The Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, says the focus of the apex bank remains macroeconomic stability.
A statement from CBN’s Corporate Communications Department, says that Emefiele disclosed while delivering a paper at the 40th anniversary/convocation lecture of Ekiti State University, Ado-Ekiti on Monday.
The theme of Emefiele ‘s paper, was “The Role of Central Banks in Manging Economic Downturns”.
It was delivered on his behalf by CBN’s Deputy Governor in charge of Corporate Services, Mr. Edward Adamu,
He said that the CBN had created various initiatives geared towards building a strong, stable and resilient economy that is self-sustaining and able to weather unanticipated shocks.
According to Emefiele, the Act establishing the CBN envisaged the role of development finance, which the Nigerian context presently demands.
“The intervention of central banks in development financing is not new as it dates back to the 1920s,” he said.
He added that some central banks in more advanced economies got directly involved in the financing of government programmes/projects in their early days.
He pointed out that central banks in both advanced and emerging markets embraced quantitative easing to support their economies towards recovering from the global financial crisis of 2008/2009, and the associated economic downturn triggered by the COVID-19 pandemic.
“Many central banks in advanced, emerging and developing economies, during the recent COVID-19 pandemic, supported their fiscal authorities to aid recovery of their economies following the significant decline in global growth occasioned by the pandemic.
“These central banks, particularly in developing countries, intervene in the real economy to enhance the transmission mechanism of monetary policy actions and facilitate the development of financial markets through the creation of easy access to credit for investment and production.
“it is, thus, undeniable that development finance interventions are frequently an integral part of the recovery strategy in most countries,” he said.
Emefiele said that the philosophy behind central banks’ interventions in the real economy was to indirectly influence cost of production for firms and affect prices positively by improving the flow of credit.
While expressing worry that the country’s manufacturing sector contributed less than 15 per cent of the Gross Domestic Product (GDP), the Emefiele decried continous importation of many commodities which Nigeria has capacity to produce and export.
“To address this challenge, we have accepted the charge of the President, Muhammadu Buhari, for the country to produce what it eats and eat what it produces.
“The CBN, working with Deposit Money Banks and participating financial institutions, is focused on critical areas such as the agricultural and manufacturing sectors.
“We have granted over N3 trillion in intervention loans that have aided economic recovery and employment generation.
“Given the limited fiscal space due to the significant drop in government revenue, the CBN had had to intervene with development finance tools and some monetary policy innovations to aid recovery without jeopardizing price stability,” he said.
Emefiele further said that different categories of Nigerians, particularly women and youth, had benefitted from various CBN intervention programmes, like the Anchor Borrowers’ Programme (ABP), Targeted Credit Facility, and Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS).
He expressed commitment to continue leading a “people-focused” central bank that will promote macro-economic objectives such as low inflation and stable exchange rates, along with a focus on promoting inclusive growth and reducing unemployment in the country.
“With an annual population growth rate of close to 2.8 per cent, it is important that all efforts are made to ensure that employment opportunities became available for Nigerians, particularly in sectors that have the potential to absorb the youths,” he said.
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