The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, on Tuesday defended the apex bank’s restrictive trade policy, stressing that it was meant to protect local industries from unfavourable competition and to create jobs for Nigerians.
He said with the country’s high unemployment rate, it was inevitable to create job opportunities and provide an enabling environment for the unemployed to live a gainful life.
Emefiele, during a meeting with the Director-General of the World Trade Organisation (WTO), Dr. Ngozi Okonjo-Iweala, in Abuja, assured the international community that Nigeria remains open to business from any part of the world.
He also attributed the CBN’s policy to restrict foreign exchange to dairy companies which refused to align with its backward integration programme, to the need to protect the national interest.
Emefiele’s clarification followed concerns raised by Okonjo-Iweala that the European Union (EU) had filed complaints about some of the CBN’s trade restriction policies before the organisation, particularly on the use of devaluation of the balance of payments agreement to protect the dairy industry.
But Emefiele said the decision on dairy products was not taken unilaterally by the apex bank, adding that about six major industry players unanimously agreed to take action against those opposed to the backward integration plan to boost job creation.
He said: “We do know one way or the other, people may have said a few things about the way we have conducted our trade, but I think it’s important for me to say that some of those things have been done to also help protect our own industries.
“We need to give a chance for our local industries to create jobs and employment.
“The unemployment rate in Nigeria, I dare say, is very high. Our youthful population of people of the age of about 18 to 40 is almost close to about 60 per cent of the population. You can use that to your advantage and you could also use that to your detriment.
“The fact that we need to create jobs for this set of people, we need to create an enabling environment for this set of people to live a gainful life, means that we have a responsibility to do so and in doing so, we will need the support of institutions like yourself (WTO) to work with us.”
Emefiele, however, added that even though the CBN may have faltered in some of its policy interventions, these could be rectified by working closely with the WTO.
“We may have faltered in a few areas, I am not going to deny that, we will be willing to engage with you (WTO) in areas where we have concerns. And if those concerns are addressed, I want to assure you madam DG that we will work with you.
“Nigeria is open to business in any part of the world and we will like to work with you,” he stated.
On the policy action in the dairy sector, the CBN governor said: “We called a meeting about six years ago when I resumed. I said look, Nigeria has dairy potential by the cattle and the rest of them; let’s see what can be done. Nothing was done. We called dairy companies.
“Two years ago, we started again, we said listen, we are going to start a programme where we are going to place FX restrictions on those who want to import dairy into Nigeria. Six of them came on board- Friesland and a few of them.
“And at a meeting next door there, what did they say? They said, governor, you have been putting us under pressure to invest locally in the dairy industry- what do you do to those who are not doing anything about it?
“At that meeting, we took a decision that those who are not embracing our own backward integration programme in the dairy industry should be restricted.
“It was not my decision, it was a decision taken. Before you (Okonjo-Iweala) were probably born or before I was born, Friesland Campina has been importing milk into Nigeria, how come for over 60 years nothing has been done by this company to backward integrate and begin to produce dairy in Nigeria?
“Does that mean Nigeria does not have the potential? The answer is no. So that’s why we in the monetary and fiscal authority must put everybody’s feet on fire so that the right things are done for the good of Nigeria and Nigerians.”
Emefiele said the current administration was serious about opening up the country to aid its economic diversification from oil to non-oil areas.
He added: “We have those endowments, it is just that we have to work at it but we need the help of multilateral institutions like yourself to work with us. Luckily, you are there from Nigeria.
“Of course, the transition of the Nigerian economy from oil to non-oil, whether we like it or not, we don’t have a choice.
“It’s important that Nigeria really needs to sit up and talk about how to improve its transportation infrastructure, energy infrastructure so that we begin to talk about how do we effectively move goods or food from farm to market in a way and then from the market, not only for domestic consumption but also for export.”
He said the federal government was doing a lot in that direction, explaining that the president only a few months ago, approved the establishment of an infrastructure corporation where the CBN, AFC and NSIA will be raising equity of about N1 trillion and raise another N14 trillion from the debt market to see how Nigeria’s infrastructure, not just roads, could be developed.
He explained further: “We talk about the ports and other areas where we think there are deficits that will help improve the logistics in Nigeria.
“So, we will be calling on the private sector to come to work with us to see how we can achieve this. We are thinking effectively on how to aggressively resuscitate Nigeria’s commodity exchange again so that on one hand, you will find those buyers who want to buy goods and on other hand, the commodity exchange stands in-between to also negotiate and also buy from those who have produced those goods.”
Emefiele, however, assured Okonjo-Iweala that the next three years will be exciting as the federal government, with the support of both the monetary and fiscal authorities is working to address inefficiencies that make it difficult for people to conduct their businesses.
He said while the country would be engaging with the WTO team to resolve inherent issues, “we need to think of how can we open up Nigeria? We need your help in these areas.”
Responding, Okonjo-Iweala proposed that the CBN’s concerns about protecting the local industries against dumping and cheap imports could be addressed by embracing the WTO trade remedies, rather than placing a ban on imports.
She also commended efforts by Nigeria to establish a trade remedies authority so as to use “remedies as a tool to help our industries to grow.”
She said: “I have to raise issues about the BoP (Balance of Payment). We have a complaint against us by the EU about the use of devaluation of the balance of payments’ agreement with respect to trying to protect the dairy industry.
“And they feel that this is not the right instrument. So as DG WTO, I have to make this known. But this is an issue which you said you’d like to engage on in a little more details so we can discuss that later and how to go about it.
“I want to say that the WTO has what we call trade remedies, which can help us without banning things to be able to protect our industries against dumping and cheap imports if we use those remedies.
“I understand Nigeria is trying to establish a trade remedies authority and I want to strongly support that so we can use those remedies as a tool to help our industries to grow.”
She also commended the CBN governor for his efforts in assisting to produce a private sector-led initiative that raised funds for addressing the impact of the COVID-19 pandemic in the country.
She said the pandemic had now “opened our eyes to see that we need to start doing something about the pharmaceutical industry in Nigeria.”
She stressed the need for the country to establish a strong pharmaceutical industry to cope with future challenges as well as create an enabling environment for them to thrive.
According to her, Africa imports over 90 per cent of its pharmaceutical needs.
She said: “With the population of the AfCFTA with a market of 1.3 billion people, which Nigeria is the largest with over 200 million people, I think there’s room.
“We should ask ourselves the question you raised governor. Why is it that the pharmaceutical companies that opened here struggled and closed?
“What are we doing to make sure this doesn’t happen and what are we doing to make sure that our own domestic manufacturers or pharmaceuticals have the appropriate environment they need?”
“We have now seen what happens. If you have this pandemic and you don’t have some ability to provide, you have to wait.
“I want to say that we have what it takes in this country, particularly in our young people, to do the necessary which is to look forward to how we are going to create jobs and move this economy in the direction that will support our youths in the future.”
Emma Okonji in Lagos and James Emejo in Abuja