Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, Tuesday said the bank would raise its Covid-19-targeted facility from N150 billion (about $395m) to N300 billion ($790m) in order to accommodate more Nigerians in a bid to cushion the impact of the pandemic that has pushed the nation’s economy into its second recession in five years.
He told reporters in Abuja after the Monetary Policy Committee (MPC) meeting that the doubling of the CBN’s Covid-19-targeted facility to N300 billion seeks to spur consumer spending and accelerate recovery from the COVID-19- induced recession.
The apex bank, arising from its two-day meeting of the MPC, the last in 2020, resolved to leave all monetary policy parameters unchanged in continued efforts to stimulate economic growth.
The CBN retained the Monetary Policy Rate (MPR) otherwise known as interest rate at 11.5% with the asymmetric corridor of +100/-700 basis points around the MPR. It further retained the Cash Reserve Ratio (CRR) at 27.5 per cent as well as the Liquidity Ratio at 30%.
The MPR is the rate which the apex bank lends to commercial banks and often determines the cost of funds.
Emefiele said increasing the targeted credit facility will, by boosting consumer spending, stimulate output and ensure that all the six geopolitical zones benefitted from the palliative.
He said: “We have been advised or nudged on by the MPC that given that this had been very impactful positively, that the CBN should do more.
“We have been told that we have to increase it not just from the N140 billion to N150 billion that it is now, but increase it to about N250 billion to N300 billion to accommodate more people that have not accessed this facility.
“But we do insist that this must be done in a way that it goes round because we found out that some zones are more represented in the country than others.
“But understand that a zone like North-central, where we have predominantly Abuja, or South-west, where you have predominantly Lagos, would certainly have a larger share.
“The important thing is that we want to use this as an opportunity to see what can be done to boost consumer spending for our people and also see to it that output is stimulated positively for the good of our people.”
He, however, reinforced his call for diversifying the economy to end reliance on crude oil and save the country from exogenous shocks often arising from volatility in oil prices.
He said it was high time the country went back into agriculture for economic sustainability amidst current efforts to steer it out of the second recession.
The CBN governor also expressed optimism that the country will exit the recession as early as the first quarter of 2021 as well as begin to witness improved output by the fourth quarter of 2020.
He said: “Base on data available to the MPC from the CBN, we are somewhat cautiously optimistic that indeed, if we continue doing what we are doing, that there is a likelihood that we would see some little positive output numbers during the fourth quarter of 2020.
“But I can say with some level of certainty as well that during the first quarter of 2021, we would exit the recession.”
According to him, the bank will continue to boost support for agriculture, industry and manufacturing to stimulate job creation as well as moderate inflationary pressures.