CBN GOVERNOR
CBN to
draft credit framework for SMEs, pumps $210m into FX market
Following
the success of the $3 billion Eurobond issue by the federal government last
month, coupled with higher oil prices and production, the Central Bank of
Nigeria (CBN) Governor, Mr. Godwin Emefiele, has disclosed that the country’s
external reserves have hit a four-year high of $38.2 billion.
Emefiele made the disclosure
Tuesday during the inauguration of a €10 million fully automated Blue Band
margarine factory by Unilever Plc, in Agbara, Ogun State.
With the rate of accretion, the reserves are expected to meet the central
bank’s projection of $40 billion by the end of 2017.
Emefiele said: “In January 2014, Nigeria’s reserves were about
$40 billion and by October 2016, it had dropped to $23 billion, all because of
the haemorrhaging of foreign exchange.
“But I am happy that today, we are beginning to sing positive
songs and our story is looking good at this time. We have seen reserves move up
from the $23 billion to $38.2 billion.”
The CBN governor commended the management of Unilever for heeding his call for
manufacturers to look inwards to grow the economy.
The establishment of the factory, according to him, was a
fallout of the central bank’s policy that restricted 41 items from accessing FX
from the interbank market.
He stressed the need for the country to focus on job creation to cater for
Nigeria’s rising population and create job opportunities for Nigerian youths.
He also emphasised on the need for private sector support,
saying government alone cannot create jobs.
Emefiele went on to recall how Unilever was encouraged to establish the Blue
Band margarine factory after it was faced with the ban on the 41 items that
included margarine.
“I must thank Unilever for doing what they have done today. The restriction of
FX for the 41 items came on board about two years ago. At that time, we were
criticised.
“Before that time, Unilever had a factory producing Blue Band
margarine. But margarine was also part of the 41 items. The managing director
and the executive team of Unilever Nigeria visited me in Abuja and said they
wanted us to grant them some form of forbearance.
“I said there was not going to be any forbearance and encouraged them to
re-establish the factory in Nigeria, because at the time their factory had been
dismantled in Nigeria and taken to another country.
“And he (Unilever managing director) made a promise that between
12 to 18 months the factory would be re-established in Nigeria,” he recalled.
According to him, based on the promise by Unilever’s management, the central
bank granted the company some form of forbearance that made it easy for them to
import margarine into Nigeria for a period.
He noted that the CBN kept monitoring the company to ensure that
they did not renege on their promise, adding: “I must say that the managing
director of Unilever is a man of his word and he kept to the promise that he
was going to re-establish that factory.
“The entire essence is to say that by re-establishing that
factory here in Nigeria, he is creating direct jobs for Nigerians in this
factory and creating indirect jobs for Nigerians by virtue of the fact that he
will buy palm oil which is the key ingredient that he uses in producing
margarine.”
He expressed the readiness of the central bank to support any
firm that wants to establish a company in Nigeria.
“I keep saying we do not have the foreign exchange to allocate to import
products that can be produced in Nigeria. I am happy that Unilever has proved
us right that Blue Band margarine can be produced in this country.
“So far, they are doing about 10,000 metric tonnes per annum and
he has promised that he is going to ramp it up to 50,000 metric tonnes.
“By doing so, you create jobs, which is what we are talking about. By creating
jobs, you save the country FX that is needed to create jobs,” he said.
Going down memory lane, Emefiele said when he drove past the
Agbara industrial estate in Ogun State, he passed some of the companies he had
visited as a young credit officer as a banker, but they were all closed down.
“At that time, Unilever was producing Blue Band margarine. The company that was
producing glass has shut down, also the fluorescent companies have closed down.
“But the promise I am making to everybody, just as I made to
Unilever, is that if there is any company that wants to set up shop in any part
of this country, we will do all we can to assist it.
“If you want to re-establish your factory and you need our funding assistance,
count on us to support you. Like I said, creating jobs is not just the
responsibility of the central bank, we need support from the private sector and
that is why we are making the promise that if there is an investor that is
ready, he should count on us,” he said.
Earlier, the executive vice-president, Unilever Nigeria and
Ghana, Mr. Yaw Nsarkoh, restated the commitment of the multinational to
Nigeria. According to Nsarkoh, in spite of the fact that the company has been
in Nigeria for over 90 years, the past few years had been the best.
According to him, the new plant consumes 50 per cent energy less than what the
company’s previous plant, but produces a higher output.
“None of these would have been possible without the support of
the central bank. In the face of the forex scarcity, the central bank continued
to support Unilever and I want to thank you (Emefiele) for embarking on this
journey with us,” he added.
The CBN Tuesday also announced that it was formulating a draft credit framework
for Small and Medium Enterprises (SMEs) aimed at improving credit to the
sector.
According to a statement posted on the central bank’s website,
this was disclosed by Emefiele at a strategy meeting with select Development
Finance Institutions (DFIs) and other stakeholders on enhancing access to
credit to SMEs in the country.
According to him, the efforts would see more government intervention in the
sector, resulting in job creation for youths in the country.
Emefiele noted that the meeting with the DFIs was as a result of the failure of
lenders to make access to credit a priority.
He conveyed the government’s concern that the citizens were yet to
feel the impact of the country’s exit from the recession, which he attributed
to lack of appreciable growth.
Speaking further, he disclosed that President Muhammadu Buhari had mandated
agencies to come up with programmes that would have Nigeria and Nigerians at
heart.
The programme, according to him, would be one that would be impactful
nationwide in terms of granting access to credit to the rising number of SMEs.
In spite of all efforts by the Bank to improve certain
parameters of the economy, he said Nigerian lenders had failed small businesses.
Speakers at the strategy session were unequivocal in their attempt to find
solutions to the failure of the commercial banks to extend credit to SMEs.
The representative of the only commercial bank at the meeting,
First Bank of Nigeria, however, said everything boils down to the huge risks
involved in giving credit to SMEs.
An Abuja-based manufacturer narrated how a commercial bank turned down his
request for a loan of N160 million on the account of his N200-million factory
that was located in Kubwa, on the outskirts of the Abuja metropolis.
Rounding off the discussion, Emefiele observed that the nation
needed to strengthen the Bank of Industry (BoI) in order to make it compete
favourably with commercial banks in the country.
A technical committee comprising the BoI, Development Bank of
Nigeria (DBN), select DFIs, Bank of Agriculture (BOA) and the Nigeria
Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), to be
chaired by the Director, Development Finance Department (DFD), Dr. Mudashiru
Olaitan, was constituted and asked to submit its recommendations to the larger
meeting in one week.
Emefiele said that the outcome of the committee’s work should
form part of the theme of the annual Bankers’ Committee retreat in Lagos,
scheduled to hold between 8 and 9 December 2017.
Those who attended the meeting included the Special Adviser to the President on
Economic Matters in the Vice President’s Office, Dr. Adeyemi Dipeolu; Managing
Director, DBN, Mr. Tony Okpanachi; and Managing Director, BoI, Mr. Olukayode
Pitan.
Meanwhile, the CBN said Tuesday that it injected an additional
$210 million into the foreign exchange market on Monday, in its bid to sustain
liquidity.
Giving a breakdown, central bank spokesman, Mr. Isaac Okorafor, said the sum of
$100 million was offered to the wholesale segment, while the SME segment got
$55 million.
The Invisibles segment (i.e. tuition fees, medical payments and basic travel
allowance, among others) was also allocated $55 million.
He said that the releases to successful bidders, which had been
concluded were part of efforts aimed at further enhancing ease of doing
business in Nigeria.
Hence, besides boosting liquidity in the FX market, facilitating trade and
remittances for legitimate personal commitments were also expected to improve
tremendously.
Speaking on the market conduct, Okorafor enjoined authorised
dealers to abide by the extant rules of the market, as CBN would continue to
monitor the market.
The naira maintained its value against the dollar, exchanging for N361/$1 on
the BDC segment of the market Tuesday.
However, the official exchange rate of the naira appreciated to
N306.85 to the dollar Tuesday, stronger than the N307 to the dollar from the
previous day.
