Accelerating Nigeria’s Economic Diversification Through CBN’s 100 Percent Initiative
1 Accelerating Nigeria’s Economic Diversification Through CBN’s 100 Per Cent Initiative
2 Accelerating Nigeria’s Economic Diversification Through CBN’s 100 Percent Initiative
3 CBN Governor, Godwin Emefiele
By Kadiri Abdulrahman
Over the past few decades, Nigeria’s economy can be described as monocultural as it is largely driven by foreign currencies from the oil sector.
4 However, this revenue stream has become unpredictable due to a number of market-disrupting reasons.
5 Some of these factors include conflicts in oil-producing countries, deliberate efforts by countries to preserve their oil reserves, foreign currency, smuggling.
6 Due to climate change concerns, many countries have put in place mechanisms to reduce the use of fossil fuels and transition to cleaner energies.
seven As an oil-producing nation, these concerns have triggered efforts by the federal government to diversify the economy by boosting the productive and manufacturing sectors.
8 Unfortunately, in the past, Nigeria had a vibrant manufacturing sector, boasting of several textile companies in Kaduna, Kano, Lagos, among other cities, employing hundreds of thousands of Nigerians.
9 Nigeria also had a range of automobile assembly plants that reduced reliance on imported vehicles, in addition to local shoe production, in Aba, Lagos, Onitsha, Kano, among others.
ten For example, global automobile brands such as Volkswagen, Mercedes, and Peugeot also had a strong presence in the country’s economy, maintaining functioning assembly plants and employing thousands of Nigerians.
11 The agricultural sector was also vibrant, with Nigeria playing a major role in the global cultivation and export of crops like groundnuts, cocoa, palm nuts, among others.
12 The overreliance on foreign exchange earnings from crude oil, which began in the early 1980s, led to a gradual neglect of other aspects of the economy as “petrodollars” reigned supreme.
13 This gradually led Nigerians to depend on imports of essential goods and services, including those where the country easily had a comparative advantage.
14 The consequence of this action is avoidable economic challenges, rising unemployment, rising inflation and a weakened naira.
15 The Central Bank of Nigeria (CBN) has in recent times launched interventionist policies and programs aimed at reversing the trend by reviving the productive sector and diversifying the economy.
16 As part of the push, in January the apex bank launched the “100 percent” policy on production and productivity (PPP).
17 Under the policy, every 100 days, manufacturers in critical industries looking to engage in greenfield projects or expand existing facilities will have access to cheaper forms of credit at single-digit rates as well. only foreign currencies to buy factories and machines.
18 The ultimate goal is to reverse the country’s dependence on imports by creating an economic system that targets and supports good businesses and good projects.
19 CBN Governor Mr. Godwin Emefiele said the policy was designed to support the federal government’s drive to increase productivity and economic diversification.
20 Emefiele said a maximum loan of five billion naira per debtor would be approved under the initiative, adding that any amount above five billion naira would require special approval from his management.
21 “The initiative will create a flow of finance and investment to businesses that can launch a trajectory of sustainable economic growth, accelerate structural transformation, promote diversification and improve productivity.
22 “This is support for private sector enterprises with the aim of reducing certain imports, increasing non-oil exports and improving the economy’s foreign exchange generating capacity,” he said. declared.
23 Emefiele said 100 eligible companies in priority sectors would be selected to receive funding from the apex bank every 100 days, adding that the initiative would boost productivity in agriculture, health, manufacturing, logistics, services , trade-related infrastructure and renewable energy.
24 “Specific objectives include: catalyzing import substitution of targeted products; increase local production and productivity; increase non-oil exports; and improve the economy’s foreign exchange earning capacity,” he said.
25 He explained that comprehensive and regular monitoring of specific benchmarks and key performance indicators (KPIs) under the initiative would be undertaken on a regular basis.
26 “The KPIs must include the increase in production of the financed companies; percentage increase in capacity utilization and percentage increase in export volume and value,” he said.
27 According to him, the projects will generate nearly $125.8 billion in foreign exchange and more than 20,000 direct and indirect jobs in all sectors of the economy.
28 Already, the CBN has provided N23.2 billion in loans to 28 beneficiaries, under the “100 percent” initiative.
29 Beneficiaries cover all sectors, including manufacturing, agro-industry, agro-industry and extractive industries, petrochemicals and renewable energies, health and pharmaceuticals, logistics services.
30 The apex bank said 28 companies had been deemed eligible and selected for funding in the first instance, with projects valued at N23.2 billion.
31 In supporting the initiative, the Minister of Labor and Productivity, Dr. Chris Ngige, recently said it was evidence of CBN’s commitment to spearheading initiatives that would boost productivity and economic growth in Nigeria. .
32 “Productivity is the foundation of everything we do.
33 Coming up with such an initiative that benefits all key sectors means that the CBN has taken into account the fact that we have to produce,” he said.
34 The Secretary to the Federation Government, Mr. Boss Mustapha, argued that the policy comes at a time when economic diversification and local production of finished goods and services are needed.
35 “Over the years, the CBN has demonstrated its ability to model and push through programs and initiatives that will facilitate the achievement of its core mandates of ensuring financial system stability and promoting economic policies and strategies,” he said. he declared.
36 The initiative also drew support from a member of the House of Representatives who praised the apex bank for introducing the policy.
37 Representative Chris Azubogu, while proposing a motion in February, urged the CBN to maintain the policy, saying it will improve Nigeria’s ability to produce goods for its people and markets in sub-Saharan Africa.
38 According to him, the policy will support economic development and contribute to increased economic activities by stimulating the production of goods and services and creating jobs for the large population.
39 “The policy will improve Nigeria’s ability to produce goods for its people and the Sub-Saharan African market in particular, while preventing the country from becoming a dumping ground for substandard products.
40 “The initiative, if well implemented, will contribute immensely to industrialization, increase the ability to create jobs for the youth in abundance.
41 “It will also improve incomes through exports and reduction in imports of goods, thereby improving the country’s economy,” he said.
42 A financial expert, Mr. Okechukwu Unegbu, commended the apex bank for thinking outside the box in its efforts to repair the national economy and urged the beneficiaries to ensure that the funds are used wisely.
43 “The CBN has made commendable efforts to encourage manufacturing and economic diversification in recent times, and this policy is another.
44 “The realization by the fiscal and monetary authorities that it is imperative to get the country out of dependence on crude oil towards the productive and manufacturing sector is encouraging.
45 “I urge the beneficiaries of this policy to ensure that the funds are used for the purposes for which they were allocated, while the CBN should provide strict monitoring and control to ensure compliance,” he said. recently declared.
46 Given the poor performance of similar interventions in the past, some experts have urged caution in celebrating the latest decision.
47 Mr. Ibrahim Aliu, chartered accountant, advised the apex bank to take stock of its previous economic policy decisions to be determined with a view to improving the execution of the present one.
48 According to Aliu, in a recent interview with NAN, he said that it is not enough to introduce these policies, saying that their implementation of such policies must inspire trust and credibility in the system.
49 “The apex bank needs to take stock, make an assessment, to determine the level of success of existing policies,” he said.
50 An economist, Mr. Joseph Adebayo, in another interview, called for effective monitoring of policy beneficiaries to ensure that funds are not misappropriated.
51 “Many Nigerians think government money is free money.
52 I hope the CBN has adequate modalities to monitor the 28 companies that have so far benefited from this policy and their use of the N23.2 billion loan,” he said.
53 Although CBN is confident of the policy’s success amid concerns over implementation, it is clear that the country’s economy can no longer afford to rely on crude oil exports.
54 The new policy therefore deserves the support of all stakeholders.
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