch a Trade Monitoring System (TRMS) in October 2019, which is an automated system that would reduce the length of time required to process export documents from 1 week to 1 day.
Emefiele, who disclosed this during his media presentation in Abuja yesterday during when he presented his first term stewardship and future development agenda, said this measure would help support the efforts at improving the non-exports of goods and service.
He that though the country’s external reserve as at June has risen to $45 billion from $23 billion in October 2016, nevertheless heavy dependence on oil revenue is not sustainable.
Emefiele, said the apex bank through concerted efforts by the monetary and fiscal authorities implemented series of measures which led to the recovery of the economy from the recession by the 1st Quarter of 2017.
The governor sadly recalled that given Nigeria’s dependence on crude oil revenues for close to 86 per cent of our foreign exchange earnings and over 60 per cent of government expenditure, the drop-in prices led to heightened inflationary pressures, depreciation of the exchange rate, significant drop in external reserves leading to eventual recession by the 2nd Quarter of 2016.
“Building on these efforts, I am delighted to note that our external reserves have risen from $23bn in October 2016 to over $45billion by June 2019.
Inflation has dropped from 18.72 per cent in January 2017 to 11.40 per cent in May 2019. Our CBN purchasing manufacturers index has risen for 26 consecutive months since March 2017, indicating continuous growth in the manufacturing sector, as a result of measures implemented by the CBN which has improved access to raw materials and finance for manufacturing firms.
” GDP growth has risen for seven consecutive quarters following the recession, and our exchange rate has appreciated from over N525/$1 in February 2017 at the BDC window to N360/$1. With improved inflow of foreign exchange, the exchange rate has remained stable around N360/$1 for the past 27 months.” Emefiele said.
The governor, recalled that part of the measures deployed to support the recovery include tightening of the monetary policy rate in order to rein in inflation, creation of an Investors and Exporters Window which allowed exporters and investors to inflow and sell their foreign exchange at the prevailing market rate.
In order to reduce Nigeria’s reliance on the importation of items which could be produced in Nigeria, the CBN, restricted access to foreign exchange on 43 items, while deploying intervention funds to support growth and productivity in the agricultural and manufacturing sectors.
These measures, according to him helped to support the attainment of its monetary policy objectives such as a reduction in the inflation rate, stability in the exchange rate and improved accretion to our external reserves.
On the other hand , the Bank as part of her goals set in 2014, increased its development finance interventions in order to catalyze growth in critical sectors of the economy and its objectives were driven by the need to increase investments by MSMEs as well as spur consumer spending, as these factors would have a positive impact on GDP growth and employment.
Furthermore, its development finance efforts were driven by the need to reduce our reliance on revenues from crude oil.
He further recalled that, “At a point in our nations history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market. Some of these products include, Cocoa, Groundnuts, Cotton and Palm-Oil.
Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians.”
Emefiele regretted that the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing the economy to the vulnerabilities that normally accompany an increased dependence on a single commodity for survival.
He observed that if Nigeria had maintained its market dominance in the palm oil industry, which stood at 40 per cent in the 70s, the country would be earning above $20 billion annually from cultivation and processing of palm oil today.
This he noted would have provided a sufficient buffer for the nation following the drop in crude oil prices. “Our situation is further worsened by the unpatriotic activities of some unscrupulous individuals and businesses who embarked on massive smuggling and dumping of goods that can be produced in the country thus leading to the demise of our agricultural and manufacturing sectors and hence the attendant high level of unemployment.”, he said.
He recalled that during his maiden address on June 5, 2014, he indicated that his vision would be to ensure that the Central Bank of Nigeria is more people focused, as its policies and programs would be geared towards supporting job creation, reducing the high level of Treasury-Bill rates, improving access to credit for MSMEs, deepening intervention program in the Agricultural Sector, building a robust payment system infrastructure that will help drive inclusion, in addition to key macroeconomic concerns such as exchange rate stability, financial system stability and maintaining a strong external reserve.