MPC retains lending rate at 11.5%
Emefiele: We’ll disburse fresh N300bn loan
With intervention in excess of N1.04 trillion, coupled with fresh nod given yesterday by members of Mon-etary Policy Committee (MPC) to increase COVID- 19-Targeted Credit Facility (TCF) to between N250 billion and N300 billion, the Central Bank of Nigeria (CBN) said Nigeria would exit recession soonest.
Addressing the media after the MPC session in Abuja, CBN Governor, Mr. Godwin Emefiele, said the committee recognised the supportive developmental roles of the apex bank towards addressing some of the structural issues in the economy and urged the bank to sustain the momentum, saying the interventions would pull the economy from recession. Emefiele said MPC unanimously endorsed retention of lending rate at 11.5 per cent, Cash Reserves Ratio at 27.5 per cent; Liquidity Ratio at 30 per cent around asym-metric corridor of +100/-700 basis points around MPR.
He said specifically that MPC expressed optimism on the future impact of the disbursements from Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) (N92.90 billion to 24,702 beneficiaries), Anchor Borrowers Programme (ABP) by the sum of N164.91 billion to 954,279 beneficiaries and COVID-19 Targeted Credit Facility (TCF) to household and SMEs (N149.21 billion to 316,869 beneficiaries).
To ensure more people are covered in respect of COVID-19 TCF, Emefiele said MPC gave CBN the go ahead to increase TCF disbursement from the current N149 billion to between N250 billion and N300 billion to accommodate more beneficiaries in some targeted zones not sufficiently covered. Re-echoing Federal Government’s exit date from recession, he said Nigeria would come out of recession and that the current inflation will subside.
“Recession or reconstruction in growth output is what we are seeing throughout the entire world as a result not only of drop in commodity prices, but because of the adverse consequences or the health crisis caused by the COVID-19 in some developed countries during the 1st, 2nd and even the 3rd quarters.
“We saw some of them even showing double digit in contraction in growth, but in Nigeria, what we have seen during the Q2, we saw a minor 6.1% contraction. Let me say that we are hopeful, and the Minister of Finance had addressed some gathering on Monday where she said that as a result of actions taken by the monetary and fiscal authority, recession will go soon. “NBS numbers show that eight sectors during the Q3 recorded growth ranging to 13 sectors during the Q2.
These growth were recorded mainly from the agricultural sector, industry manufacturing. Indeed, we saw even services slightly increasing, but at least agriculture coming up also means what we can achieve from agriculture.
“Whatever we are doing to stimulate agriculture and manufacturing, we will do it to create jobs for our people and also stimulate spending, increase output and ultimately lead to moderation in the level of inflation in our country.
“If you recall in March at the outset of COVID-19, the CBN came out very quickly and we put on the table, initiative that we believe will amend and alleviate the pain of COVID-19 on our people first. We talk about how the banks should restructure their facilities, how interest rate should come lower, particularly for CBN interventions and how re-payment should be spread for those who are owing banks so that they have some more rest as their cash flow have been badly affected.
“On another hand, we also proposed that for Targeted Credit Facility to household and small scale businesses that are deeply impacted by the COVID- 19, we are going to put on the table N50 billion for them. These are all secured facilities made for people who we feel are impacted and just needed money either to start business or start some kind of consumption so as to help them live their lives during the period of the pandemic.
“We also put on the table N100 billion for healthcare industries, pharmaceutical and hospitals for their upgrade of building of new ones and made available also a facility of N1 trillion for those who are willing to expand either in the manufacturing or agricultural sector.
“Till date, the CBN has disbursed through its institutions the sum of N149 billion to 317,000 beneficiaries. On healthcare, around N600 billion has been disbursed to 60 healthcare projects.
On the road sector, we have disbursed N350 billion to over 105 road sectors during this same period. “Now that we have seen that this has been quite impactful, particularly the Targeted Credit Facility made for household and SMEs, we have been advised by MPC that given that this has been very impactful positively, CBN should do more.
“We have been told that we have to increase it not just from N149 billion that it’s now, but to increase to almost about N250 billion to N300 billion to accommodate more people that have not accessed,” said CBN governor. On the need to increase COVID-19 TCF, he said the increment was meant to spread the facility. On management of foreign market, which attracted criticism lately, the CBN governor defended the policy and lampooned defenders of parallel marketers as uninformed.
“I heard some analysts talking about the parallel market, saying that exchange rate is N480 to $1. “For the information of everybody, parallel market, as far as we know, is shallow market in Nigeria with no more than five per cent of market share.
Parallel market is a tainted market in Nigeria where people who desire to deal in illegal foreign exchange transactions, including sorting of forex cash for purposes of offering bribes, corruption that is where they deal.
“Parallel market is a market where people who don’t want to provide documentation to support their transactions deal in and it cannot be the basis to determine the value of our currency,” he said.
The CBN Governor said Nigeria depreciated its currency this year by 28 per cent, adding that it was a whopping depreciation compared to some countries. Commenting on soundness of the financial system, he said MPC welcomed the improvement in the financial soundness indicators of Other Financial Institutions (OFIs) as indicated by the growth of N582 billion or 16.94 per cent (year-on-year) in aggregate assets to N4.02 trillion as at end-September 2020. Similarly, aggregate credit grew by N217 billion, or 12.27 per cent (year-onyear), to N1.99 trillion during the same period. The Capital Adequacy Ratio for the subsector also exceeded the minimum prudential ratio of 10 per cent.