The Central Bank of Nigeria (CBN) has announced plans to disburse N400 billion Real Sector Support Facility (RSSF) to operators in the manufacturing and agricultural sectors, its Governor, Godwin Emefiele said on Saturday.
Emefiele made the disclosure at The Guardian newspaper’s presentation of a Special Report on Financing the Economy held in Lagos, where he added that the fund will be given to manufacturers at a single digit interest rate of nine per cent.
According to the CBN boss, the strategic initiative targets projects in manufacturing and agriculture, given the mutual interdependence of both sectors for the complete industrialisation of agro-allied business.
Stressing the importance of a well-functioning financial system, Emefiele said the CBN’s development finance strategy was aimed at diversifying the economy away from over- dependence on oil revenues and consistent with its development agenda.
“In most cases, private funding in the form of bank credit is often considered an important determinant of the level of productive investment in an economy,” he said.
“Like many other emerging and developing countries, Nigeria has got its own peculiarities in the area of financing the economy. In addition to these peculiarities, the sheer size of our economy makes it impossible for neither the public sector nor the private sector to independently satisfy the financing requirements of the economy; hence, the need for an effective public private partnership and for each to play its individual roles.”
He stated that the CBN is using a “two prong approach to resolve the insufficient credit flow to the private sector and concomitantly accomplish its development finance function,” he said.
He said the first involves a de- risking of bank lending to the private sector through a wide-range of credit guarantee schemes undertaken by the bank, while the second involves direct intervention initiatives in key high impact sectors including agriculture, Micro Small and Medium Enterprises, manufacturing, power, among others.
Emefiele said the vulnerability of the Nigerian economy to global shocks simply reflected the fact that it was unable to sufficiently produce what it consumes, hence, the need for adequate finance to strategic high impact and high employment multiplier sectors.
The CBN boss further stated that the economy has seen stabilisation and convergence of the exchange rate around N360/ $1 from about N525/$1 in February 2017, in addition to a strong recovery of external reserves from just over $23 billion in October 2016 to over $46.7 billion as of March 29, 2018.