Uche Usim, Abuja
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) rose from its 273rd meeting on Thursday with a decision to cut the Monetary Policy Rate (MPR) by 100 basis points from 13.5per cent to 12.5 per cent, while retaining all other policy parameters.
The committee with 10 members in attendance had voted hold the liquidity ratio at 30 per cent, Cash Reserve Ratio (CRR) at 27.5 per cent and the asymmetric corridor at +200 and -500 basis point around the MPR.
Reading the communique after the meeting, the MPC Chairman and CBN Governor, Mr Godwin Emefiele, called for aggressive and strategic approach towards the gradual reopening of the economy, insisting that both lives and livelihoods needed to saved from the ruinous effects of COVID-19 pandemic.
He however advised that the reopening must align with the safety protocols rolled out by designated health authorities.
Emefiele noted that Nigeria may escape another recession if concerted efforts are made to boost domestic production and export.
To avoid another recession, the CBN Governor disclosed that under the N100 billion healthcare intervention fund, the bank has approved and disbursed N10.15 billion for some projects for the establishment of advanced health centres and the expansion of some pharmaceutical plants to make essential drugs and intravenous fluids.
Emefiele said: “From the N1 trillion intervention targeted at the agriculture and manufacturing firms, the CBN has disbursed N93.2 billion under the real sector support fund to boost local manufacturing and production across critical sectors. It consists of over 44 greenfields and brownfield projects. “The bank has also approved N10.9 billion to 14,331 beneficiaries.
Under the N50 billion Targeted Credit Facility (TCF), for households and SMEs N4.1 billion has been disbursed to 5,868 successful applicants. The committee reached out to banks to help facilitate the disbursement of those loans to priority sectors of the economy so as to stimulate aggregate demands and create more jobs.
“This is the most potent time to diversify our economy. We must follow through our policies on diversification and there’s no other better time than now.
“Over 40 countries have banned export of goods from their countries.
Thank God President Buhari asked us to produce rice. We’re almost self sufficient in rice.
“Now rice exporting nations have halted export as local demand has risen by about 70per cent because they’re running out of stock. They didn’t farm due to COVID-19. Same thing with those exporting drugs”, he revealed.
On resumption of forex sales to Bureau De Change (BDCs), Emefiele said CBN would in no distant time curb the nefarious activities of some speculators.
“If people say they want forex to travel and there is a travel ban, it means some people got naira somewhere and want to buy dollars and keep for themselves”, he added.
Emefiele said there was an urgent need for better tax collection to help diversifying the country’s economic base. He regretted that the COVID-19 pestilence, which hitherto started as a health challenge in 2019 quickly snowballed into a global economic crisis that disrupted the global supply and other catastrophes that vandalised economies across the world.
Reacting to the MPC decision to cut the benchmark interest rate by 100 basis points down to 12.5percent, Nigeria’s first professor of the Capital Market, Prof Uche Uwaleke, described it as a demonstration of the CBN’s sensitivity to the need to stimulate the economy and enable it withstand the negative impact of COVID-19 as well as the drop in oil revenue.
“Having signalled intention to adopt an accommodative stance in favour of growth, the CBN should put in place measures to ensure that it translates to lower lending rates by the banks to the real sectors of the economy”, he added.