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Published On: Mon, Jul 29th, 2019

CBN: How Emefiele ‘raised the bar’ with Five-Year Plan

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By Etuka Sunday

The official announcement of the five-year plan of the Central Bank of Nigeria (CBN)’s governor, Mr Godwin Emefiele came with a lot of excitement among Nigerians particularly existing and potential investors as well as stakeholders across different sectors of the economy.
Farmers, business men and women, global and domestic experts are still wondering at the strength, dexterity and commitment of Mr Emefiele in initiating and implementing monetary policies aimed at stabilising the economy.
on June 5, 2014, Emefiele announced that his vision would be to ensure that the CBN was 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 would help drive inclusion, in addition to key macroeconomic concerns such as exchange rate stability, financial system stability and maintaining a strong external reserve.
As a team player, he believes that whatever achievements CBN has recorded in addressing the difficult economic conditions, was indeed reflective of the collective efforts of the management and staff of the bank.
He has in the past five years has done well as the arrow head of the bank; with the current exchange rate stability, Gross Domestic Product (GDP) growth by 2.01 per cent, moderation in headline inflation (year-on-year) to 11.22 per cent in June 2019 from 11.40 per cent in May 2019 attributable to the CBN’s support to the agricultural sector and the prevailing stability in the Nigerian foreign exchange market.
The continued stability in the foreign exchange market and the steady accretion to external reserves, which stood at US$44.88 billion as at July 19, 2019, representing a 0.38 per cent increase from US$44.71 billion at the end of June 2019 is also a welcome development.
As a goal getter, he was just not satisfied with all he has achieved, even in the face of difficult economic conditions. Therefore, has raised the bar with the announcement of a five-year Policy Thrust from 2019 to 2024.

CBN Vision for the Next 5 years
On Monday, June 24, 2019, Mr Emefiele announced the bank’s policy thrust for the next five years with the pledge to work closely with the fiscal authorities to achieve a double digit target growth by the next five years and working assiduously to bring down inflation to single digit; while accelerating the rate of employment.
Additionally, he said, “our priorities at the CBN over the next 5 years are the following; First, preserve domestic macroeconomic and financial stability; Second, foster the development of a robust payments system infrastructure that will increase access to finance for all Nigerians thereby raising the financial inclusion rate in the country; Third, continue to work with the Deposit Money Banks to improve access to credit for not only small holder farmers and MSMEs but also Consumer credit and mortgage facilities for bank customers.
“Fourth, grow our external reserves; and fifth, support efforts at diversifying the economy through our intervention programs in the agriculture and manufacturing sectors.
“We are confident that when implemented, these measures will help to insulate our economy from potential shocks in the global economy. In my second term in office, part of my pledge, is to work to the best of my abilities in fulfilling these objectives,” he said.

Macroeconomic Stability
He said, over the next 5 years, with a key emphasis on supporting improved GDP growth and greater private sector investment, CBN intends to leverage monetary policy tools in supporting a low inflation environment, while seeking to maintain stability in exchange rate.
“Our ultimate objective is to anchor the public’s inflation expectation at single digits in the medium to long run,” he said.

Exchange Rate Stability
He said, CBN will continue to operate a managed float exchange rate regime in order to reduce the impact which continuous volatility in the exchange rate could have on the economy.
“We intend to aggressively implement our N500bn facility aimed at supporting the growth of our non-oil exports, which will help to improve non-oil export earnings.
“We will launch a Trade Monitoring System (TRMS) in October 2019, which is an automated system that will reduce the length of time required to process export documents from 1 week to 1 day,” he said.

Financial System Stability
He said, the bank in the next five years, intends to pursue a program of recapitalizing the Banking Industry so as to position Nigerian banks among the top 500 in the world. Banks will therefore be required to maintain higher level of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system.

Robust Payment System Infrastructure
Emefiele said an efficient payment system is vital to the effectiveness of monetary policy interventions, therefore, efforts will be on at driving the cashless initiative across the country, due to the immense efficiency gains that will be derived from it, and the impact it could have on financial inclusion drive. “Through measures such as the cashless initiative, USSD, Mobile Banking, agent networks and Payments Service Banks, Nigerians can expect to see significant improvements in the payment systems infrastructure over the next 5 years.

Targeted Development Finance
“Building on the success of our Anchor Borrowers Program and other intervention programs, we intend to: Boost productivity growth through the provision of improved seedlings, as well as access to finance for rural farmers in the agricultural sector, across 10 different commodities namely: Rice, Maize, Cassava, Cocoa, Tomato, Cotton, Oil-palm, Poultry, Fish, and Livestock/Dairy.
“Our choice of these 10 crops is driven by the amount spent on the importation of these items into the country, and the over 10 million jobs that could be created over the next 5 years if efforts are made to expand cultivation and processing of these items in Nigeria.
“We believe these measures will help to boost not only our domestic outputs but also improve our annual non-oil exports receipts from $2bn in 2018 to $12bn by 2023.

Financial Inclusion
The CBN boss said, over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the payment service banks, the bank intends to broaden access to financial services to individuals in underserved parts of the country.
“Our ultimate objective is to ensure that 95 percent of eligible Nigerians have access to financial services by 2024.

Access to Credit
“We are working to encourage banks and financial institutions to lend from their balance sheet in order to support the growth of critical sectors of the economy, such as Agriculture, MSMEs and the Real Estate Sector.
“MSMEs today constitute over 90 percent of businesses in the country.
Through the national collateral registry, over N400 billion worth of movable assets have been registered by MSMEs in the registry. We intend to triple this number over the next 3 years,” he said.

Unique Identification
He said, in order to ease the constraint poor identification has on availability of credit to prospective banking customers, the CBN will support an aggressive enrollment of prospective banking customers in the informal sector onto the BVN system.
He said, the current enrollment of 38 million unique banking customers will be expanded to 100 million over the next 5 years.

Lending to MSMEs
Emefiele said, the recently established NIRSAL microfinance bank will also work to improve access to credit for MSMEs in rural communities, which will help stimulate improved economic activities.
“In order to reduce the constraints which high account receivables, have on the growth and operations of MSMEs, we will support the development of a Trade Receivables Portal, which will enable MSMEs trade their invoices with financial institutions in order to improve their cash flow and support ongoing operations of their respective businesses,” he said.

Consumer Credit
The CBN boss said, today, less than 10 percent of adult Nigerians who have a bank account, utilize financial products offered by banks, such as credit cards, personal loans, mortgage loans, auto loans and consumer durable loans, therefore, in order to spur lending to consumers, a lending framework will be announced by the CBN in that regard.

Mortgage Lending
He said, in the bank’s effort to support the growth of Nigeria’s real estate industry, it would work in developing a framework that will enable banks to securitize mortgage loans, which can then be sold in the capital markets.

Conclusion
From the above stated plan, and the willpower driving it, there is no doubting the capability of Godwin Emefiele to take the Nigeria’s economy to the next stage of growth and development.
Apart from working to safeguard the stability of the financial system, while supporting the development of a payment system infrastructure that will improve access to credit for all eligible Nigerians, greater efforts would be intensified to reduce unemployment, through targeted interventions in the agricultural and manufacturing sectors

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