Yemisi Izuora
The Central Bank of Nigeria, CBN says the country’s foreign reserves is likely going to reach $50 billion later in the year.
Current reserves according to the Bank is $47.37 billion as at April 5 2018.
Governor of the Bank, Godwin Emefiele reassured in Uyo, Akwa Ibom state at the annual seminar organized for Finance Correspondents and Business Editors that the Foreign Reserves will continue to grow.
Speaking on the theme: “Sustaining Economic Growth Beyond Recession” Emefiele who was represented by Edward Adamu, deputy governor corporate services predicted that following recent accretion, Foreign Reserves may be about US$50 billion sometime later this year and Economic Recovery will consolidate, adding, “As the sentiments improve in the macroeconomy and supported by proactive monetary, trade, industrial and fiscal policies, we expect a continued uptick in GDP growth with a positive spillover to improved unemployment rate. As policies to strengthen the agricultural and industrial sectors become more emergent, growth in these sectors will rise, further bolstering overall economy”.
He said the Bank took critical steps when the country was hit by recession which helped to reverse the situation.
“The Bank took a number of proactive measures many of which were, at the time, vigorously criticized by some of you seated here this morning. Yet, these policies were based on our understanding of the developments and traverse of the future as shown by exhaustive scenarios from our in-house macroeconomic simulations and analyses”, Emefiele explained.
According to him, under Monetary policy, the CBN embarked on a cycle of policy tightening to rein in inflation using increasing Monetary Policy Rate (MPR) and aggressive Open Market Operations, while in external reserves management, it adopted demand management through the restriction of Foreign Exchange for imports of 41 items, which was believed could be produced locally;
“On exchange rate management, we took a number of actions to stabilize the exchange rate by abolishing speculators, bettors, round-trippers and rent-seekers. We also introduced the NAFEX and the Investors-Exporters FX Window to increase market transparency and FX inflows;
“In Development Finance, the Bank continued its financing activities in key high-impact sectors like Power, Aviation, Education, MSME, Agriculture, including CACs, ACGS, NIRSAL, the Anchor Borrower Programme, etc.
“In light of these and other policy responses, we are delighted that the economy has turned the corner with our worst days clearly behind us. For example, GDP recovered after five quarters of continuous contraction recording positive growths of 0.7 and 1.4 percent in quarters two and three of 2017, respectively, and signalling an exit from the recession, Inflation declined from a peak of 18.7 percent in January 2017 to 14.3 in December 2017, Exchange Rate appreciated significantly from over N525/US$1 in February 2017 to about N360/US$1 today, tapering premium across various windows and segments of the market, FX Supply has improved since the establishment of the I&E Window, with autonomous inflows of over US$20 billion through this window alone from April 2017 to date, FX Reserves has recovered significantly from a
low of just over US$23 billion in October 2016 to about US$47.37 billion as of 5 April 2018.
“Improvement in the World Bank’s “doing business indicators” for 2018 as Nigeria, with the country rising 24 places to rank 145 out of 190 countries. This feat largely reflecting the CBN’s work on establishing the Collateral Registry and Credit Reference Bureaus, both of which increased access to finance, Significant Boost in Local Production which is partly due to the CBN’s development finance efforts and the dogged implementation of our FX policies”.
He said today many local manufacturers are reporting major boosts to their revenue and profit.
Continuing Emefiele noted that, “For one, our import bill may have fallen but our manufacturing and agriculture sectors still have a long way to go if we must attain self-sufficiency in those sectors. We must not be quick to discard the restrictive measures which aided our recovery simply because the metrics have improved. At the CBN we will continue to fine-tune our policies and strategies based on our understanding of evolving developments and supported by in-house technical analysis and simulations. We will remain proactive in ensuring that the welfare of Nigerians is optimised at any point in time.
“In the area of Development Finance, the Bank will continue to provide access to much-needed credit to sectors with the potential to create jobs on a mass scale. In this regard, we will explore opportunities to expand the highly-successful Anchor Borrowers’ Programme to other crops and States. In order to continue our gains in local production and help boost non-oil exports, we are in the process of finalizing the creation of a N500 billion fund with the Nigeria ExportImport Bank (NEXIM) to assist local manufacturers interested in non-oil exports.
In Monetary and Exchange Rate Policy, we have signalled from the last Monetary Policy Committee (MPC) that we will sustain the tight policies that have helped rein-in inflationary pressures. That is the reason we kept the Monetary Policy Rate (MPR) at 14 percent. We will also continue the transparency and evenhandedness that has attracted inflows of FX into the country while keeping FX supply to the market adequate.
On the basis of these policies, and barring any unforeseen shocks, we expect that inflationary pressure will continue to ease :This may return to very low double digit or high single digit levels during the year, while Exchange Rate stability will continue, he noted adding, “As we entrench and sustain the transparency in the FX market, as FX reserves accretion continues, and market confidence and improved sentiments remain, we expect that the exchange rate will not only be stable but would begin to appreciate against major currencies”.