Stop Raising False Alarm About Nigeria’s Economy, CBN Warns NESG

…Disburses N59.12bn To 103,189 Beneficiaries

The Central Bank of Nigeria on Tuesday took a swipe at the Nigerian Economic Summit Group, warning the body to stop raising false alarm about the state of the Nigerian economy.

The apex bank said the false alarm raised by the Group raises serious credibility
questions on the actions of the group, as its comments, which have been circulated across the globe, significantly harmed the credibility of the Governor and the CBN as an institution.

The NESG had on Monday issued a statement condemning many of the economic policies of the apex bank, stating that these policies were responsible for the collapse of the economy.

But reacting to the development, the apex bank stated that the allegations made by the Group on the closure of the border was disappointing as the NESG has not shown any tendency to deeply interrogate the real reasons for the closure.

The statement signed by the CBN Director Corporate Communications Isaac Okorafor said while the apex bank is not opposed to its reopening, the reason for the closure was significant economic sabotage involving smuggling of many fake products, drugs, small arms, and other goods.

The statement stated, “How can a Nigerian farmer struggle for months to plant, cater, and harvest their crops only to find that those crops cannot attract good prices because of smuggled products from across our borders?

“Does the NESG know that according to the International trade Center, Benin Republic imports as much rice as China and nearly as
much frozen chicken as the U.K.?

“In which country does the NESG think all these rice and chicken end up? How then can a Nigerian rice farmer or poultry owner survive? While the Federal Government is doing its best to tackle these issues and reopen the border, we must bear in mind that border issues require cooperation by other countries.

“But if these countries, given their huge benefits from a rigged system, deny there is even a problem, how can Nigeria reopen the border without resolving these matters?”

With respect to foreign exchange, the statement said the CBN operates two windows: wholesale and retail.

In the wholesale window, banks are allocated FOREX weekly, which is meant to be allocated to their customers at their discretion, reflecting customer size and distributive efficiency, for final sale to parents paying school fees, patients settling medical bills abroad, SME traders importing small-scale inputs and raw materials, and general travelers for business and personal trips.

The CBN also said it allocates a certain amount of Forex to licensed BDCs per week,
who resell to small-scale users.

In both categories, the statement said the CBN does not know the final buyers of this Forex.

It added, “Given that these submissions are first scrutinized by the banks and are accompanied by the provision of significant documentation, we do not understand the extra transparency being called for by the NESG.

“Based on very limited information and cross-country exposure, the NESG refers to the CBN’s recent directive, which simply sets a floor on saving rates as ‘price fixing’.

“Given that the NESG should know better, we believe that these allegations are reflective of sinister motives and malicious
intent.”

The CBN also said it had disbursed the sum of N59.12bn as Covid-19 loans to support 103,189 beneficiaries under its development financial initiatives.

The CBN in the statement said that although the bourgeoises atop the NESG may not feel the impact of the Bank’s development finance activities, many ordinary Nigerians, including smallholder farmers, households, and medium-scale entrepreneurs across the country know better.

The statement reads in part, “As encapsulated in our most recent monthly economic report published on the Bank’s website, a total of N38.11bn was disbursed as loans to 44,458 beneficiaries through the NIRSAL Microfinance Bank.

” This number has risen to N59.12bn; supporting to 103,189 beneficiaries as of August 2020. It is important for the NESG to note that our intervention programmes in the agricultural sector were a key contributor to the resilience of the agricultural sector during the crisis, as
the sector experienced positive growth of 1.6 percent in the second quarter of the year
despite the lockdown.

” As the NESG may be aware, as a result of the COVID-19 pandemic, Vietnam, Cambodia, India, and Thailand placed export restrictions on the exports of critical
food items, including rice and eggs.

“With these disruptions, the Nigerian economy could have faced a major food crisis, but for the government’s intervention programmes in the agriculture sector.”

Furthermore, the CBN said by alluding to the fact that money cannot address constraints in the agriculture sector, the NESG failed to realize that access to credit is listed among the three major challenges faced by farmers and businesses in Nigeria.

It said while the Federal Government is seeking to address issues such as access to electricity and logistic constraints faced by businesses, it was vital for the CBN to address an area that the country had
sufficient ability to impact upon, given the nature of the crisis it faced, which is improving the flow of credit to critical sectors of the economy.

It added, “Contrary to the NESG’s allegation that our lending process is devoid of a proper framework, it is important to note that recipients of intervention funds from CBN go through an expansive due diligence process through participating financial institutions, following which an additional assessment process is embarked upon by the CBN before disbursements are provided.

“The PFIs expend extensive due diligence on these intervention loans as the risk of default lies with them.”

On the issue of the revisions to the BOFIA Act, the CBN said there are many reasons why it see a total ignorance or malicious intent on the part of the NESG.

It added, ” First, the provision they refer to as being currently conceived as part of the new BOFIA already exists as Section 53 in the old Act, which is now Section 51 in the amended Act passed by the National Assembly.

“The current bill has not proposed any changes to that section at all. Second, contrary to their misleading anxiety and associated reportage, the provision of Section 51 does not purport to confer immunity on the Governor of the Central Bank of Nigeria like that which obtains for State Governors.

” Rather, this provision protects the Federal Government, the Central Bank of
Nigeria and their respective officials against adverse claims for actions or omission in good faith exercise of powers under BOFIA and other specified statutes including the Central Bank of Nigeria Act and regulations made thereunder.

“The import of the said provision is to set a threshold against which suits against public
officers must be filtered, such that for a suit to be maintainable it must scale that threshold by proving bad faith on the part of the pubic officer.

“It is not a bar against action. Indeed, a review of the legislative history of BOFIA will readily show that the said provision
also appeared as Section 49(1) of the then BOFIA of 1991.”