The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has disclosed plans by the apex bank to set up an International Financial Centre at the Eko Atlantic City in Lagos to be operational in the second quarter of 2022.
Emefiele explained that the facility is expected to serve as a hub for attracting domestic and external capital which is much-needed to strengthen the Nigerian economy post-COVID-19.
The CBN governor stated this in a keynote address he delivered at the 56th Chartered Institute of Bankers of Nigeria (CIBN) annual dinner held in Lagos at the weekend.
“The International Finance Centre when fully operational in the 2nd quarter of 2022, will help to position Nigeria as a key destination for investment in Africa,” Emefiele added.
The CBN governor noted that a key challenge to supporting growth in key sectors of the economy was access to large pools of cheap investment capital, adding that over $100 trillion was being held by institutional investors in Organisation for Economic Co-operation and Development (OECD) countries.
According to him, most of the funds were invested in low-yielding assets relative to high-yielding opportunities in Nigeria.
Furthermore, Emefiele noted that although uncertainties remained around the mutating Delta virus, prospects of a broad-based economic recovery in Nigeria were bright as efforts were being made to improve access to vaccines for Nigerians, in addition to measures aimed at implementing safety protocols to curb the spread of the virus.
He, however, pointed out that “our economic growth remains fragile, as our unemployment and inflation rate remains at levels that are not very supportive of growth. Second, continued implementation of our intervention efforts would need to be undertaken to sustain the recovery efforts and stimulate further growth of the economy.
“Third, given population growth at about 2.7 per cent annually, it is important that we continue to deploy measures that will enable our economy to attain annual growth rates of over five per cent.
“Through the pandemic, we are aware that our policy responses are often more effective when we work with the private sector. For example, the CACOVID alliance played an instrumental role in reducing the negative effects of the pandemic, by providing palliative support to families affected by the virus and in rebuilding our healthcare institutions.
“Leveraging the strength of the private sector will be critical in mobilising funds that are needed toward building a more resilient and stronger economy. We intend to strengthen collaborations with the private sector to support investments in critical sectors such as infrastructure, and ICT, in addition to ongoing efforts to build a stronger agriculture and manufacturing base in Nigeria.
“As a result, all efforts in 2022 must be made to ensure that we maintain our focus on improving access to finance and credit for households and businesses, mobilising investment to boost domestic productivity, enabling faster growth of non-oil exports, and supporting employment generating activities,” he explained.
Commenting on the recently introduced 100 for 100 policy on production and productivity, he reiterated that the programme targets credit of up to N5 billion to be provided to 100 firms every 100 days, provided that the firms are investing in projects that are Greenfield projects.
Secondly, projects would be assessed on their ability to generate significant employment opportunities in critical sectors of the economy, he added.
Thirdly on the 100 for 100 policy, he pointed out that eligible firms must show evidence of their efforts to harness available local raw materials towards the realisation of their intended investment.
Emefiele also said efforts would be made to support firms geared towards producing goods for the export market.
“Let me add that routine audits will be conducted on firms that receive funding, to ensure that they are complying with the terms of the program. We believe this program will significantly help to catalyse growth in critical sectors of our economy while aiding our efforts to create employment opportunities and reduce our dependence on imported goods.
“A key focus of the Central Bank of Nigeria under my leadership has been enabling the build-out of a robust payment system in Nigeria that will provide cheap, efficient, and faster means of conducting payments for most Nigerians.
“With the growing pace of digitisation globally, it is essential that we leverage digital channels in fulfilling this objective. Total transaction volumes using digital channels more than doubled between 2018 and 2020, as volumes rose from 1.3 billion to over 3.3 billion financial transactions in 2020.
“Digital payment channels also help to support continued conduct of business activities during the lockdown. Our robust payment system has continued to evolve towards meeting the needs of households and businesses in Nigeria. Reflective of the confidence in our payment system, between 2015 and September 2021, about $900 million has been invested in firms run by Nigerian founders.
“Notwithstanding these gains, close to 36 per cent of adult Nigerians do not have access to financial services. Improving access to finance for individuals and businesses through digital channels can help to improve financial inclusion, lower the cost of transactions, and increase the flow of credit to households and businesses.
“It is in this vein that the Central Bank of Nigeria recently deployed the first central bank digital currency in Africa, the e-Naira, which would help in attaining our goals of fostering greater inclusion using digital channels, supporting cross border payments for businesses and firms, and providing a reliable channel for remittance inflows into the country.
“The e-Naira will ensure that Nigerians in remote areas can conduct financial activities using their digital devices at little or no cost. It will also help to strengthen the effectiveness of government intervention programs, as funds provided will get to the intended beneficiaries. In less than four weeks since its launch, almost 600,000 downloads of the e-naira application have taken place.”
He added: “Efforts are ongoing to encourage faster adoption of the e-naira by Nigerians who do not have smartphones. The support of the financial industry will be critical in the ongoing deployment of the e-naira and efforts are ongoing to encourage continued partnership between the CBN and stakeholders in the financial industry.
“With the decline in revenues due to federal and state government as a result of reduced receipts from the sale of crude oil, alternative ways of funding infrastructure are critical if we are to ensure sustained growth of our economy. As we are all aware, the cost of logistics is often seen as a significant impediment to the growth of businesses in the country.
“In recognition of the role improved infrastructure could play in the development of our economy, along with the need to leverage private sector capital in funding the over N35 trillion deficit, which is the estimated amount required to build an efficient infrastructure ecosystem in Nigeria, the Central Bank of Nigeria working in partnership with critical stakeholders such as the Nigerian Sovereign Investment Authority (NSIA) and African Finance Corporation (AFC) set up Infracorp. Infracorp is expected to raise over N15 trillion to support investment in critical infrastructure in Nigeria.
“So far, N1 trillion has been provided as seed funds by the promoters to support the operations of Infracorp. We recently appointed four fund managers, and a Management Team has been selected to run and manage Infracorp.
“Over the next two months, Infracorp will kick off its operations by targeting strategic infrastructure projects that would help catalyse further growth of our economy. Infracorp is expected to set the standard template that will help in enabling greater private sector funding for public infrastructure projects in Nigeria.”
On the outlook for 2022, Emefiele revealed that CBN’s in-house model, after an exhaustive simulation with various oil price possibilities and numerous scenarios of other macroeconomic metrics, indicates a continued and strong rebound of the domestic economy.
He said the near-term outlook of the Nigerian economy was brightening significantly, with improvements projected into the short- and the medium-term. He projected that the real GDP growth rate would remain robust and strengthen within the short term.
“Output growth rate is projected to remain positive from 4.03 per cent in 2021q3 to nearly 2.91 per cent in 2021 fourth quarter, implying a total growth of about 3.10 percent for 2021. The short-term projection indicates a continued strengthening of the growth rate.
“Deliberate structural policies and reforms are needed to raise this projected trend higher towards the desired five per cent average growth level.
“Output growth rate for the Nigerian economy is broadly estimated by key institutions to consolidate in 2021. The IMF and the World Bank project real growth rates of 2.6 per cent and 2.4 per cent, respectively while the estimate by the Federal Ministry of Finance and National planning stands at 3.0 per cent.
“Generally, the real GDP growth rate is projected to remain robust and strengthen within the short-term, regardless of the immanent vulnerabilities. With this continued strengthening, real GDP could recover beyond the pre-pandemic levels by the first quarter of 2022. Further simulations of the medium-term projections suggest that Nigeria’s real GDP could surpass pre-COVID trends by 2024.
“The business environment remains optimistic given the sustained policy interventions in the economy. The overall business confidence index is projected to rise significantly from -9.2 index points as at end-August to over 37.7 index points in November 2021 and surpass 57.6 index points by mid-2022,” he added.