“FG, CBN Must Not Get Carried Away By Marginal Economic Growth”
Photo Caption: Representative of Governor Akinwunmi Ambode of Lagos State and Secretary to the State Government, Tunji Bello (left); CBN Governor, Godwin Emefiele and President/Chairman of Council, the Chartered Institute of Bankers of Nigeria (CIBN), Professor Segun Ajibola, at the 2017 Annual Bankers’ Dinner of the CIBN held in Lagos on Friday, November 10, 2017.
Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), on Friday in Lagos attributed improvements in the domestic production and a reduction in Nigeria’s import bill to the dogged implementation of its policy denying importers of 41 items access to foreign exchange from the official window.
Speaking at the 2017 Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), Emefiele noted that as a result of the decision which was opposed in several quarters, local manufacturers are now recording profits, besides the major boosts to their revenue.
Specifically, he said since implementation of the restriction commenced, the nation’s monthly import bill has fallen considerably by $3.6bn or 65.45% from an average of $5.5bn, first to $2.1bn in 2016 and $1.9bn by the first half of this year.
In addition, he said implementation of the policy has had a great impact on Nigeria’s import bill and boosted local rice production in the country, recalling that Nigeria, in 2012, imported about 1.2 million metric tonnes of rice from a trading partner, a number that dropped by 99% to only 784 metric tonnes in 2016, one full year of implementation of the policy.
He noted, for example, that the policy turned around the fortune of Psaltry International Limited (PIL), an agro-allied company engaged in of production of starch, based in Oyo State, which has since moved from having only few customers and a huge backlog of inventory.
The company, Emefiele continued, now has over 50 multinational clients, including Nestle and Unilever, besides saving the country $7m in foreign exchange drawdown over the two years of the policy.
As part of the gains from the policy, the governor also announced an agreement reached with Unilever, which moved its production facility to another country a few years ago, to commission a new Blue Band Factory in Agbara, Ogun State before the year end.
According to him, “these are clearly verifiable successes of government’s attempts to create jobs locally, improve the wealth of our rural population, improve industrial capacities and ultimately attain economic growth in Nigeria.”
Today, he continued, Nigeria’s economy had recorded positive growth after five consecutive quarters of negative growth, thereby signaling its exit from recession, besides the downward trend in headline inflation from 18.72% in January 2017 to the September 2017 figure of 15.98%.
The CBN Governor equally expressed gladness that the Naira had appreciated from over N500/US$1 to about N360/US$1, noting that the economy had seen stability in the exchange rate of the naira for over six months, he affirmed that the exchange rate was not only stable, but was also converging across various windows and segments of the market.
He noted that since the establishment of the Import and Export Window, the CBN had recorded about US$10bn in autonomous inflows therefrom, a situation he said reflected the effect of the increased transparency which that window accorded the foreign exchange market and its impact of improving investor confidence and business sentiments.
He noted that the nation’s external reserves had recovered significantly from about US$23bn in October 2016 to over US$34.3bn as at November 3, 2017.
“The accretion in reserves does not only reflect increased inflow but also our shrewd FX demand management strategy,” he added
Meanwhile, speaking on the economic outlook for 2018, Emefiele warned fiscal and monetary authorities against complacency and over-confidence because of current positive developments in the economy. Rather, he urged all to strive to improve and sustain the pace of recovery.
Although he noted that the import bill had dropped, he stressed that Nigeria’s manufacturing and agriculture sectors still had a long way to go if the country were to attain self-sufficiency in those sectors. Nevertheless, he assured that the CBN, on its part, would continue to fine-tune its policies and strategies based on its understanding of evolving developments and supported by in-house technical analysis and simulations. He assured that the CBN would remain proactive in ensuring that the welfare of Nigerians is optimised at any point in time.
Specifically, Emefiele noted that, that barring any unforeseen shocks, inflationary pressure will continue to ease, expressing optimism that the rate may return to very low double digit or high single digit levels during the next year. He also expressed hope that the foreign exchange reserve will continue to grow; stressing that Nigeria can attain a foreign reserve position of about US$40 billion by end of 2018.
Emefiele also expressed hope that the economic recovery would consolidate and that the exchange rate stability currently being witnessed would continue. While expressing hope for even stronger policy coordination, collaboration and cooperation in 2018, he hinted that monetary policy stance could change when the underlying fundamentals become supportive.
While expressing delight that some of the pains that were associated with some of the CBN’s policies had become major gains in Nigeria’s economy, Emefiele urged all stakeholders to work towards creating a Nigeria, where balanced growth and shared prosperity is guaranteed for all.
