By Bassey Udo
With Nigeria’s population growing by over 3 percent per annum amid an unstable output growth since 2019,
expansion of production and industrial capacities must be given
special attention if the country must achieve overall macroeconomic stability, the Central Bank of Nigeria (CBN) has said.
The CBN governor, Godwin Emefiele, spoke at the opening of the 33rd Seminar for Finance Correspondents and Business Editors on Saturday on the theme: “Policy Options for Economic Diversification: Thinking Outside the Crude Oil-Box”.
He was represented by the Director of Corporate Communications Department of the CBN, Osita Nwanisobi.
To underscore the need for economic diversification, Emefiele said the impact of COVID-19 pandemic and the fallout of the Russia-Ukraine war aggravated trade dislocations and supply shocks across regions, triggering unprecedented increases in commodities, energy and food prices, as inflationary pressures persist to all-time high levels.
With crude oil prices hovering above $100 per barrel for several months, Emefiele said these have become a major drag to many industrialized economies of the world.
Besides, the blockage of shipments (predominantly grains and other food items) along the Black Sea, he said, caused significant pressures on food prices, underscoring the need to diversify the country’s economy, to ensure negative shocks do not undermine food security and self-sufficiency.
To build a more sophisticated economy anchored on agriculture, and MSMEs, the CBN governor said industrial and manufacturing concerns must become the major component of the country’s monetary policy.
“Nigeria has largely depended on the oil sector for revenue generation over the past four decades and the sustained decline in crude oil production has continued to negatively undermine the performance of the economy. Thus, there is the urgent need for a conscientious effort to diversify to other non-oil sectors,” the CBN governor said.
In this direction, he said the country must work to create an economy that would enable the country to feed itself, create jobs for the youths and improve the standard of living of the people.
In the last six years,Emefiele said the CBN took major steps to diversify the country’s economy away from largely oil-based economy through numerous interventions to support non-oil sectors such as agriculture, manufacturing, health-care, education, power and aviation and other allied economic value chains.
He said the Anchor Borrowers’ Programme (ABP), which heralded the recent rice revolution in th country, changed the long-standing dependence on imported rice to domestic production, and now to a rice exporting country.
The Commercial Agriculture Credit Scheme (CACS), he said, is another major special purpose vehicle to support commercial farmers in the country in different value chains, including oil palm, cotton, cocoa, among others.
The continued support to the manufacturing sector and micro, small, medium enterprises (MSMEs), he said, have been yielding great results, as the implementation of 44 items not valid for FX for imports revealed.
He said the intervention of the CBN in the health sector has begun to reduce the healthcare tourism Nigerians outside the country, thereby helping to conserve foreign exchange and improving the people’s well-being.
Furthermore, he expressed optimism that the new 100-for-100 Policy on Production and Productivity (PPP), targeted at harnessing the country’s local raw materials to increase domestic production and exports through deliberate credit and other supports, would soon begin to yield quality results.
In addition, the RT200 FX initiative designed to take advantage of the country’s large domestic production to other regional markets was targeted at increasing foreign exchange inflows to the economy and support exchange rate stability.
Again, the on-going work at the Dangote Refinery, when fully completed, would stop fuel importation, just as the situation in cement, sugar and fertilizer markets.
Beyond these interventions, he said at a time the global economy was characterized by rapid digitalisation across all sectors, particularly the financial system, Nigeria must remain innovative and think out of the box.
To entrench a resilient payments system, Emefiele said the CBN has over the years established strategic initiatives and policies in the financial sector such as the Payments System Vision 2020 (2007), National Financial Inclusion Strategy (2012, 2018), Cash-less Policy (2012), Framework for Regulatory Sandbox Operations (2018, 2021), Open Banking Initiative (2021), among others.
Under the National Digital Economy Policy and Strategy (2020 – 2030), he said the financial industry was poised to accelerate the private sector-led efforts towards building a nation where digital innovation and entrepreneurship to create value and prosperity for all.
As a result of these interventions, he said the Nigerian payment ecosystem has improved tremendously over the years, with innovative systems to boost the financial stability.
To consolidate the apex bank’s efforts to engender a digital economy, he said the e-Naira, reputed to be Africa’s first Central Bank Digital Currency (CBDC) was unveiled in preparation for the future payment landscape, in view of the potential benefits to a digital economy.
“The e-Naira provides Nigerians with a cheap, generally accepted, safe and trusted means of payment and seeks to enhance financial inclusion, support poverty reduction, enable direct welfare disbursement to citizens, support a resilient payments ecosystem, improve availability and usability of central bank money, facilitate diaspora remittances, reduce the cost of processing cash, and reduce cost and improve efficiency of cross-border payment, among others,” he said.
“Through the evolution of offline payments channels like agent networks, USSD, wearables, cards and near field communication technology, the e-Naira will give access to financial services to underserved and unbanked segments of the population,” he added.
Besides, he said the e-Naira platform also provides an innovative layer for products and services to be built, to enhance Nigerians’ participation in the digital economy and promote further development of a burgeoning Fintech ecosystem.
To realise the objectives of economic diversification, Emefiele said out of the box solutions would drive financial inclusion, SME growth and the creation of start-ups; facilitate cross border trades and transfers as well as international remittances and FX exchanges; ensure effective implementation of welfare-inclined government programmes; and enhance efficiency in the interbank market.