CBN’s Commodities Devt: Diffusing the Unemployment Time Bomb



Armsfree Ajanaku

Even as the whole world grapples with the realities of a new economic normal, imposed by the devastating effects of the COVID-19 pandemic, Nigeria’s political elite have carried on as if nothing has changed. They do not appear to understand the urgency which the current times require. The bulk of Nigeria’s self-absorbed public officials do not appear to know, neither do they seem to understand the fact that in terms of the health of the economy, the country is sitting on a time bomb. The bomb is fast ticking away, and unless it is quickly diffused, it will go off, precipitating serious consequences for the stability of the country.

According to the World Economic Forum, the effects of the COVID-19 pandemic have led to huge losses in jobs. The realities of unemployment continue to stalk the country with no clearly defined path to economic recovery. In the second quarter of 2020 for instance, Nigeria’s economy is reported to have contracted by 6.1 percent year on year. Ominously too, a sizeable 27 percent of the country’s labour force, over 21 million citizens are reported to be currently unemployed. Hopes of quick recovery to enable the economy get back to a footing, where it can create jobs and boost growth, have been blunted by more pessimistic projections.

The World Bank predicts that Nigeria is set for its worst recession in four decades. Given this grim outlook, citizens expect government institutions and the functionaries manning them to respond quickly to these great challenges. The realities of the new economic normal require leadership with astute problem solving skills to rise to the challenge of tapping the country’s vast potential.

Put differently, the times require initiatives, which explore high impact economic activities with the capacity to create millions of jobs in a short time. Government at all levels, federal, state and local are agreed that agriculture constitutes the lowest hanging fruit, which can be tapped to address the monster of youth unemployment in the short run. Government has also mouthed the need to refocus the economy away from its dependence on volatile oil revenues.

Effectively, the realisation of the goals of making agriculture a job creator, and diversifying the oil dependent economy, lies in practical problem solving steps, which will keep the eyes of the policy implementers on the big picture of job creation. This is where the Central Bank of Nigeria (CBN) has risen tall to be recognised. The apex bank is apparently leading the race for smart, accountable and tailor-made solutions to the challenges of the times. Accordingly, the bank has moved beyond the rhetoric of what is to be done to walking the talk. It is doing what should be done.

In contextualizing its policy implementation, the CBN must have reasoned that with a total land area of about 910, 768 Km2 of which 33.02 per cent is arable and about 3.14 per cent suitable for permanent crops, Nigeria has no business playing host to the highest number of poor people in the world. The bank has therefore continued to harp on the need to tap Nigeria’s massive potentials for agricultural commodities such as cocoa, peanuts, palm oil, corn, rice, sorghum, millet, cassava (tapioca), yams, and rubber.

Outside its monetary policy role, the CBN has been pushing the handlers of the broader fiscal policies to be more strategic in exploring the potentials of agriculture for wealth creation. One way it is doing this is through surveillance on domestic and international commodity production and prices with a view to providing policy advices to government. This has kept the CBN way ahead of the Federal Ministry of Agriculture and Rural Development in terms of proactively engaging citizens and government through targeted seminars, workshops and actual interventions to boost the production of identified commodities such as rice, sesame seed, cocoa, neem tree, cassava and others, which are on high demand domestically and internationally.

The CBN is also a member of various international commodity organisations such as the International Cocoa Organisation (ICCO), the International Coffee Organisation (ICO), International Natural Rubber Organisation (INRO), Cocoa Producers Alliance (CPA), amongst others. The bank has also been on the frontlines of monitoring and collecting Export Levy on various export commodities, just as it has been providing funding for the development of export commodities.

One of the bank’s recent interventions within the purview of the Commodities Development Initiative is in the Cotton Textile and Garment (CTG) sector. This is intended to bring back Nigeria’s glorious days in textile production, which were allowed to dim due to bad policies. Beyond the lure of returning Nigeria back to its preeminent position as the textile hub of West Africa, the intervention will return thousands of jobs, which were lost to the unfortunate collapse of the sector.

Another key objective is to make Nigeria self-sufficient in cotton production, with the attendant benefits of saved foreign exchange that would have gone into cotton importation.

In pursuant of these goals, the CBN had invested over N120b across CTG value chain with more than 320,000 farmers between 2016 – 2020 to massively increase the cultivation of cotton. With what has been deployed, expected output for seed cotton in 2020 is put at about 300,000 metric tons. The CBN also wants to expand the production capacity of Ginneries to over 102,000 metric tons of cotton lint which is expected to meet and even surpass the cotton lint requirement of Nigeria’s textile industries. Similarly, there have been moves to resuscitate 19 ginneries across the country, and the projection is that more will come on stream before the end of 2020.

Whichever way it is measured, CBN’s policies have impacted positively on domestic local production of staple food, especially rice. According to figures from the UN’s Food and Agriculture Organization, rice production increased from an annual average of 7.1 million tonnes between 2013 and 2017 to 8.9 million tonnes in 2018. In 2019, the CBN set up a $130m initiative offering farmers who had at least 1 hectare of land loans at a 9% interest rate, which is below the benchmark interest rate of 14%. In 2018, the Bank of Agriculture (BoA) declared that Nigeria was able to save $800 million in the preceding year by ramping up production of local rice alone.

In real terms, these efforts are capable of removing two million people from the unemployment market. But given the huge population of unemployed Nigerians, what the CBN is doing can only create a demonstration effect. This is therefore the time for other agencies of government with the mandate to promote agricultural production to pick the gauntlet and complement the CBN for maximum impact. The Ministry of Agriculture and Rural Development comes to mind in this respect. A look at the ministry’s website gives the impression that those running the place are yet to come to terms with the programmes that could massively put Nigerians back to work in these difficult times. One expects to see text and images portraying ministry officials robustly engaging farmers on how to boost Nigeria’s agricultural production, instead of endless speeches and symposium reports. At the time of the COVID 19 pandemic, Nigerians should be able to go on the website of the Ministry of Agriculture and Rural Development to know how they can startup ventures in agribusiness, as well as other forms of support to help citizens realise these goals.

Over all, the Ministry of Agriculture and Rural Development should take a cue from the CBN which has since gone beyond talking to getting things done. Such a synergy, if pursued with sincerity of purpose, will create a win-win situation of more jobs in the agricultural sector for unemployed Nigerians who are currently in dire straits as well as save the country the foreign exchange that will have been used to import food items that are now produced locally. This way, the ticking time bomb of unemployment and a volatile domestic currency as a result of the pressures of importation, will be diffused.

•Ajanaku writes from Abuja.