By Babajide Okeowo
Godwin Emefiele, governor of the Central Bank Nigeria has disclosed that with sustained implementation of the apex bank’s development finance initiatives, as well as efforts from the fiscal authorities, the Nigerian economy could emerge from recession by the first quarter of 2021.
He made this know while speaking at the 55th Annual Bankers Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos while also predicting a 2% growth in the country’s Gross Domestic Product (GDP) in 2021.
Emefiele assured his audience that just like policymakers did in 2016 when the economy slipped into recession, the fiscal and monetary policy managers would join forces to address the present economic challenge.
“We also expect that growth in 2021 would attain 2%. However, downside risks remain, as restoration of full economic activities, particularly in service-related sectors, remains uncertain until a Covid19 vaccine is produced and made available to millions of people across the world.
“Second, with the significant rise in cases in advanced markets and the imposition of lockdowns in parts of Europe, concerns remain on the impact this could have on growth in advanced economies, commodity prices, and the financial markets.
“We must therefore find ways to insulate our economy from the impact of these shocks through our diversification efforts, while also working to ensure that we adhere to safety protocols in order to prevent a surge in Covid-19 related cases, as this could further cripple economic activities,” he said.
Highlighting further ways to ensure that the country exit recession, Emefiele disclosed that actions by the CBN in 2021 would be guided by considerations that emerged from the Monetary Policy Committee, MPC meeting held last week, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices.
He noted that given the fact that the rise in inflation was not due to monetary factors but rather the prevalence of structural rigidities and supply shocks, traditional tools of monetary policy may not be helpful in addressing current inflationary pressures. Rather, he said a more useful policy would be the supply-side measures implemented by the Bank.
As a result, Emefiele said emphasis would be placed on strengthening the development finance initiatives of the CBN in order to stimulate greater production and reduce unemployment.
“We intend to increase our support for measures that will improve cultivation of local produce in Nigeria, with particular emphasis on improving our yield levels, as food inflation continues to remain the key driver of inflationary trends.
“The banking sector, therefore, has a significant role to play as a facilitator of growth in the agriculture sector, through its intermediation function.
“Some of the opportunities in the agriculture sector that banks should explore include ways to address some of the existing gaps in the agriculture value chains, such as storage centers, transport logistics, and technology platforms, that can enable rural farmers to sell their produce directly to the markets.
“These measures would help to improve the productivity of farmers, reduce post-harvest losses, increase access to finance for farmers, and improve sourcing of local raw materials for processing by manufacturing and industrial firms.
“It will also aid improved production of local goods, enable the creation of jobs while supporting the growth of other sectors of our economy such as manufacturing, and transportation,” Emefiele said.
Recall that Nigeria’s real GDP contracted for the second consecutive quarter by 3.62% in the third quarter of the year, compared to a growth of -6.1%, as a result, the country entered its second economic recession in five years.