The Nigerian Central Bank had a very busy year in 2021, battling epidemic effects, loss of purchasing power, and fostering economic growth, among other things.
Hence, Nigeria’s central bank governor, Godwin Emefiele, employed different commendable initiatives to accomplish the CBN’s goal, to manage these economic issues.
The extension of interest rate reductions on CBN intervention facilities, the N4 trillion invested in the agricultural sector, the establishment of the “Naira 4 Dollar Scheme,” the acceptance of the NAFEX rate as the inter-bank benchmark rate, and the introduction of the eNaira are just a few examples.
This report x-rays the many list of Emefiele’s led CBN primary policies aimed at achieving goals such as price stability, moderate inflation, employment, and economic growth.
CBN’s agriculture focused policies
The CBN has spent over N4 trillion on agriculture interventions across different platforms.
Earlier in 2021, the CBN launched the country’s first-ever rain-fed wheat program, with the goal of reducing wheat imports by 60% and saving $2 billion in foreign money yearly. According to the CBN, the scheme will assist over 150,000 farmers and will first be implemented in 15 states across the country.
The CBN has also put aside approximately N5.7 billion in loans for 10,000 farmers in Bauchi State to support dry season wheat farming, with 4,500 farmers benefiting so far.
Between September and October 2021, the bank disbursed N43.19 billion through the Anchor Borrowers’ Program to support the cultivation of 250,000 hectares of maize, sorghum, soya beans and rice during the 2021 dry season farming season, as well as N5.88 billion to finance six large-scale agricultural projects through the commercial agricultural agri-business scheme.
Rice has been a major concern for the Central Bank of Nigeria. Recall in 2015, the CBN issued a circular banning a list of 41 imported goods and services from accessing the official Nigerian foreign exchange market, and rice was at the top of the list.
Central Bank of Nigeria (CBN) unveiled an ultra-modern 420 metric tons per day capacity rice milling factory in Kano State. The decision was made in order to maintain the stability of the foreign exchange market and ensure the efficient utilization of foreign exchange. As a result, the CBN believed it was imperative to bar importers of certain goods and services from accessing foreign exchange at Nigerian foreign exchange markets in order to encourage local production of these items.
100 for 100 Policy
The CBN announced the launch of its new financial instrument, dubbed “The 100 for 100 PPP Policy on Production and Productivity,” on October 25, 2021.
The 100 for 100 PPP is a program that will provide financial support to 100 designated private sector enterprises every 100 days. Under this scheme, businesses can apply for up to N5 billion in funding. Any payment exceeding N5 billion would require CBN management’s special permission.
However, the scheme’s selection criteria confine the instrument to new projects exclusively, and it does not cover refinancing of existing facilities. The project, according to the CBN, is a long-term loan for the purchase of plant and machinery as well as working capital.
The Central Bank of Nigeria distributed N23.2 billion in loans to 28 recipients as part of the launch of its new “100 for 100” Production and Productivity Policy (PPP).
The ultimate goal of the policy is to reverse the nation’s reliance on imports by creating an ecosystem that targets and supports the right companies and projects.
Regulatory forbearance for the restructuring of credit facilities
As part of measures to reduce the impact of the COVID-19 epidemic on the economy, the Bank extended the window for lowering interest rates on its intervention facilities from 9% to 5% per year until February 28, 2022, on March 3, 2021. In addition, on a case-by-case basis, the roll-over of the moratorium on repayment of intervention facilities would be considered.
“Naira 4 Dollar Scheme” for diaspora remittances
The Bank introduced the “Naira 4 Dollar Scheme” on March 8, 2021, to boost the inflow of diaspora remittances into the country. The Scheme serves as an incentive, as all recipients of diaspora remittances, through CBN licensed International Money Transfer Operators, would be paid N5 per US$1 received as remittance inflow. The Scheme, originally scheduled to end on May 8, 2021, was extended indefinitely by the Bank, on May 5, 2021.
Adopting the NAFEX rate as the benchmark rate
In an effort to ensure uninterrupted services to customers on Unstructured Supplementary Service Data (USSD), a meeting held on March 15, 2021 and attended by Mobile Network Operators (MNOs), Association of Licensed Telecoms Operators of Nigeria, Nigerian Communications Commission (NCC) and the CBN, deliberated on and resolved key challenges.
The resolutions were: USSD services for financial transactions conducted at DMBs and all CBN – licensed institutions would be charged a flat fee of N6.98 per transaction effective March 16, 2021. In order to enhance convergence of exchange rates in Nigeria, the Bank, on May 24, 2021, adopted the NAFEX rate as the benchmark rate in the inter-bank market.
Fintech policy: Issuance of the framework for regulatory sandbox operation
The regulatory sandbox framework was published on January 13, 2021, following the CBN’s release of a draft framework in July 2020.
Because it provides a formal method for corporations and start-ups to undertake live tests of any novel goods, services delivery channels, or business models, the regulatory framework sandbox allows the CBN to actualize control over innovation in the FinTech industry.
The regulatory sandbox is not only for CBN licensees but also for other Nigerian corporations and enterprises that want to test their goods but aren’t regulated by the CBN.
Regulatory framework for open banking in Nigeria
In February 2021, the CBN published its Regulatory Framework for Open Banking in Nigeria, often known as the “Open Banking Framework.” Through the establishment of a single Banking Industry Application Program Interface (API) standard, the Open Banking Framework takes a supportive approach to open banking and provides guidelines for data exchange across the banking and financial services ecosystem.
APIs are essential for accomplishing the integration of the whole banking industry, as well as the underlying philosophy of Open Banking. In addition, the framework would encourage innovation, increase competition, increase financial inclusion, and broaden the range of financial products and services available in Nigeria.
Ban of forex sale to BDCs
The CBN outlawed the sale of foreign exchange (forex) to Bureaux De Change (BDC) operators in July 2021. The governor of the CBN, Godwin Emefiele made this known while addressing the press during the MPC briefing, 27th July 2021.
The central bank also confirmed that it will no longer license new BDC operations in the country and also halted all current processes for new licenses.
The governor noted that the actions of the BDCs were in contrast to the understanding with the apex bank, which highlights that the BDCs were allowed to make a small margin from the sales of the US dollar allocated to them by the CBN.
However, he opined that they had become somewhat greedy, by making abnormal profits, which had further affected the exchange rate of the country.
BDC Operators are now relying more than ever on peer to peer transactions to fund their dollar supplies amidst the CBN dollar sales ban. Those with stronger networks of buyers and sellers are able to attract more business while those without, struggle with volume.
Although, the issue of exchange rate is contentious the CBN plans to unveil a new FX bidding regime to support Nigerian companies in need of Forex, particularly those involved in local production and job creation.
eNaira, Nigeria’s first digital currency
The Central Bank of Nigeria (CBN) launched eNaira, the country’s first digital currency, in October. The eNaira acts as both a means of exchange and a store of value, providing better payment prospects in retail transactions. To launch the digital currency activities, the apex bank teamed with Bitt Inc.
The eNaira, Africa’s first digital currency, made its debut on October 25, 2021, and in less than two weeks, it had accomplished N46.3 million in transactions.
Bitt Inc, CBN’s technical partner, has revealed intentions to launch a new mobile application that will allow the unbanked to use eNaira.
eNaira, has had 694,000 downloads in the 95 days since it was launched and that shows a strong relationship between consumer and Banks. This shows that the CBN CBDC can also promote the banking sector rather than cause harm.
CBN TIES to help undergraduate and graduates
At the end of the year, the Central Bank of Nigeria (CBN) launched the Tertiary Institutions Entrepreneurship Scheme (TIES). TIES is a portal that allows undergraduates and graduates to apply for loans.
TIES’s main goal is to provide financing to Nigerian undergraduates and graduates from polytechnics and universities who have unique entrepreneurial and technological concepts.
TIES aims to move undergraduates and graduates away from white-collar jobs and direct them towards a culture of entrepreneurship development for economic growth and employment creation.
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