Emefiele And CBN's Uncommon Development Finance Activities

By Luke Onyekakeyah

The attacks, taunts and apparent persecution of Godwin Emefiele, the immediate past governor of the Central Bank of Nigeria (CBN) have beclouded the uncommon historic development finance activities he initiated and implemented. The development appears to be a uncommon attempt to rubbish what ordinarily should be acclaimed as progressive imprints in favour of the economy. Nigeria’s unenviable culture of use and dump is what is playing out on Emefiele. For never in the history of the CBN has the apex bank played such a more direct progressive and positive role to impact the real sector of the economy.

I am not saying that all was well under Emefiele’s CBN. As a matter of fact, no sector of the economy would excel on its own when the entire Nigerian system is comatose. The CBN as a subset of a faulty Nigerian system cannot excel with all the ills plaguing Nigeria. That was why it couldn’t achieve its set targets. Persecuting or attacking Emefiele on the ground of systemic failure he did not cause is vindictive and amounts to chasing the wind.

For instance, farmers who were given loan to boost food production could not go to their farms due to ravaging insecurity not caused by Emefiele. Industrialist who were given loan to boost production could not perform due to epileptic power supply and bad roads not caused by the CBN. The examples are unending showing how a faulty system negatively affects every sector under it. The CBN is no exception.

CBN’s interventionist policies in different sectors of the economy, particularly the real sector was unmatched. The extent of the intervention was more than enough to give boost to the economy if the general operating environment was conducive. My concern now is what becomes of the interventionist policies under a new helmsman who may not buy into the progressive vision of Emefiele. Are the policies going to be sustained or are they going to be discarded because the new power brokers don’t like the face of Emefiele who initiated them? That would mean throwing the baby with the bathwater and that would be a disservice to the economy. It would be foolhardy to discard the policies without realising the full benefits for our distressed economy.

The CBN came up with the interventionist policies to address the needs of the real sector with the aim of achieving a variety of economic targets among which was the need to address financial exclusion by locating easy access to credit to give impetus to the development of priority sectors of the economy. The philosophy behind the schemes and programmes in the real sector was to stimulate affordable and sustainable finance to priority sectors and segments of the economy, particularly, agriculture, manufacturing and small and medium scale businesses. The schemes aimed at providing low-cost and long-term funding for enterprises within these sectors and segments involved in large scale processing or secondary production activities. The development finance interventions of the CBN were transmitted through schemes and programmes ranging from credit guarantees and interest rebates to indirect lending.

Under Emefiele, the CBN initiated and implemented as many as 43 programmes and schemes that positively impacted different sectors of the economy. The catalogue of interventions included the popular Anchor Borrowers Programme ( ABP), Accelerated Agriculture Credit Scheme ( AACS), Commercial Agriculture Credit Scheme ( CACS), Family Homes Financing Initiative ( FHFI), Micro Small and Medium Enterprises Development Facility (MSMEDF), National Youth Investment Fund (NYIF), Tertiary Institutions Entrepreneurship Scheme (TI ES), Youth Entrepreneurship Development Programme (YEDP), TRSDERMONI, among many others.

Under agriculture, for instance, the CBN’s Anchor Borrowers Programme (ABP) reportedly contributed between 2 to 2.5 million metric tonnes of rice paddy annually to the national output. In the same vein, the programme supported maize production amounting to over 1.12 metric tonnes from financed projects across the country besides the cultivation of over 1.41 metric tonnes of cassava and the domestic production of its derivatives namely starch, ethanol, sorbitol, etc. In sum, a total of over 4.59 million smallholder farmers are cultivating some 6,135,150 hectares of 21 agricultural commodities across the country.

Apart from rice and cassava, the other commodities cultivated under the ABP include cocoa, cotton, groundnut, soya bean, wheat, sorghum, ginger, castor seed, tomatoes, yellow pepper, cowpea, onion, among others financed through 23 participating financial institutions.

Furthermore, the ABP contributed to the increase in yield per hectare for maize and rice paddy cultivation from an average of 1.5 to 4.5 metric tonnes, cotton yield from1.5 to 2 metric tonnes per hectare and wheat from 1.3 to 3 metric tonnes. Besides, CBN as part of its strategic response to assuage rising food prices released some 190,000 metric tonnes of maize directly to feed millers from its Strategic Maize Reserve (SMR).

Under the Commercial Agricultural Credit Scheme, the CBN financed the expansion of agricultural operations with 67.6 per cent of financed projects acquiring new or additional equipment.

It is noteworthy that as a result of these interventions, there is progressive decline in the nation’s major food import bill from US$ 3.23 billion in 2014 to US$ 0.59 billion in 2018, which represents an 82 per cent decline in import bill.

Under Agribusiness Small and Medium Enterprises Investment Scheme (AgSMEIS), the Bank financed 40, 884 projects covering agriculture, cottage industry, manufacturing and services etc. The AgSMEIS has thus boosted the productive capacity of the domestic equipment fabrication industry across the country.

Besides agriculture and production activities, the Bank also delved into other productive sectors of the economy. For instance, under the Creative Industry Financing Initiative (CIFI), the Bank financed some 373 projects cutting across fashion, software development, information technology (IT), movie industry etc. Unknown to many, some of the top Nollywood movies were financed by the Bank. Some of the major titles financed under CIFI include Legend of Inikpi, Yeku, Tiwa’s Baggage and Damaged Goods. The initiative has created significant number of direct and indirect jobs thereby reducing the rate of unemployment.

Thus, in an effort to curb the unemployment challenge in the country, the Bank initiated the Targeted Credit Facility (TCF) through which it financed 830,831 beneficiaries made up of 684,441 households and 146,390 SMEs.

Furthermore, the CBN provided a N12.5 billion seed fund for the youths. Under the intervention, funds were disbursed to 7,057 beneficiaries, comprising 4,411 individuals and 2,746 small businesses throughout the country.

Under the Bank’s Entrepreneurship Development Centres (EDC) initiative, 55,422 nascent entrepreneurs were trained, with 18,598 having access to single digit finance which led to the creation of 37,069 jobs.

On energy and infrastructure, the Bank financed a total of 1,403.3 megawatts (MW) of power supply under the Bank’s energy and infrastructure scheme to produce a new capacity of 944.3 MW. The improvement in power supply services was expected to reduce domestic production costs, improve industrial capacity utilisation and poverty alleviation among Nigerians. The industries serviced included fast moving consumer goods , steel production, cement, packaging, agro allied, Independent Power Plant (IPP), and wood products at various percentages.

The Power and Airline Intervention Facility (PAIF) created a cash flow for recurrent expenditure through interest differential. Through PAIF), the Bank leveraged additional private sector investment by attracting private sector players in the Nigerian power sector. By the arrangement, private investors were required to provide 30 per cent of the total project cost while the initiative provides the remaining 30 per cent.

The intervention has also enabled the electricity distribution companies (Discos) to carry out projected Capex through issuance of Letters of Credit (LC) for the purchase of over 704,928 meters comprising 3-phase smart and single phase meters.

The Nigeria Bulk Electricity Trading – Payment Assurance Facility (NBET-PSF) has stabilized the electricity market to ensure the continued existence and operation of generating companies and gas suppliers.

Furthermore, the Nigeria Electricity Market Stabilization Facility (NEMSF) financed the recovery of 1,180 megawatts capacity through rehabilitation of 10 gas turbines at Geregu, Transcorp Ughelli and Ibom thermal power plants and three hydro-power stations at Shiroro, Jebba and Kainji dams.

Under the National Mass Metering Programme (NMMP), the CBN financed the procurement of 657,562 electricity meters through 17 Meter Asset Providers (MAP) and 9 distribution companies (Discos).

The CBN had mapped out strategies for the recovery of outstanding loans owed to it. These include monitoring and recovery, timely loan reconciliation with PFIs, issue demand notice on outstanding facilities and implementation of global standing instruction, among others.

The foregoing highlights the robust economic enhancement schemes and programmes initiated and implemented by the CBN under Emefiele. As earlier indicated, these uncommon economic policies could lift the economy from its dysfunctional quagmire. The question is what is being done now to sustain these vibrant economic policies in order to leverage the pathetic state of affairs in the country. The economy is currently in a worse situation. What is the new CBN governor doing to get the battered economy out of the doldrums? The ball is in the court of President Ahmed Tinubu and his CBN governor Cardoso.