Economy:
Emefiele’s Five Year Plan to Boost Nigeria’s Economy

Not long ago, Nigeria’s Central Bank Governor unveiled his economic blueprint to make banks in particular contribute significantly to the nation’s economy


A couple of days after his reappointment as the governor of the country’s apex financial -controlling body, the Central Bank of Nigeria, CBN, Godwin Emefiele’s first major action was to unfold his five year plans aimed at making the banks leading players of the nation’s economy. His pronouncements on Monday, June 24 in the bank’s corporate headquarters in Abuja were informed largely by his belief that a resilient and stable financial system was imperative for continued growth of the economy given the intermediation role that financial institutions play in supporting the needs of individuals and businesses.

The Central Bank of Nigeria under his leadership plans to create 10 million jobs in the next five years through investment support in agriculture and manufacturing sectors, in line with President Muhammadu Buhari’s agenda of diversifying the Nigerian economy. What is more, Emefiele said, during his next five years as CBN governor, he would pursue an economic agenda that would make the economy grow by double digits through targeted programmes that would boost output. The governor said he would work with Deposit Money Banks in the next five years to boost credit to the real sector as well as the creative and education sector. He said the apex bank will over the next five years increase its support to farmers in order to bring down the rate of inflation.

He explained that the bank will continue to also operate a managed float exchange rate regime to reduce the impact of continuous volatility in the exchange rate on the economy. Emefiele stated that the bank would support measures that would increase and diversify Nigeria’s export base and ultimately help in shoring up the reserves. The CBN governor said, while the dynamics of global trade continued to evolve in advanced economies, Nigeria remained committed to a free trade regime that was mutually beneficial. According to him, “We intend to aggressively implement our N500 billion facility aimed at supporting the growth of our non-oil exports, which will help to improve non-oil export earnings. “We will launch a Trade Monitoring System in October, which is an automated system that will reduce the length of time required to process export documents from one week to a day,’’ he said. According to him, this measure will help support the bank’s efforts at improving our non-oil exports of goods and services.

He declared that to make this a reality, the CBN will continue to improve the onsite and off-site supervision of all financial institutions, while leveraging on data analytics and in-house experts across different sectors, to improve our ability to identify potential risks to the financial system as well as risks to individual banks. He declared: “In the next five years, we intend to pursue a programme of recapitalizing the Banking Industry so as to position Nigerian banks among the top 500 in the world. Banks will therefore be required to maintain higher level of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system.” According to Emefiele: “With the rise in digital payments and cyber security threats, we will develop a robust mechanism that will help ensure that the necessary safeguards are put in place by banks and financial institutions to protect against loss of data, fraud and cyber incursions in their respective systems.

“We will also reinvigorate our efforts at driving the cashless initiative across the country, due to the immense efficiency gains that will be derived from it, and the impact it could have on our financial inclusion drive. Given Nigeria’s large size, and the cost involved in building bank branches across the country, the payment system department would support the spread and utilization of digital modes of transactions, so that every Nigerian will have access to financial services.

A strong emphasis will also be placed on improving speed and efficiency of payments channels, while working to ensure that digital channels are safe and secure. This will help to build confidence in our nation’s payment system.” The CBN also dwelt on the need to improve utilization rate, for which he said the apex bank will continue to ensure that payment channels were interoperable, which will enable individuals with digital devices to transact across different banks or payment modes.

The CBN governor promised the nation: “Through measures such as the cashless initiative, USSD, Mobile Banking, agent networks and Payments Service Banks, Nigerians can expect to see significant improvements in the payment systems infrastructure over the next five years. “We will also work with NIBSS, Banks and Fintechs in developing a regulatory sandbox. This sandbox will enable us to test financial innovations by Fintechs and Banks in a controlled environment, in order to assess its impact on the growth and safety of our financial system.”

That was not all. Towards achieving Targeted Development Finance, the nation’s banking chief said they will be building on the success of the apex bank’s Anchor Borrowers Program and other intervention programmes geared towards supporting the growth of agriculture and manufacturing sectors, and in keeping with the recent Presidential Directives, the bank intends to play frontal roles in boosting productivity growth through the provision of improved seedlings, as well as access to finance for rural farmers in the agricultural sector, across 10 different commodities namely: rice, maize, cassava, cocoa, tomato, cotton, oil-palm, poultry, fish, and livestock/dairy.

“Our choice of these 10 crops is driven by the amount spent on the importation of these items into the country, and the over 10 million jobs that could be created over the next five years if efforts are made to expand cultivation and processing of these items in Nigeria. So far, we have held series of engagements with importers and producers of these products. Most of them have committed that they would install or expand their production capacities in Nigeria. We believe these measures will help to boost not only our domestic outputs but also improve our annual non-oil exports receipts from $2bn in 2018 to $12bn by 2023.

“Our intervention programmes will strengthen the linkage between farmers and agro-processors/manufacturers by ensuring that the output of farmers is purchased by agro-processors/manufacturers” he said. To complement the progress made so far as well as the lesson learnt from the conduct of previous programmes, he disclosed that the CBN intends to strengthen the capacity building arm of the Anchor Borrowers Program, which will help support better farming practices and higher outputs for farmers. He added that over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the payment service banks will be encouraged to broaden access to financial services to individuals in underserved parts of the country.

The ultimate goal of the initiatives is to ensure that 95 percent of eligible Nigerians have access to financial services by 2024.The apex Bank will as a result intensify its financial literacy and consumer protection programs such that current and eligible bank customers are fully aware of the financial services being offered to them as well as the cost of utilizing these services, which will enable them to make well informed choices. Through the credit bureaus, “we will also leverage technological tools such as analytics in identifying and supporting farmers that have exhibited good credit behavior, in repayment of their loan obligations. This measure will improve their ability to source for financing from commercial banks.

“We will introduce a non-oil export aspect to the anchor borrowers’ program, which will be focused on linking small holder farmers to international buyers” he added. Mr Emefiele equally addressed measures to be taken to stem one of the challenges facing the nation’s economy, for whose reason the nation has lost billions of dollars in foreign exchange as a result: Smuggling across its porous borders. To discourage the activities of smugglers, the Federal Government is taking hard measures against those involved including blacklisting perpetrators and their affiliated companies from accessing banking services in the entire country.

This renewed focus of its intervention programme, coupled with increased support for research and development on improved seedlings and enhanced farming practices, will help drive exponential growth of agricultural and manufacturing sectors. The CBN governor disclosed that the banking supervisory and consumer protection department at the CBN will ensure that dispute resolution mechanism in financial institutions were not only efficient but also timely, in order to maintain the confidence of the Nigerian populace in the utilization of banking services. While addressing the great financial challenges of access to credit, he said, beyond the Bank’s intervention programmes, the apex Bank was working to encourage banks and financial institutions to lend from their balance sheet in order to support the growth of critical sectors of the economy, such as Agriculture, MSMEs and the Real Estate Sector. Greater emphasis on improving consumer spending and business investment by MSMEs he stressed was critical to sustainable double digit growth of the nation’s economy.

MSMEs today, he said, constitute over 90 percent of businesses in the country. Through the national collateral registry, over N400 billion worth of movable assets have been registered by MSMEs in the registry. “We intend to triple this number over the next three years.” he said. The current enrolment of 38 million unique banking customers will be expanded to 100 million over the next five years, he stated. He noted with regret that as at today, less than 10 percent of adult Nigerians who have a bank account, utilize financial products offered by banks, such as credit cards, personal loans, mortgage loans, auto loans and consumer durable loans.

Consumer credit, he noted, is critical to the growth of the economy as it will help boost consumer spending, accelerate improved investments by businesses, who seek to meet the demand of consumers. Improved consumer spending and investments by businesses will ultimately help to spur the growth of our economy and support our job creation efforts.