The governor of the Central Bank of Nigeria (CBN) Governor Godwin Emefiele said over the weekend that the worst is over for Nigeria’s economy.
Nigeria has endured a torrid year in which inflation has soared, unemployment worsened and negative growth recorded, leading to the official confirmation last month by the National Bureau of Statistics (NBS) that the nation is in the midst of a recession.
Despite all this, Emefiele said during a meeting with media executives that “we have turned the bend.”
Emefiele gave the following reasons for his optimism:
1. In the last two and half months, there has been an inflow of about $1 billion from foreign portfolio investors.
2. The federal government has prepared an Emergency Spending Bill to be debated by the national assembly. The bill will shorten the procurement process and enable government spend money quicker.
3. The government will release about N374 billion for spending in the economy.
4. The government’s long awaited social spending program will soon begin and there will be capital expenditure payments towards that aim.
5. One million traders will get subsidised loans, which is actually one of the planks of the social investment plan of the FG but got special mention by Emefiele.
The CBN governor said that the reason foreign portfolio investors are returning is the flexible exchange rate regime recently introduced by the bank and the introduction of the Over-the-counter (OTC) feature market which has reduced volatility in the forex market.
Emefiele explained that the Emergency Spending Bill which the executive is sponsoring, will help the nation spend its way out of the recession in a quicker fashion as the slow procurement process will be significantly improved when the bill is passed. He said the bill removes bottlenecks so that government can go directly and procure items and spend money to stimulate the economy.
“When you start the procurement for an item, what happens is that you have to advertise for bids in the newspapers. That process of advertisement and calling for bids require that it has to be for 12 weeks. Now when you open the bid, you’ll now see the numbers, you’ll now negotiate for the prices. After that you’ll go to the Bureau for Public Procurement, get the approval. After that, maybe you’ll go to the Federal Executive Council to get approval. You’ll find out that almost six months would have elapsed and that is why government is saying we must shunt this process,” he said.
The CBN governor said that the bank will provide “bridge funding” for the FG so that it can go ahead and spend monies even though the N900 billion expected to be borrowed in foreign currency to fund the budget deficit has not been sourced yet.
“When the proceeds of the foreign loans come, then, we can use that to clear the bridge fund that has been done,” he said.
“That is allowed because this time we do not need to wait and that’s why you may have read that the Minister of Finance just came up and said so far we have spent about N420 billion and, in fact, by this coming week (this week) alone another close to N374 billion would be injected into the economy to stimulate it.”
According to Emefiele, one million market women will benefit from loans at subsidised rates this year from “our micro, small and medium enterprise loan.”