…External Reserves Stands At Over $41.4Bn
Yemisi Izuora
The Central Bank of Nigeria, CBN, says Nigeria has witnessed robust economic recovery as GDP growth stood at 4.03% in the 3rd quarter of 2021, following the 5.01% growth recorded in the 2nd Quarter of 2021.
The Governor of the Bank, Godwin Emefiele said the economy has remained on a positive growth path for four consecutive quarters after the recession in the 3rd quarter of 2020.
According to him, 41 out of the 46 sectors assessed in the 3rd quarter by National Bureau of Statistics, NBS, recorded positive growth, as growth was driven by significant improvements in the non-oil sector, particularly, Agriculture Manufacturing, Trade, ICT, Construction, Finance and Transportation.
The country has also witnessed a gradual recovery in manufacturing output growth as the Manufacturing PMI index rose to 47.3 points in October 2021 from 44.9 in January 2021.
Emefiele, while addressing the 56th edition of the Annual Bankers Dinner in Lagos, Friday November 26, said, Our interventions particularly in the manufacturing and the agriculture sectors significantly helped to encourage continuous improvements in growth in these two key sectors of our economy.
“Today, our food production systems have become more sustainable due to the improved output at our farms and local factories. Output of staple commodities such as rice, maize, palm oil and tomatoes have grown significantly, and we have also seen increased efforts of our local manufacturing firms to engage in backward integration efforts.”
He said a visit to any major retail chain will reveal an increasing number of high quality made in Nigeria products relative to imported goods, which is helping to increase domestic production, generate employment and wealth in our country, adding, “If these intervention efforts were not carried out by the monetary and fiscal authorities, our economy would have been in a grim state.”
The Governor observed that Inflation has continued to moderate for seven consecutive months, as it declined from 18.17 percent in March 2021 to 15.9 percent in October 2021 supported by improved output of staple food items. Inflation however still remains above our benchmark, which means efforts must continue to be made to slow down the pace of the rise in prices.
He further stated, “Supported by our demand management policy, in addition to support from the successful issuance of the $4bn Eurobond and the IMF SDR, our external reserves today stands at over $41.4bn which is enough to support 9 months of imports. This is not just a morale booster for both foreign direct and portfolio investors willing to invest in the economy, but it provides significant fire power to support our domestic industries that need to import critical machines and equipment for domestic production and exports”
He said that asa result of its demand management policy, the naira has remained largely stable around N411/US$1 at the I&E window particularly since the discontinuation of FX allocation to Bureau De Change operators along with the convergence between the CBN and NAFEX rates. Banks are now able to meet the demands of their customers seeking forex for SMEs, school fees, medical and PTAs, which has reduced the need of customers to rely on alternative providers of foreign exchange. Average daily Fx turnover at the I&E window is now over $250million, up from $40million in April 2020.
He continued, “Our current account deficit has narrowed significantly, from a huge deficit of 4.53% of GDP in the 4th quarter of 2020 to negative 0.44% of GDP in the 2nd quarter of 2021 due to a surplus position in the goods account. The surplus position in the goods account is due to a reduction in imports, increase in crude oil and gas export receipts, and improvement in remittance inflows. Remittance inflows have been supported by our naira for dollar program, and we have seen a surge in remittance inflows from over $5m per week in June 2020 to over $100m per week in October 2021.”
Following the impact of the various accommodative policy measures, he said the economy made a swift exit from the recession, saying, “Unlike the five quarters it took to exit the previous recession, the economy rebounded after just two quarters of contractions, underpinning the resilience of the economy amid greater policy support. I am pleased to note that growth has returned to pre-covid levels due to the accommodative policy support provided by the monetary and fiscal authorities. ”
Although uncertainties remain around the mutating Delta virus, Emefiele noted that prospects of a broad-based economic recovery in Nigeria remain bright as efforts are made to improve access to vaccines for Nigerians, in addition to measures aimed at implementing safety protocols to curb the spread of the virus.
As a result of these growth enhancing policy measures, he projected that GDP will grow at 3.0 percent for 2021 up from -1.8 percent in 2020. Inflation is expected to continue on its downward trajectory into 2022 as continued interventions along with the onset of the harvest season aid improved supply of food items, which would further help to decelerate inflationary pressures.
Notwithstanding, these positive indicators, he said that the economic growth remains fragile, as unemployment and inflation rate remained at levels that are not very supportive of growth.
He further stressed that continued implementation of its intervention efforts would need to be undertaken to sustain the recovery efforts and stimulate further growth of the economy and given population growth at about 2.7 percent annually, it is important to deploy measures that will enable our economy to attain annual growth rates of over 5 percent.
“Through the pandemic we are aware that our policy responses are often more effective when we work with the private sector. For example, the CACOVID alliance played an instrumental role in reducing the negative effects of the pandemic, by providing palliative support to families affected by the virus and in rebuilding our healthcare institutions.
Leveraging the strength of the private sector will be critical in mobilizing funds that are needed toward building a more resilient and stronger economy. We intend to strengthen collaborations with the private sector in order to support investments in critical sectors such as infrastructure, and ICT, in addition to ongoing efforts to build a stronger agriculture and manufacturing base in Nigeria.” he said.
The Governor stated that all efforts in 2022 must be made to ensure improved access to finance and credit for households and businesses, mobilizing investment to boost domestic productivity, enabling faster growth of non-oil exports, and supporting employment generating activities.