CBN Interventions Prevented Nigeria From Going Into Larger Contraction In Q2 - Godwin Emefiele - PROSHARE
The various COVID-19 interventions by the Central Bank of Nigeria (CBN) prevented Nigeria from experiencing a larger contraction in Q2, 2020. Mr. Godwin Emefiele the Governor of the CBN disclosed this at the opening session of the 13th annual banking and finance conference, organized by the Chartered Institute of Bankers of Nigeria (CIBN).
The conference which was hosted in Abuja and Lagos was held Virtually with the theme "Facilitating a Sustainable Future: The Role of Banking & Finance".
According to Mr. Godwin Emefiele the key interventions and measures that CBN deployed to respond to disruptions caused by COVID-19 included;
- A one-year extension of the moratorium on principal repayments for CBN intervention facilities;
- Regulatory Forbearance was granted to banks to restructure loans given to sectors that were severally affected by the pandemic
- Reduction of the interest rate on CBN intervention loans from 9 to 5 percent
- Strengthening of the Loan to Deposit ratio (LDR) policy, which has resulted in a significant rise in loans provided by financial institutions to banking customers. Loans given to the private sector, have risen by over 21 percent over the past year.
- Creation of a N100bn credit facility for affected households and small and medium enterprises through the Nirsal Microfinance Bank;
- Creation of an N100bn billion intervention fund in loans to pharmaceutical companies and healthcare practitioners intending to expand and strengthen the capacity of our healthcare institutions;
- A N1trn facility in loans to boost local manufacturing and production across critical sectors;
The CBN Governor expected a recovery in the growth rate of the country by Q3, 2020 due to the following developments in the nation;
- The phased withdrawal of the lockdown measures;
- Resumption of travel by land and air;
- Improvements in crude oil prices from $19 in April 2020 to an average of $44 in August 2020; and
- Continued implementation of the CBN interventions in the agricultural and manufacturing sectors.
On the continued growth in the Nigerian banking sector, the CBN Governor highlighted the fact that the ultimate strength of the financial system, relied on the following three key factors;
- Ensuring that banks have adequate capital buffers to withstand similar pandemics.
- Developing adequate internal controls that can identify potential risks and putting in place measures to contain that risk.
- Being able to adapt your business model to changes taking place in the business environment.
He tasked the Nigerian banking and financial system to support the growth of the Nigerian economy by focusing on Agriculture, Information and Communication Technology and Infrastructure Financing.
Emefiele used the occasion to announce that President Muhammadu Buhari has approved the establishment of a CBN-led Infrastructure Company.
According to him the Infra-Corp working in partnership with the African Finance Corporation and the Nigerian Sovereign Investment Authority (NSIA) would enable the use of private and public capital to support infrastructure investment that will have a multiplier effect on growth across critical sectors of the economy.