By Etuka Sunday
The Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has said that the various interventions of the bank has returned the country’s economy on the path of positive growth.
Emefiele stated this while addressing the banking community at the 55th Annual
Bankers Dinner, organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.
He said, “the impact of these measures along with the removal of restrictions on movement and resumption of international travel, led to improvement in key indicators of the economy, as several economic activities returned to positive growth.
Emefiele noted that a sectoral assessment of economic activities in the third quarter indicates that the economy witnessed positive growth in key sectors such as Information and Communications Technology, Agriculture, Health, Construction, Finance and Insurance and Public Administration.
“The Agricultural sector continued to record positive growth supported by productivity gains in the sector, interventions by the government, and improved demand for local produce.
“The Manufacturing Purchasing Managers Index, in the month of November stood at 50.2 points, indicating an expansion in manufacturing activities after six months of contraction.
“A total of 18 sectors recorded positive growth in the third quarter relative to 13 sectors in the second quarter, which reflects significant improvement in economic activity.
“Furthermore, 36 out of the 46 economic activities tracked by NBS, reflected positive improvements in growth, which includes activities that recorded negative growth.
“In the Investors and Exporters Window, close to $150m is being traded daily as a result of our measures to sanitize activities in the foreign exchange market.
“In addition, the Nigerian Stock Exchange All Share index rose by 65 percent between April and November 2020, reflecting improved sentiments by investors on the fundamentals of publicly listed companies.
“As a result of these measures, GDP growth in the third quarter, improved to -3.6 percent from -6.1 percent in quarter two, even though the economy fell back into a recession. We however expect that Nigeria would emerge from the recession by the first quarter of 2021, due to high frequency data that indicates continued improvements in the non-oil sector of our economy,” he said.
On Financial System Stability, the apex bank governor said, with the decline in economic activities, the CBN instituted measures in the banking
system, in order to prevent an economic crisis from spilling over into a financial crisis.
Inaction on our part would have led to a wave of bankruptcies by firms along with rising unemployment, which would ultimately have a significant impact on the balance sheet of banks.
“As a result, we ensured that; Banks made adequate capital provisions to cover for unexpected losses. We supported viable businesses that had been affected by the pandemic through access to our intervention funds. We enabled banks to restructure loans granted to sectors affected by the pandemic.
“As a result of these measures, NPL ratios has remained low at 5.7 percent. The capital adequacy ratio of the banking industry, at 15.5 percent, remains above the prudential requirement percent.
“In addition, return on earnings in the banking sector was over 21 percent as at October 2020. Similarly, Other Financial Institutions (OFIs) recorded a remarkable improvement as aggregate assets grew by N582 billion, or 16.94 per cent (year-on-year), to N4.02 trillion as at end-September 2020.
“While the news of the continued growth in the banking and finance sector in the third
quarter of the year is encouraging, the ultimate strength of our financial system would depend on three key factors; Ensuring that banks have adequate capital buffers to withstand similar pandemics.
“Developing adequate internal controls that will be able to identify potential risks to banks, such as cyber threats, as well as putting in place measures to contain these risks. Being able to adapt your business model to changes taking place in the business environment.
“This last point is vital as COVID-19 has demonstrated the impact externally induced disruptions could have on the Nigerian economy. It is therefore imperative from an economic as well as a security perspective, that the banking and financial system works to support growth in sectors that have significant growth potential, and can enhance the resilience of the Nigerian economy, in the face of external shocks,” he said.
He assures all Nigerians that the Monetary and Fiscal authorities are alive to their responsibilities to restore the economy back to recovery.