Repositioning For Real Sector Growth | Independent Newspapers Limited
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Repositioning For Real Sector Growth

CBN Resists Political Pressure, Retains Rates
Posted: Nov 1, 2016 at 6:29 pm   /   by   /   comments (0)

At the 328th session of the Bankers’ Committee meeting in Abuja recently, the Central Bank of Nigeria (CBN) announced its decision to lend special intervention facilities to the country’s manufacturing and agricultural industries at single digit interest rate. The master-stroke policy was aimed to turn around the country’s two ailing but most critical sectors with high capacity to create jobs, unleash sustainable growth and dilate the production possibility frontier.

We are elated that the apex bank has two major intervention funds made up of N235 billion reserved for manufacturing, and N750 billion for the agricultural sector. We also identify totally with the commendable initiative by the lender of last resort and the Bankers’ Committee to revivify the economy and ensure it does not cascade further from recession to depression and stagnation. The various stakeholders should, however, understand clearly that making huge sums available alone does not necessarily solve problems, but cautious and shrewd allocation and disbursement of same to harness the propensity to generate value in core sectors of the economy do.

It is for this reason we strongly suggest that the subversive gimmicks of so-called godfathers of Nigerian political and corporate worlds should not be allowed to play out in utilising the funds if the essence of the initiative must be realised. It is our view that Nigeria is much bigger than the narrow interests and diversionary tendencies of this few.

We also point out that each of the two sectors targeted for revival by the CBN has long been denied necessary attention, resulting in gross under-performance, and now needs even much more than the total sum as huge as it may seem. For years, we have heard of intervention funds but not seen their impact in such critical area as the power sector. The Nigerian electricity supply industry (NESI) is still enmeshed in incongruities and conundrums.  While the industry finds it difficult to generate 5,000 megawatts in Nigeria, Venezuela, an oil producing country with a population of 30 million people generates 20,000 megawatts of electricity; South Africa, a non-oil producing country with a population of 36 million people generates 44,000megawatts of electricity. While it remains tough to reconcile these discrepancies among the three nations, we hold the view that this huge gap can be bridged when such intervention funds are discreetly applied and corruption is eschewed.

This underscores our position that all such reserved special intervention funds be put to immediate use in relevant sectors backed with the implementation of well crafted policies to sustain the fight against economic paralysis, which many Nigerians seem so good at analysing, albeit, without proper analytical tools, sophistication and desired solution. We are convinced that it would make greater economic impact and touch better on the welfare of more Nigerians than being sterilised in CBN’s vaults and yielding uneconomic return to banks and other stakeholders.

Strong case has long been made by various stakeholders for a regime of low interest rate to act as a pull factor, power the economy and galvanise the entire system for inclusive growth. It is cheery that the same bankers that had in the past been described as buccaneers are now also the arrowheads in this latest dimension of  support for resurgence in manufacturing and agricultural activities.                                                                                                                                                                       Now that we are about to witness the application of single digit lending rate, it is our view that every necessary caution be exercised to ensure the essence of the new wave of thinking is neither subverted nor defeated. We are in total support of the position of the Bankers’ Committee that no project qualifies for loan access in the new support scheme except it is proven that it falls in the category of those with capacity to support import substitution and conserve foreign exchange.

It is also our view that similar radical intervention is made in the housing sector to ensure more Nigerians have access to good and affordable houses. We consider it an aberration that there is still so much deficit in the country’s housing industry.