The Central Bank of Nigeria (CBN) on Saturday said Public and Private Partnership (PPP) is yet to be fully explored in Nigeria, despite its popularity in other emerging economies, particularly Brazil and India.
The Brazilian Development Bank (BNDES) has supported industrialisation and infrastructure development in Brazil by providing financing support mechanisms to public and private enterprises investing in enabling infrastructure projects; while in India, the Infrastructure Development Finance Company of India (IDFC) provides long-term funding to help finance PPP infrastructure projects.
Godwin Emefiele, governor of the CBN said this in Lagos at a seminar organized by the Financial Correspondents Association of Nigeria (FICAN).
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Represented by Osita Nwanisobi, director of, corporate communications department, he said the CBN remains committed to fulfilling its developmental mandate by collaborating with stakeholders across infrastructure and MSME segments in order to boost domestic output.
He said there is an urgent need for fiscal authorities to collaborate with the Central Bank of Nigeria to change the lenses through which they look at Micro Small and Medium Enterprises (MSMEs) and infrastructure development, by developing innovative policy measures to unlock the potential of these enterprises to drive innovation and industrialisation.
“Without adequate infrastructure, the Nigerian economy cannot overcome its structural challenges and achieve growth, as well as development,” Emefiele said.
He stressed that Nigeria’s output growth remains on the upbeat, as the economy is on a recovery path following the roll-out of the Covid-19 vaccines, reopening of economies globally, as well as the implementation of the various stimulus packages by the fiscal and monetary authorities.
Emefiele admitted that Nigeria is no exception to growth-limiting challenges, that is infrastructure deficit and MSMEs’ lack of access to credit. While MSMEs have been recognized to play a critical role in supporting the growth of the Nigerian economy; poor access to finance, particularly credit; and lack of quality infrastructure, such as electricity and access to market, continue to pose significant constraints to the growth of MSMEs in Nigeria.
Thus, weak and inadequate infrastructure, as well as the poor flow of credit to businesses impact severely on economic growth, as well as human development.
Following the impact of the Covid-19 pandemic on key economic variables, Emefiele said the CBN took a number of measures to mitigate the long-term effects on the growth prospects of the economy. First, policy measures were introduced to restore stability in the economy by supporting households that have been severely affected by the pandemic. Also, targeted interventions were introduced to support critical sectors, such as agriculture, manufacturing, energy, and health.
Cumulatively, the Bank’s intervention efforts represented about 3.5 per cent of the GDP, he said.
The policy measures included a cumulative reduction of the monetary policy rate from 13.5 to 11.5 percent between May and September 2021 in order to spur lending to the economy and support the current recovery of output growth; reduction of the interest rate on CBN intervention loans from 9 to 5 percent; a 1-year extension of the moratorium on principal repayments for CBN intervention facilities.
Regulatory forbearance was granted to banks to restructure loans given to sectors that were severely affected by the pandemic; strengthening of the Loan to Deposit ratio (LDR) policy, which has resulted in a significant rise in loans provided by financial institutions to banking customers; Creation of the Targeted Credit Facility (TCF) to support affected households and businesses through the NIRSAL Microfinance Bank.
Already, N343.21 billion has been disbursed to 726,198 beneficiaries, comprising 602,730 households and 123,468 MSMEs. Given the resounding success of this program and its positive impact on domestic consumption, the seed capital for the intervention was increased to N400.00 billion, so as to accommodate many more beneficiaries and boost consumer expenditure which should positively impact output growth.
The Bank has also disbursed N134.57 billion to 38,140 projects in agriculture, cottage industry, manufacturing, services, amongst others under its Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS).
As part of efforts at addressing the youth unemployment challenge in Nigeria, the Bank released N3.00 billion to 7,057 youth entrepreneurs, comprising 4,411 individuals and 2,646 SMEs under the Nigeria Youth Investment Fund (NYIF).