- Improve on quality of fiscal consolidation, IMF tells Nigeria, others
Ndubuisi Francis, James Emejo in Abuja and Nume Ekeghe in Lagos
The Governor of Central Bank of Nigeria(CBN), Mr. Godwin Emefiele, yesterday expressed disappointment over the reluctance of commercial banks to lend to the real sector of the economy.
This is coming as the International Monetary Fund (IMF) has advised Nigeria and other sub-Saharan African countries to improve on the quality of fiscal consolidation being implemented by them, adding that progress on the domestic revenue mobilisation has been elusive, and far short of the region’s potential.
The CBN governor was also unhappy that banks would rather invest in treasury bills than perform their intermediation role, in order to stimulate the economy.
Furthermore, Emefiele described as fake news, a recent report that Nigeria recorded an increase in its rice importation bill.
Speaking at the Nigeria Investment Conference organised by the Chartered Financial Analyst(CFA) Society Nigeria, the CBN governor said the role of banks was to act as catalysts for economic growth.
Emefiele said: “It is the fact that the banks are supposed to be partnering with us to achieve this. Your job as a bank is to stimulate the economy to act as catalysts for growth and development, one way or the other. “Yes, you have a responsibility to work for your shareholders which is to maximise profit, but what you do is to take deposits and put it in treasury bills because we feel the yields are good. “We are not happy with you about that.”
He said the Anchor Borrowers’ Programme (ABP), was yielding the desired results.
“I can tell you that we have empowered 800,000 farmers directly, not looking at the fall out. We have disbursed over N400 billion to these communities and that is why it is painful when people come over and begin to say it hasn’t worked and that we are importing rice.
“It is very discouraging and that is why I say if you cannot join us, just keep quiet.”
The United States Department of Agriculture World Markets and Trade Report had said Nigeria’s rice importation rose by 400,000 metric tonnes to three million in 2018. A figure the CBN Governor said was false.
“I was reading a report where the United States said the volume of imports of rice increased by 400,000 tonnes.
“I am not a politician, but people should be very mindful when they open their mouths to say what is untrue because we would come out as central bank to attack it particularly if you use data incorrectly. I seize the opportunity to say that it is untrue. “The data that we have today shows that rice imported illegally into the country is less than 25,000 tonnes in 2018 so far.
“Then how come an agency which has not been to Nigeria or even been to the farms to see what we are doing, just come up and say that Nigeria has imported 400,000 tonnes above what it normally should import?
“Go to the data of countries that export rice, you would see their data; you would find the quantity of rice imported by Nigeria. This is false and fake news.”
Meanwhile, the IMF has advised Nigeria and other sub-Saharan African countries to improve on the quality of fiscal consolidation being implemented by them.
According to the IMF, the quality of fiscal adjustment undertaken by the region is also threatened by the re-emergence of fuel subsidies.
In its Sub-Saharan Africa Regional Economic Outlook (Capital Flows and the Future of Work), which was unveiled in Abuja yesterday, the IMF said the average fiscal deficit for the region is set to shrink from 4.2 per cent of gross domestic product (GDP) to 3,3 per cent in 2018.
The IMF Senior Resident Representative and Mission Chief for Nigeria, Mr. Amine Mati, who unveiled the report said this masks significant variations across economies, with fiscal balances expected to improve in oil exporting countries like Nigeria, remain unchanged in non-resource-intensive countries , and deteriorate somewhat in other resource-intensive countries.
“The improvement in fiscal balances in oil-exporting countries stemmed in most cases from increased revenues from the oil sector and cuts in capital expenditures, with notable exception of Nigeria where public investment has doubled over the last two years, albeit low levels,” the IMF said.
It warned that further radical cuts in capital expenditure was tantamount to risking medium-term growth, if the investment is not picked up by the private sector.
The IMF noted that progress on the much-needed domestic revenue mobilisation in the region has been elusive, remaining far short of Sub-Saharan Africa’s potential.
“Under current medium-term fiscal plans, the revenue gap estimated at 3-3.5 per cent of GDP on average across countries , is not expected to be closed. In deed, domestic revenues are envisaged to rise by about two and half per cent of GDP in oil exporting countries and only by1/2 per cent of GDP in other countries.
“The quality of the fiscal adjustment is also threatened by the re-emergence of fuel subsidies. While most countries did pass lower oil prices through to domestic prices, most countries have not raised prices as much in response to the recent increase in international fuel prices”.
However, speaking at the unveiling of the IMF report, Central Bank of Nigeria (CBN) Deputy Governor, Economic Policy, Dr. Joseph Nnanna said the changing structure of the Nigerian economy has implications for inflows of foreign direct investment (FDI).
He said a stable macroeconomic environment was still critical for inflows into the domestic economy.
Represented by CBN Director, Mr. Friday Oguche, he said contrary to received knowledge, equity rather than bond instrument remained the driver of portfolio inflows into the country.
But he said it was still debatable whether domestic interest rate can reverse current trend of capital reversal in the context of political development.