Why the CBN should have a Plan B for its 2019-2024 Goals

Business Featured Finance Latest Opinion

The Central Bank of Nigeria (CBN) headed by Governor Godwin Emefiele unveiled its policy agenda for the next five year period spanning from 2019 to 2024.

The policy agenda which cuts across key priorities will include the 1) Preservation of domestic macroeconomic and financial stability with a key emphasis on supporting improved GDP growth and greater private sector investment; 2) Fostering the development of a robust payments system infrastructure that will increase access to finance for all Nigerians thereby raising the financial inclusion rate in the country; 3) Improving access to credit for not only smallholder farmers and MSMEs but also Consumer credit and mortgage facilities for bank customers. 4) grow external reserves, and 5) Continuing support for the real sector.

The policy thrusts have received accolades and significant thumbs up from economists including Prof Uche Uwaleke, Professor of capital market and the Chairman Chartered Institute of Bankers of Nigeria, Abuja Branch.

Also Read: FEYReP Partners UNFPA on Reproductive Health

According to the professor, Emefiele’s five year policy thrust is a good development with a lot of positive impact on the economy.

“The recapitalization of banks will strengthen financial system stability and put our banks in a stronger position to finance big projects needed for development as well as play in the global scene,” he said.

Highlighting further benefits, Uwaleke explained that the planned introduction of a Trade monitoring system that reduces the length of time it takes to process export documents from 1 week to 1 day will surely boost exports.

He commended the plan to scale up the anchor borrower programme and target for massive funding support 10 commodities that consume a lot of foreign exchange to import.

“This will help conserve forex, grow external reserves, reduce food prices and possibly create job opportunities.

The plan to build a robust payment infrastructure including  through promoting payment service banks, shared agent networks, mobile money will go a long way in helping to achieve the target of 95 percent financial inclusion by the year 2024.

Similarly, the boost in the collateral registry where over N400 billion worth of assets have been registered as well as the NISRAL microfinance bank will no doubt improve access to finance by micro and small businesses.”

Uwaleke however noted that a major risk he sees in the pursuit of price and monetary stability which is the core function of the CBN is the volatility in crude oil price given the country’s dependence on the sector, the professor thus advised the CBN  to have a plan B in its five year plan.

“It is also vital to get the cooperation of the fiscal authorities especially when it comes to the task of achieving double digit growth because on this very score, the CBN cannot clap with one hand,”  the professor further advised.

At the macro level, Governor Emefiele hopes to target double-digit GDP growth, single digit inflation rate and increased job creation while seeking to maintain stability in the exchange rate.

To guarantee financial system stability, the CBN plans to recapitalize the banks to position Nigerian banks among the top 500 banks in the world.

Also, CBN proposes to work on a framework to enable banks to securitize mortgage loans as well as spur consumer lending by working with large retail stores, automobile companies and so on.

In all, the Governor intends to sustain intervention programs of the Apex Bank by extending same to Youth Corp members, activities in the Agric and manufacturing sector.