New Telegraph

Assessing gains of CBN’s intervention schemes

The testimonies of chief executives of companies that are beneficiaries of the Central Bank of Nigeria (CBN)’s intervention programmes shared in their interaction with journalists, last week, about how the support from the apex bank has helped to ensure the survival of their businesses, should shut up critics of the intervention schemes, writes TONY CHUKWUNYEM

 

Undoubtedly, the rise in global inflation occasioned by Russia’s invasion of Ukraine provided more ammunition to critics who accuse the Central Bank of Nigeria (CBN) of allowing promotion of its development finance initiatives to detract from paying attention to its core mandate of ensuring monetary and price stability.

 

Although it is no longer news that the apex bank’s Monetary Policy Committee (MPC), last Tuesday, raised the benchmark interest rate to 13 per cent for the first time in over two years as part of measures to curb inflation, the communiqué issued by the committee at the end of its meeting did state that despite the rate hike, CBN would continue to adopt “an accommodative approach to development finance initiatives that have supported the growth of the economy and sustained recovery.”

 

Monitoring, evaluation of projects

 

In fact, from the findings of the select group of journalists, including New Telegraph’s correspondent, who accompanied a CBN team that was in Lagos, last Thursday and Friday, to monitor and evaluate the apex bank’s intervention projects in the state, it is clear that the development finance initiatives are having a significant positive impact on the country’s economy and the regulator should strive to sustain them.

 

The monitoring and evaluation exercise saw the team, which was led by the Director, Development Finance Department at CBN, Mr. Yusuf Yila, visiting facilities of companies that are beneficiaries of the apex bank’s intervention loans, such as Ikeja Electric Plc., Eko Electricity Distribution Company, construction sites of the Lagos Rail Mass Transit (Blue Line and Red Line rail projects), Pinnacle Oil and Gas’ Ibeju-Lekki FZE terminal, Candel Company Ltd., Lagos Free Zone and Sana Building Systems.

 

In a chat last Thursday with journalists at the head office of Ikeja Electric Plc., which was the first company that the team visited during the exercise, Yila said: “The CBN, as part of its Development Finance efforts, does disbursed funds    to different sectors.

 

Disbursing funds is the easiest part; monitoring and evaluation has to be done to ensure that those funds are used for the purposes they are meant for. So as part of our monitoring and evaluation, we are in Lagos for the next two days to see projects that have been funded through deposit money banks.”

 

He added: “Energy takes about 24 per cent of the portfolio that we have loaned out and we felt it was important that we should come and see some of the projects being done in the sector.”

 

Commendation

 

Also speaking with journalists, the Chief Executive Officer, Ikeja Electric Plc., Mrs. Folake Soetan, thanked CBN for its support to players in the electricity value chain. She said: “As you all know, the power sector has had major liquidity issues and the liquidity issues have affected the performance of different players in the sector.

 

But CBN, over the last eighteen months, has played a critical role in ensuring that there is improved liquidity and I really would like to thank you on behalf of everyone in the sector, in the value chain.”

 

Continuing, she said: “I will like to thank you on behalf of Ikeja Electric for the support you have shown us as well as with regards to facilitating the funds for our opex, capex. A lot of things that we have done over the last one year were simply as a result of the funds and support provided by CBN.”

 

The Ikeja Electric boss, who disclosed that the company had so far received over N40 billion from CBN intervention, said that it was hoping to get additional funds to enable it implement its projects for this year.

 

As she put it, “we will also appeal once again. As you know, the plan is for 2021 and 2022. The projects we have executed, so far, are for 2021 and we are already in Q2’22. So, in order for us to be able to effectively execute the projects that we planned for 2022, we once again will require your support as you have always done.”

 

It was a similar narrative at the Eko Electricity Distribution Company as its Managing Director and Chief Executive Officer, Dr. Tinuade Sanda, said that the    CBN’s intervention came at a critical period for the sector.

 

She said: “It was not a mistake that the CBN intervened because the industry was in a crisis. We needed investments and that was why we contacted CBN through NERC. The Opex loan, which was facilitated by CBN, came at the right time for the entire value chain.”

 

During the CBN’s team’s visit to construction sites of the Lagos Rail Mass transit project, the Managing Director, Lagos Metropolitan Area Transport Authority (LAMATA), Mrs Abimbola Akinajo, said the civil works would be completed on both the Blue and the Red corridors by year end, while commercial operation would begin on both by first quarter 2023.

 

On his part, Yila expressed satisfaction at the pace of work, saying that CBN would be looking forward to full commercial operation of the project by first quarter of 2023. Yila said: “We have been told by the Managing Director of LAMATA that all construction will be completed by year end and commercial operation will commence by first quarter 2023. “We look forward to that promise, because we know the enormous impact this would have on transportation in the state.”

 

Yila, who observed that the state was under enormous pressure in the area of transportation, said the infrastructure was already over-burdened, adding that the take off of the rail project would help to ease commuters’ burden. “Lagos is like a mini Nigeria and the economic nerve centre of the nation.

 

We can all see how people are just moving into the state and the insecurity in the Northeast and Northwest is not helping matters. So, this will go a long way in bringing relief to residents living in the state and assist Lagos in managing traffic in the metropolis,” he said.

 

Local production

 

On Day 2 of the monitoring and evaluation exercise, the CBN team visited Candel Company Limited and members of the team were so impressed with what they saw that they called on banks to support Nigerian companies more actively to boost local production.

 

Specifically, the Head, Legal Services Department of CBN, Mr Kofo Salam-Alada, said: “With what the company (Candel ) is doing, I believe that bankers should start coming for them; it’s not just the central bank’s Intervention Funds, Nigerian banks should seek them to see how they can partner with them to drive it forward.

 

“The key thing that Nigerians must also know is that we need to support our own, not just in terms of employment generation; for CBN that is interested in increasing foreign exchange in this country, it is something that needs to be supported,” he said.

 

Also, the Director, Banking Supervision Department, Haruna Mustapha, said what the company was doing was quite complementary to the apex bank’s RT200, designed to boost the non-oil sector. Mustapha said: “Candel stands at two critical junctures; it is a manufacturing outfit. CBN recently introduced the RT200 designed to boost the non-oil sector and what Candel is doing here is quite complementary to that policy.

 

“Again, it is providing the needed support to the agricultural sector, which will feed into the policy of the government to diversify the productive base of the Nigerian economy. Ultimately we expect to see a solid impact, especially when you consider the various value chain this business touches. So, we need more support for companies like Candel and if we can have them in sufficient critical mass, the future looks great for Nigeria.”

 

In a chat with journalists during the visit, the Chairman, Candel Company Ltd., Charles Anudu, commended CBN for its development finance initiatives, noting that manufacturing companies face lot of challenges doing business in Nigeria. He said: “We suffer a lot of disadvantages manufacturing in Nigeria; our cost profile is very prohibitive. You know, in Nigeria, you have to generate your own power and do everything, everything is expensive.

 

“Yet, we are still competing against countries exporting to Nigeria, whereas my competitors elsewhere are getting an export rebate.

 

“When somebody exports from China, for instance, he already makes a profit because he gets the 15 per cent paid to him or her by his government. I get no such support.”

 

According to him, the CBN’s intervention was a God-sent as he had exhausted his working capital and the company was struggling to stay afloat when the apex bank facilitated the intervention facility, which he said, has enabled him to open several outlets and employ many young Nigerians.

 

Conclusion

 

Indeed, the consensus among journalists who accompanied the CBN team was that though the Nigerian economy is still facing headwinds, the situation would have been more challenging without the apex bank’s intervention programmes.

 

 

Read Previous

NSIA’s 2021 performance boosts prospects for economic transformation

Read Next

Vessels offload 220,271MT of fertiliser in 2 months

Leave a Reply

Your email address will not be published. Required fields are marked *