The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, reiterated that the objective of the apex bank is to stabilize the macroeconomic sector.
A statement from CBN’s Corporate Communications Department indicates that Emefiele said this while presenting a paper at the 40th anniversary conference/convocation of Ekiti State University, Ado-Ekiti, Monday.
The News Agency of Nigeria (NAN) reports that the subject of Efiele’s article was “The Role of Central Banks in Managing Economic Downturns”.
It was delivered on his behalf by CBN Deputy Governor for General Services, Mr. Edward Adamu.
He said the CBN has created various initiatives aimed at building a strong, stable and resilient economy that is self-sustaining and able to withstand unforeseen shocks.
According to Emefiele, the law establishing the CBN provided for the role of development finance, which the Nigerian context currently requires.
“Central bank intervention in development finance is not new as it dates back to the 1920s,” he said.
He said that some central banks in more advanced economies got directly involved in funding government programs/projects in their early stages.
He said central banks in advanced and emerging markets have embraced quantitative easing.
According to him, this is to help their economies recover from the 2008/2009 global financial crisis and the associated economic downturn triggered by the COVID-19 pandemic.
“During the recent COVID-19 pandemic, many central banks in advanced, emerging and developing economies have supported their fiscal authorities.
“The objective is to help the recovery of their economies after the significant drop in global growth caused by the pandemic.
“These central banks, especially in developing countries, intervene in the real economy to strengthen the transmission mechanism of monetary policy actions.
“In addition to facilitating the development of financial markets through the creation of easy access to credit for investment and production.
“It is therefore undeniable that development finance interventions are often an integral part of the recovery strategy in most countries,” he said.
Emefiele said the philosophy behind central bank interventions in the real economy was to indirectly influence the cost of production for businesses and positively affect prices by improving the flow of credit.
The CBN Governor expressed concern that the country’s manufacturing sector contributes less than 15% of gross domestic product (GDP).
Emefiele also denounced the continuous importation of many products that Nigeria had the capacity to produce and export.
“To meet this challenge, we have accepted President Muhammadu Buhari’s charge for the country to produce what it eats and eat what it produces.
“The CBN, in collaboration with depository banks and participating financial institutions, is focusing on critical areas such as the agricultural and manufacturing sectors.
“We have provided over three trillion naira in intervention loans which have helped economic recovery and job creation.
“Given the limited fiscal space due to the significant decline in government revenue, the CBN had to step in with development finance tools and some monetary policy innovations to help recovery without compromising price stability. “, did he declare.
Emefiele further said that different categories of Nigerians, especially women and youths, have benefited from various CBN intervention programs.
He listed the programs to include the Anchor Borrower Program (ABP), the Targeted Credit Facility and the Agribusiness Small and Medium Enterprise Investment Program (AGSMEIS).
He expressed the bank’s commitment to continue leading a “people-centric” central bank that would promote macro-economic goals such as low inflation and stable exchange rates.
Emefiele said the bank would also focus on promoting inclusive growth and reducing unemployment in the country.
“With an annual population growth rate of nearly 2.8%, it is important that every effort is made to ensure employment opportunities are available for Nigerians.
“Especially in sectors that have the potential to absorb young people,” he said.