Uche Usim, Abuja
President Muhammadu Buhari has approved the establishment of an Infrastructure Company (Infra-Corp) to be driven by the Central Bank of Nigeria (CBN) in partnership with the African Finance Corporation (AFC) and the Nigerian Sovereign Investment Authority NSIA).
This is as the nation’s external reserves shrunk to $36 billion following a cocktail of monetary policy interventions by the apex bank to cushion the scathing effects of the COVID-19 pandemic on the economy.
CBN Governor Mr Godwin Emefiele made these disclosures in Abuja on Tuesday at the annual conference of the Chartered Institute of Bankers of Nigeria (CIBN) themed “Facilitating a Sustainable Future: The role of Banking and Finance”.
According to him, Infra-Corp would enable the use of private and public capital to support infrastructure investment that will have a multiplier effect on growth across critical sectors.
‘This entity would also be able to raise funds from the capital markets and mobilise long term finance to address some of our infrastructure needs, while providing reasonable returns to investors.
‘We believe this well-structured fund can act as a catalyst for growth in the medium and the long run. The support of the banking community will be important in achieving this objective.
‘A well-built infrastructure system, comprising hard infrastructure such as roads and ports, and soft infrastructure such as broadband penetration, can have a multiplier effect on growth by enabling the expansion of business activities in the country,’ he explained.
On foreign reserves crash, Emefiele attributed it to the decline in foreign exchange earnings and subsequent adjustments in the value of the naira vis-à-vis the US dollar.
He added that the CBN has continued to implement a demand management framework, which is designed to support improved production of items that can be produced in Nigeria, and further conservation of our external reserves.
‘These measures have helped to prevent a significant decline in our reserves. Our external reserves currently stand at $36 billion and are sufficient to cover eight months of import of goods and services,’ he added.
The CBN Governor explained that the increase in outflows from emerging markets also led to a corresponding depreciation in the currencies of several countries such as Brazil, South Africa, Indonesia and Turkey.
‘Nigeria was not exempted from the drop-in flows, as capital importation into the country declined from $6bn in Q2 of 2019 to $1.2 billion in Q2 of 2020.’
Earlier in her remarks, the Minister of Finance,Budget and National Planning, Mrs Zainab Ahmed, who represented President Muhammadu Buhari urged the bankers and fund managers to closely partner with the government in its efforts to diversify the economy and reposition the country for a sustainable future.
She asked the bankers to redouble their efforts, mobilise domestic resources and attract foreign investment to create quality job opportunities for the teeming youths and lift people out of poverty.
She recalled that part of the concerted effort aimed at bridging the transition to a post COVID -19 era was the launch of a 12 months’ economic sustainability plan with a stimulus package of N2.3 trillion.
‘This amount is being funded by N500bn from Special Accounts, N1.11 trillion of CBN structured lending and N302.9 billion from other funding sources. This was against the backdrop of the recent design of the 2020-2023 Medium Term Expenditure Framework/Fiscal Strategy Paper as well as the ongoing work on the medium to long term development plans that hold the potential of putting the country on a more sustainable economic trajectory for the next 30 years. The present administration recognises that a strengthened implementation framework is needed to achieve the objectives of the medium to long term plans, hence the need to put in place a process of broad-based dialogue with all stakeholders.
‘The framework is meant to accommodate changing economic realities, drive the economy on the path of accelerated growth and also serve as a reference point for economic planning, while the Fiscal Strategy Paper, highlights the macroeconomic objectives of the Government over the period 2021-2023 and the policy measures to be implemented to achieve them,’ she stated.