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Emefiele: Evaluating an icons’ ’ years of impactful banking

The African Development Bank (AfDB) is providing $950,000 to support women’s access to finance and training and accelerate economic inclusion in the Sahel region. According to a press release, the AfDB’s Gender Equality Trust Fund will provide a $950,000 grant to the Africa Small and Medium Enterprise Business Linkages Programme in Burkina Faso, Chad, Mali, Mauritania, and Niger. The statement said that the grant, which will supplement an earlier $3.9 million financing grant from the Bank’s Transition Support Facility, is expected to bolster 1,400 women-led enterprises and contribute to the region’s economic resilience and social cohesion.

The Gender Equality Trust Fund supports the delivery and scaling of the bank’s Affirmative Finance Action for Women in Africa, or AFAWA, program. AFAWA aims to close the $42 billion gender financing gap for women-led African enterprises by promoting gender- transformative lending and non-lending operations. “We are excited to extend the impact of the program that will reach more than a thousand women entrepreneurs across the Sahel region,” said Malado Kaba, the Bank’s Director for Gender, Women and Civil Society.

“We believe one key to building resilient African societies is the inclusion of women in economic development. The program’s wide range of business-relat- ed training and coaching – in addition to increasing access to finance – will go a long way toward reaching that goal,” she added. Women entrepreneurs in the Sa- hel region face significant barriers to accessing finance, markets, and business development services. The Africa Small and Medium Enterprise Business Linkages Program will pro- vide women entrepreneurs with the tools and resources they need to over- come these barriers and grow their businesses. It will also help increase productivity and employment opportunities, especially for young women and men, including offering capacity building in entrepreneurship, core business functions and management training.

The bank’s Gender, Women and Civil Society Department conducted three studies and consulted with Sahel region chambers of commerce to identify women-led businesses to participate in the program. The bank also supports national statistics offices to build more robust, gender-responsive data, which helps measure programme impact. While heading central banks is always a serious responsibility in every part of the world, it is clearly a more difficult job in an emerging economy such as Nigeria, which even though is Africa’s largest economy, has performed below its undoubted potential as a result of decades of dependence on crude oil.

Given that when he assumed duties on June 3, 2014, as the 10th indigenous Governor of the Central Bank of Nigeria (CBN), there was a 60 per cent decline in the price of crude oil (the commodity that accounts for over 80 per cent of the country’s foreign exchange earnings) as well as other external headwinds, it was clear Mr. Godwin Emefiele was confronted with formidable challenges and as the cliché goes, would have to think outside the box to have any chance of success.

Indeed, although the four key objects of the CBN include ensuring monetary and price stability; issuing legal tender currency in Nigeria; maintaining external reserves to safeguard the international value of the legal tender currency; promoting a sound financial system in Nigeria and act as banker and provide economic and financial advice to the Federal Government, central banks in developing economies such as Nigeria, usually collaborate with fiscal authorities to promote and maintain an adequate level of production and employment.

Unorthodox and interventionist model

That is why in a speech entitled, “Entrenching Macroeconomic Stability and Engendering Economic Development in Nigeria,” delivered at his maiden world press conference, when he was first appointed in 2014, as well as the five-year policy thrust he unveiled when he was reappointed for another term of five years in 2019, Emefiele, who marked nine years in office on Saturday, made it clear that the apex bank, under his leadership, would embrace an unorthodox and interventionist model.

In fact, despite the fact that in the nine years he has led the central bank, the country’s banking industry has never been healthier or sounder (total assets hit N77.59 trillion in March 2023), Emefiele is, today, primarily known for some of the apex bank’s key intervention programmes such as the Anchor Borrowers’ Programme (ABP) as well as its initiatives to help reduce the impact of Covid-19 on the economy. The pandemic, which started as a health crisis, quickly transformed into an economic crisis, leading to a significant drop in the price of crude oil and almost brought the global economy to its knees in 2020. The crisis necessitated a speedy and effective response from fiscal and monetary policy authorities across the globe including Nigeria.

Covid-19 interventions

Within a month of the pandemic hitting Nigeria, the CBN, under Emefiele’s leadership, unveiled a raft of measures to moderate its impact on the country. Specifically, Emefiele announced an extension of the moratorium on the apex bank’s interventions programmes, interest rate reduction, creation of a N100 billion targeted credit facility; N100 billion health sector intervention facility and N1 trillion for the manufacturing sector. In addition, the CBN Governor spearheaded the formation of the private-sector-led Coalition Against COVID-19 (CACOVID), which was able to mobilise billions of naira that was used to support the setting up of healthcare facilities across the country and in distributing palliatives to states. Furthermore, the health sector facility provided loans to pharmaceutical companies to expand/open their drug manufacturing plants in the country and also for hospitals and healthcare practitioners to expand/build health facilities.

Also, during that period, the CBN, as part of efforts to stimulate infrastructural development across the country, collaborated with the fiscal authorities to establish a N15 trillion infrastructure development company (Infraco). Completion of Dangote Oil Refinery and Petrochemicals Complex However, analysts believe that Emefiele’s biggest achievement so far as CBN Governor is the leadership role he played in ensuring that the apex bank as well as the deposit money banks (DMBs) effectively supported the construction of the Dangote Oil Refinery and Petrochemicals Complex, which was inaugurated last month. Commenting on Emefiele’s role, President and Chief Executive of Dangote Group, Alhaji Aliko Dangote, said in his speech at the event that the CBN Governor moved mountains to ensure the completion of the project.

He said: “Without Governor Emiefele’s courageous support and backing, this project would not have stood a chance of successful completion.” He noted that apart from the board and management of Dangote, the CBN Governor was the most frequent visitor to the complex, as he was keen to ensure that the project moved from dream to reality. Many industry watchers believe that the completion of the Dangote Oil Refinery and Petrochemicals Complex means that Nigeria is now ready to take off in terms of economic growth. For instance, as Emefiele noted in his speech at the inauguration of the refinery, the completion of the project means that under the administration of the country’s new President, Bola Tinubu, Nigeria would cease importing petroleum products, fertiliser and petrochemical which gulped over $26 billion in 2022. He also pointed out that apart from the project generating up to 12,000MW of electricity, the project would have enormous impact on job creation by generating thousands of direct jobs, over 135,000 permanent jobs and millions of indirect jobs.

In addition, he stated: “This project avails Nigeria with significant savings both in terms of foreign exchange and in easing the fiscal burden on Federal Government. Available data at the Central Bank of Nigeria as of 2014, shows that at least 30 percent of the foreign exchange required to meet Nigeria’s import needs went into the importation of refined petroleum products. “It is instructive to note that according to the balance of payments statistics, the cost (including freight) of petroleum products imports into Nigeria doubled over a fiveyear period from about $8.4 billion in 2017 to $16.2 billion (indicating an annual average of $11.1 billion), before rising further to $23.3 billion by end2022. “At this rate, the average annual cost of petroleum products imports to Nigeria could reach $30 billion by 2027 if we continued to rely on petroleum imports.

These figures suggest that the refinery could engender foreign exchange savings, to the country, of between $25 billion and $30 billion annually.” According to the CBN Governor, in addition to the nearly $30 billion foreign exchange savings from the reduction in petroleum imports, the economy is projected to benefit an extra $10 billion of foreign exchange inflow annually through the export of refined petroleum products. Another significant benefit of the project listed by Emefiele is that it would provide support to the fiscal operations of the government by helping to ease budget constraints of funding the petroleum subsidy. According to him, “available data indicates that, over a five-year period, fuel subsidy in Nigeria rose more than nine-folds from about N154 billion in 2017 to over N1.43 trillion before another three-fold rise to N4.4 trillion by the end of 2022.

“A simple straight-line projection suggests that this figure could surpass N7 trillion within the next three years if we do not tackle it effectively. Thankfully, the Dangote Refinery and Petrochemicals could spare Nigeria about N5 to N7 trillion annually in fiscal expenditure of the federal government over the next five years.” Not surprisingly, Emefiele, in his speech, also highlighted the critical support that the CBN had provided for the economy through its intervention schemes.

Intervention programmes

He said: “Consistent with the Federal Government’s drive to diversify the economy, the Central Bank of Nigeria, through its various development finance interventions, has continued to support critical sectors of the Nigerian economy to promote a homegrown rebalancing of our economy and foster self-sufficiency. “Accordingly, since the refinery will backstop our diversification efforts by exporting its surplus refined products, the CBN supported the project through our Small and Medium Enterprise Refinancing and Restructuring Facility (SMERRF).

Under this facility, the sum of N75.0 billion was released for the project through a consortium of banks, in order to bolster value-addition in the real sector, create jobs sustainably, and enhance foreign exchange dynamics.” He further stated: “The CBN Real Sector Facility, is implemented through two interventions, namely Real Sector Support Facility through Differentiated Cash Reserve Requirement (RSSF-DCRR) and Covid-19 Intervention for Manufacturing Sector. Under this facility, the CBN has released the sum of N2.56 trillion to 462 projects in agriculture, manufacturing, mining, and services sectors. “In addition, the CBN has also supported other priority sectors and segments of the economy, with cumulative N3.60 trillion released to the manufacturing sector to support the domestic productive capacity of industries. The sum of N2.09 trillion has been disbursed to various projects in the agricultural sector, particularly through the Anchor Borrowers’ Programme, which has supported 4.56 million smallholder farmers cultivating over 5.96 million hectares of agricultural commodities across the country.” He added: “The bank has also supported infrastructural development with the sum of N2.28 trillion to bridge the nation’s infrastructure gap and improve access to energy for domestic production.”

Conclusion

Although he is frequently criticised over issues connected with implementation of some of the intervention schemes, Emefiele’s response is always that the CBN has no choice than to support real sector activities and help end the country’s fatal dependence on oil.

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