- Real sectors, Anchor Borrowers gulp N3.22trn
In its bid to drive economic growth, the Central Bank of Nigeria under the watch of Godwin Emefiele has disbursed about N4.37 trillion under its various intervention programmes as at October 31, 2022. BAMIDELE FAMOOFO writes.
A review of the performance of the intervention programmes of the CBN to spur economic growth under the administration of Godwin Emefiele as at October 2022 showed that disbursement to beneficiaries of seven of the schemes stood at about N4.37 trillion.
The performance of the CBN intervention programme and its impact on the economy was a major consideration at the first MPC meeting held in Abuja last week as how well the economy performed in the third quarter was largely attributed to it.
However, the CBN in recent times has cautiously reduced its commitment to its interventions, about 37 in all due to rising inflation. Disbursements dropped by 45 percent from about N221billion in June 2022 to N121.08 billion as at October 2022.
Interest rate has also been reviewed upward from 5 percent to 9 percent for beneficiaries of the schemes reflecting the realities of inflation.
According to the MPC, the sectors covered under the schemes between September and October included among others Healthcare, Agriculture, Manufacturing, Services and Power. Breakdown of disbursements as at October 2022 showed that under the Anchor Borrowers’ Programme, the Bank disbursed N41.02 billion to several agricultural projects, bringing the cumulative disbursements under the Programme to about N1.07 trillion to over 4.6 million smallholder farmers cultivating or rearing 21 commodities across the country.
The Bank also released N300 million to finance large-scale agricultural projects under the Commercial »24 CONTINUED ON PAGE 23 »25 Agriculture Credit Scheme, bringing the total disbursements under the Scheme to N745.31 billion for 680 projects in agro-production and agro-processing. In addition, the Bank released the sum of N48.30 billion under the N1.0 trillion Real Sector Facility to seven new real sector projects in agriculture, manufacturing, and services.
“THE CONTINUED HIGH LEVEL OF INSECURITY; PERENNIAL SCARCITY OF PREMIUM MOTOR SPIRIT AND HIGH COST OF OTHER ENERGY SOURCES; INCREASED SPENDING TOWARDS THE 2023 GENERAL ELECTIONS; RISING COST OF DEBT SERVICING; AND DETERIORATING FISCAL BALANCES, REMAIN THE KEY SOURCES OF SHOCKS TO THE NIGERIAN ECONOMY”
Cumulative disbursements under the Real Sector Facility currently stood at N2.15 trillion disbursed to 437 projects across the country, comprising 240 in manufacturing, 91 in agriculture, 93 in services and 13 mining sector projects.
Furthermore, under the 100 for 100 Policy on Production and Productivity, the Bank has disbursed the sum of N20.78 billion to nine projects in healthcare, manufacturing, and services.
This brings the cumulative disbursements under the facility to N114.17 billion to 71 projects across healthcare, manufacturing, services and agriculture. The Bank released N4.0 billion under the Intervention Facility for the National Gas Expansion Programme (IFNGEP) to promote the adoption of compressed natural gas (CNG) as the preferred fuel for transportation and liquefied petroleum gas (LPG) as the preferred cooking fuel.
In the MSME sector, the Bank supported entrepreneurship development with the disbursement of the sums of N1.33 billion and N10.00 million under the Agribusiness/Small and Medium Enterprise Investment Scheme (AgSMEIS) and Micro, Small, and Medium Enterprise Development Fund (MSMEDF), respectively, to support entrepreneurship development in the country, bringing the total disbursement under the interventions to N150.22 billion and N96.08 billion, respectively.
Under the Export Facilitation Initiative (EFI), the Bank funded export-oriented projects with the sum of N5.34 billion, bringing the cumulative disbursement under the intervention to N44.58 billion.
DOMESTIC ECONOMIC DEVELOPMENTS
Available data from the National Bureau of Statistics revealed that Real Gross Domestic Product grew by 2.25 per cent (year-on-year) in the third quarter of 2022, compared with 3.54 per cent in the second quarter of 2022 and 4.03 per cent in the corresponding period of 2021.
The economy has continued on a path of positive growth for eight consecutive quarters. This is driven largely by support by the Bank and the fiscal authority to growth enhancing sectors. Staff projections showed that output growth recovery is expected to continue reasonably in 2023, given the expected sustained positive performance during the fourth quarter of 2022 and steady rebound in economic activities.
The MPC welcomed the moderation in inflation following 10 consecutive months of uptick, as headline inflation (year-on-year) declined marginally to 21.34 per cent in December 2022 from 21.47 per cent in November 2022. Month-on-month headline inflation however, increased to 1.71 per cent in December 2022 from 1.39 per cent in the preceding month, due to a rise in consumer spending during the festive period.
The Committee observed the continued growth in money supply with broad money (M3) growth exceeding the 2022 provisional benchmark of 15.21 per cent at 16.52 per cent (year-to-date) in December 2022, compared with 13.92 per cent in November 2022. This was largely driven by increased claims on other sectors (other financial corporations, state and local governments, public nonfinancial corporations, and the private sector).
Money market rates oscillated below and within the asymmetric corridor of the standing facilities window, reflecting changing liquid ity conditions in the banking system. Accordingly, the monthly weighted average Open Buyback rate decreased to 11.61 per cent in December 2022 from 12.56 per cent in November 2022, while the monthly average inter-bank rate increased to 12.08 per cent in December 2022 from 11.89 per cent in November 2022.
The MPC noted the continued resilience of the banking system, evidenced by the progressive improvement in the Non-Performing Loans ratio from 4.9 per cent in November 2022 to 4.2 per cent in December 2022.
The Committee also noted that the liquidity ratio was well above its prudential limit at 44.1 per cent, while the Capital Adequacy Ratio (CAR) remained at 13.8 per cent in December 2022 compared with the preceding month, staying within its prudential range of 10.0 -15.0 percent.
The equities market was bullish in the review period, as the All-Share Index and Market Capitalization increased to 51,251.06 and N27.92 trillion on December 30, 2022, from 43,839.08 and N23.88 trillion respectively, on October 31, 2022. This reflected better-than-expected corporate earnings and improved investor confidence in the country.
The Committee noted the marginal decline in the external reserves, as gross external reserves decreased by 0.95 per cent at end-December 2022 to $36.55 billion, from $36.9 billion at end-November 2022. This reflects the exchange rate pressure accentuated by a combination of heightened demand and slow accretion to reserves.
OUTLOOK The MPC
noted that the broad outlook for the recovery of both the global and domestic economies remain uncertain with the path to full recovery clouded by significant downside risks.
The key risks remain the lingering headwinds from the Russian Ukraine war, heightened inflationary pressure across several economies and sharp slowdown of economic activities in China with the resurgence of COVID-19 pandemic across its major cities.
Others include: the tightening of external financial conditions, as monetary policy normalization continues; increasing risk of a global debt crisis, as both corporate and public debt levels burgeon; and the increasing likelihood of a global recession in 2023. Available data and forecasts for key macroeconomic indicators for Nigeria suggest that the economy will continue to grow through 2023, but at a subdued pace.
The continued high level of insecurity; perennial scarcity of Premium Motor Spirit and high cost of other energy sources; increased spending towards the 2023 general elections; rising cost of debt servicing; and deteriorating fiscal balances, remain the key sources of shocks to the Nigerian economy. Accordingly, the economy is forecast to grow in 2023 by 2.88 per cent by the CBN estimate.
