The Central Bank of Nigeria (CBN) has disclosed that its intervention scheme has helped to stimulate growth and boost gross domestic product (GDP).
This was stated by the CBN governor, Godwin Emefiele while fielding questions from reporters at the just-concluded monetary policy committee (MPC) meeting in Abuja.
He was responding to the recent call by the International Monetary Fund (IMF), through its 2021 Article IV consultation report on Nigeria, that the CBN should consider scaling back its credit intervention programmes because they are likely to cause market distortions in the long run.
But Emefiele said that the central bank, as a development finance institution, has a responsibility to support the economy especially in difficult times.
“We reiterate the fact that the CBN remains a development finance-oriented central bank and it is normal for a developing economy to deploy the development finance tools through intervention to support the growth of the economy,” Emefiele explained.
“I think it is just reasonable that the CBN steps in to support the fiscal to fill that space not through grants but through loans to smallholder farmers, SMEs and to wake up our manufacturing industries who are dead.”
He argued that the IMF would agree that the over N300 billion disbursed to over one million households helped to catalyse consumption expenditure that has helped Nigeria to turn positive in its GDP even though GDP is still fragile and vulnerable.
“IMF knows that even our interventions to the manufacturing sector are helping and we have facts to show so,” he added.
“Aside from the Anchor Borrowers Programme in agriculture, last month we went to Sokoto to launch a three million tons cement factory to increase manufacturing output in cement. And Mr President would be going to Lagos to commission a $2.5 billion fertilizer plant.
“What would that do for us? The $2.5 billion fertilizer plant will result in an additional three million tons of urea in the country. Indorama produces three million metric tons, Notore produces 500,000 and that is 6.5 million metric tons per annum.
“Our annual consumption is one million metric tons. What does that mean? They would export. We would earn foreign exchange that would create liquidity in our I&E window and lead to less reliance on central bank for FX.
“Yes, it is an advice from IMF which we would take but at this time we are in a development finance mode where we must grow our economy while at the same time, we are doing everything possible to make sure our mandate of monetary and price stability still remains sacrosanct.”
Emefiele said the MPC had further urged the CBN to double its developmental finance initiatives aimed at boosting domestic food output.
This, he said, will help to moderate food inflation, thereby lessening headline inflation.