The Central Bank of Nigeria Governor, Godwin Emefiele has stated that the banking sector has responded positively with the rise in aggregate industry credit from N15.3 trillion in May 2019 to over N17.4 trillion in January 2020.
He reiterated the need to adopt measures that would diversify the economy given the external headwinds that the Nigerian economy faces, which have emerged as a major threat to global growth in 2020.
He added that the impact of the Coronavirus across over 100 countries has affected global supply chains, as well as demand for goods and services.
“The CBN fortunately had already embarked on similar measures, which have resulted in significant reduction in lending rates, as part of our efforts to boost growth.
“Working with the fiscal authorities, we will not hesitate to deploy additional measures to strengthen our buffers and insulate the Nigerian economy from the global headwinds,” he said.
According to him, in the last three years, the Nigerian economy had remained on a positive growth path as Gross Domestic Product (GDP) growth has remained in positive territory for 11th consecutive quarter, following the 2016 – 2017 economic recession.
“One of the critical measures that helped to boost growth in 2019 was the impact of the central bank’s new minimum loan to deposit ratio, which was initially at 60 per cent and subsequently raised to 65 per cent.
“We also imposed restriction on access to open market operations (OMO) auctions in order to encourage banks to lend to the real sector.
“Indeed, the banking sector has responded positively with the rise in aggregate industry credit from N15.3 trillion in May 2019 to over N17.4 trillion in January 2020.
“I am aware that these loans have been granted to borrowers across different sectors at considerably lower rates. Although a lot more still needs to be done; we intend to sustain these policy measures as it will help support improved economic growth and create more employment opportunities,” Emefiele added.
He explained that notwithstanding current measures aimed at supporting growth, the economy faces challenges as GDP growth remains below annual population growth rate at 2.6 per cent.
He said: “Second, our reliance on crude oil for more than 80 per cent of our foreign exchange earnings and 60 per cent of government revenues means our economy is exposed to the impact of the Coronavirus on crude oil prices.
“Projected declines in revenues as occasioned by the drop in crude oil prices, constrains the government’s ability to meet its infrastructure commitments in 2020, which is vital if we are to achieve double digit growth.
“Given this challenge, it is imperative that this roundtable session comes up with well-structured funding models that will mobilise funds from banks and other financial institutions to fund critical infrastructure projects, while providing attractive returns to investors.
“We must also use this opportunity to consider funding for infrastructure projects that improve access to markets for farmers and SMEs, while also connecting the railways to our ports, in order to increase our non-oil exports.
“Such schemes will support greater economic growth and help free up funds for the government to focus on other priority objectives.”
According to him, the current oil price shock validates some of the measures taken by the fiscal and monetary authorities on diversification of the Nigerian economy.
