…We must be vigilant to avoid sliding into another recession- Emefiele
…Targets $50bn external reserves in 2018
In order to continue the success recorded in the nation’s local production, the Central Bank of Nigeria (CBN) has disclosed that plans have been concluded to float a N500 billion support funds for the local manufacturers in the country to boost local production and improve the performance of the non-oil export in the economy.
The CBN said that the fund would be launched in collaboration with the Nigeria Export Import Bank (NEXIM) to assist local manufacturers interested in non-oil exports.
CBN Governor, Mr. Godwin Emefiele, made this disclosure on Monday in his keynote address at the 25th Seminar for Finance Correspondents and Business Editors in Uyo, the Akwa Ibom State capital.
Emefiele, who was represented by the Deputy Governor, Corporate Communications Services, Mr. Edward Lametek Adamu, said the measure is aimed at continuing its gains in local production and help boost the non-oil sector.
He said that the economic recovery would consolidate as the sentiments improved in the macro economy and supported by proactive monetary, trade, industrial and fiscal policies.
Emefiele also said the apex bank expected a continued uptick in Gross Domestic Product (GDP) growth with a positive spillover to the improved unemployment rate.
He said, “Whilst basking in the delight of these accomplishments, what then must we do to sustain them and ensure that we do not slide into another 11 recession?
“I believe that the first thing we need to do is to remain vigilant. Those of us who have been entrusted with leadership and policymaking responsibilities must neither become complacent nor over-confident. We must strive to improve and sustain the same policies that has gotten us this far”.
Speaking on the foreign exchange market, the CBN governor said the rate stability would continue.
He said: “As we entrench and sustain the transparency in the FX market, as foreign FX reserves accretion continues, 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.
“The adverse competitiveness outcome which such appreciation may entail will be adequately mitigated by proactive policies to ensure that our balance of payments position is not undermined.”
According to him, there is also need for strong policy coordination.
“Finally, we expect a re-doubling of strong policy coordination, collaboration and cooperation which flourished during the very difficult times,” he added.
He said that the need was greater now than ever for robust policy coordination between the key aspects of economic policymaking space to sustain the recovery.
This, he said, would include fiscal, monetary, exchange and trade policies, which must be targeted at protecting farmers to boost agricultural outputs and support local companies.
Emefiele said it would also enhance manufacturing and industrial capacities, to diversify the economy away from oil and fossil fuels.
He stressed that the activities and policies of the apex bank that moved the country out of recession must be sustained.
“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,” he said.
According to him, “the theme of this year’s seminar: “Sustaining Economic Growth Beyond Recession” is both relevant and timely considering the fact that we have just exited Nigeria’s first recession in over 25 years.”
In the area of Development Finance, he said that the CBN would 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.”
On the Monetary and Exchange Rate Policy, Emefiele said: “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 even handedness that has attracted inflows of FX into the 13 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.
The CBN Governor said that Foreign Exchange Reserves will continue to grow, saying, “following recent accretion, FX Reserves may be about $50 billion sometime later this year.”Economic Recovery will consolidate.
“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.”
According Emefiele, Exchange Rate stability will continue. “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.
“The adverse competitiveness outcome which such appreciation may entail would be adequately mitigated by proactive policies to ensure that our balance of payments position is not undermined,” he stated.
He said there is need for “strong policy coordination”. “Finally, we expect a re-doubling of strong policy coordination, collaboration and cooperation which flourished during the very difficult times.
“To sustain our recovery, the need is greater now than ever for a robust policy coordination 15 between the key aspects of economic policymaking space. This would include fiscal, monetary, exchange, and trade policies, which must be targeted at protecting farmers to boost agricultural outputs, support local companies and enhance manufacturing and industrial capacities, with a view to diversifying the economy away from oil and fossil fuels,” he added.