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CBN’s Covid Interventions Account for 3.5% of Nigeria’s GDP, Emefiele Says

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has disclosed that the apex bank’s interventions to protect the economy from the impacts of COVID-19 represented 3.5

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has disclosed that the apex bank’s interventions to protect the economy from the impacts of COVID-19 represented 3.5 per cent of Nigeria’s Gross Domestic Product (GDP).

Nigeria’s GDP was estimated at $432.29 billion by the National Bureau of Statistics (NBS) in the second quarter of 2021.

This is coming as the United Bank for Africa (UBA) has published the names and account numbers of some customers who allegedly defied the forex policy of the apex bank.

Emefiele stated this on Saturday in Lagos in his keynote address on the occasion of the Finance Correspondents Association of Nigeria (FICAN) 2021 Annual Conference and 30th Anniversary Celebration with the theme: ‘Financing Infrastructure and SMEs for Inclusive Growth in the Post-COVID-19 Economy.’

The CBN governor who was represented by the Director, Corporate Communications, Mr. Osita Nwanisobi, said the conference provided an opportunity to share the CBN’s experiences at boosting the economy by stimulating investments towards the development of Small and Medium Enterprises (SMEs) and critical infrastructure in the country.

He said: “Given the consequences of the COVID-19 pandemic on key economic variables, the CBN took several measures to mitigate the long-term effects on the growth prospects of the economy. First, policy measures were introduced to restore stability in the economy by supporting households that have been severely affected by the pandemic.

“Also, targeted interventions were introduced to support critical sectors, such as agriculture, manufacturing, energy, and health. Cumulatively, the bank’s intervention efforts represented about 3.5 per cent of the GDP.”

Emefiele said that the CBN has equally developed and introduced low-interest and long-term finance interventions in tandem with the gestation periods of infrastructure projects in line with the bank’s developmental mandate to stimulate finance for infrastructure development in Nigeria.

The design of the interventions, according to him, was hinged on the need to develop enabling infrastructure in critical sectors to drive economic growth and development.

He said: “To fast-track, the development of infrastructure in the power and aviation sectors, the Power and Airlines Intervention Facility (PAIF) disbursed N312.77 billion to 73 projects to stimulate investment in the sectors, improve power generation, support retention of sustainable jobs and enhance the living standard of the citizens through improved access to electricity.”

Emefiele acknowledged that the current level of infrastructure deficit in Nigeria “is a major constraint to economic development and attainment of growth average rate of at least five to seven per cent required to boost productivity and sustainable growth for businesses.”

He referred to the World Development Indicators (2019), which said that 56.20 per cent of Nigerians have access to electricity, while electric power consumption stood at 144.52 kWh per capita as of 2018.

He added that “while infrastructure deficit in Nigeria is estimated to be about 1.2 per cent of GDP, it is projected that the federal government needs to commit about $10billion annually to address the nation’s infrastructural deficit.”

The central bank governor stated that lack of access to quality infrastructure has been a limiting factor to MSMEs potential for growth and creating employment.

Emefiele said access to finance remained one of the biggest threats to MSME development with serious implications for productivity, economic development, and job creation.

“Access to credit has been identified as a critical enabler for the growth and development of MSMEs, as the overall credit gap for MSMEs in developing countries is estimated to be $5.2 trillion, representing 19 per cent of these countries’ cumulative GDP. Of this, the unmet financing demand from MSMEs in sub-Saharan Africa is about $331 billion, representing 18 per cent of the potential demand for credit by MSMEs in the region.

“With over 42 million MSMEs in Nigeria, contributing 49.78 per cent to the nation’s GDP, 7.64 per cent of exports, and employing 76.5 per cent of the workforce, the sector is faced with numerous challenges that continue to limit the enterprises’ potential to contribute to economic growth and development.”

Emefiele referred to a PwC report, which said that access to electricity accounted for the major share of costs to daily operations of MSMEs, adding that the energy sector is overwhelmed by a plethora of challenges that ranged from operational inefficiencies to infrastructure deficiencies, which have resulted in inadequate electricity supply to households and businesses in Nigeria.

“This has contributed significant economic costs to MSMEs, thus hampering their competitiveness and contribution to economic growth. Specifically, the IMF has identified a lack of access to reliable electricity which costs the Nigerian economy an estimated $29 billion annually.

“The financing gap for MSMEs in Nigeria is estimated to be about N617.3 billion annually pre-Covid-19 pandemic, as less than five per cent of these businesses have access to adequate finance to support their working capital and business expansion needs (PwC).

“Other constraints to MSME development in Nigeria, as noted in the survey, included difficulty in finding customers, infrastructure deficit, insufficient cashflows, multiple taxations, regulatory burden, and sub-optimal implementation of the provisions of the •UBA publishes names, account details of forex defaulters


Nume Ekeghe and Dike Onwuamaeze MSME policy,” he said.