Emefiele: How Nigeria Fought COVID With N5tr Bailout Cash

The Monetary and Fiscal Authorities mobilised N5 trillion to fight Covid-19 and bring support to households and businesses affected by the pandemic, Central Bank of Nigeria (CBN) Governor, Godwin Emefiele announced yesterday.

Speaking at the 56th Chartered Institute of Nigeria (CIBN) Bankers’ Dinner held in Lagos, he said the CBN worked with the fiscal authorities in instituting strong policy support measures capped under the Economic Sustainability Plan (ESP).

The ESP, he said, was designed to contain the effects of the pandemic, restore stability to the economy by helping households and businesses affected by the pandemic and to lift the economy out of the woods through massive interventions to critical sectors.

Emefiele also explained why food prices are rising . He said that the global economy has been affected by rising inflation and supply chain disruptions. The swift recovery in global demand was not followed by a corresponding rise in supply of goods and services, which not only heightened inflationary pressures, but also contributed to significant supply disruptions.

He said that average intercontinental freight rates for a 40ft container, rose from $1,500 in January 2020 to over $10,000 by September 2021. The rise in freight rate along with demand pressures, he said, helped to support a significant rise in food prices.

“Reflecting this pressure, the FAO Food Price Index stood at its highest level in October 2021, since July 2011. Inflationary pressures in advanced and developing economies have been aggravated by rising commodity prices such as crude oil, which would likely reshape the accommodative monetary stance of major central banks in 2022. Curtailing inflation and supply disruptions are key to supporting continued recovery of the global economy in 2022,” he said.

Continuing on the interventions, he said: “Under this plan, the monetary and fiscal authorities collectively mobilised and injected over N5 trillion to support households and businesses. It is gratifying to state that the Central Bank of Nigeria deployed more than N3.5 trillion, – about 4.1 per cent of Nigeria’s GDP to critical sectors such as agriculture, manufacturing, electricity, and healthcare in order to stimulate and help the economy recover from the deep shock,” Emefiele said.

He listed other specific policy measures undertaken the reduction of the monetary policy rate from 13.5 to 11.5 per cent to improve the flow of credit to households and businesses as well as reduction of the interest rate on CBN intervention loans from 9 to 5 per cent.

He said the apex bank also extended the moratorium on principal repayments for CBN intervention facility to March 2022 and  granted regulatory forbearance that allow banks restructure loans given to sectors severely affected by the pandemic.

Emefiele said the strengthening the Loan to Deposit ratio policy, which has resulted in a significant rise in loans provided by financial institutions. Total gross credit rose by over 21.1 percent over the past year, from N19.4 trillion to N23.5 trillion.

The CBN he added, created a N50 billion target credit facility for affected households and small and medium enterprises through the Nirsal Microfinance Bank, against which N363.5 billion has been disbursed to over 767,000 Nigerian households and micro businesses.

The apex bank also mobilised key stakeholders in the Nigerian economy, under the Private Sector Coalition Against COVID-19 (CACOVID) team that raised N39.646 to support the fight against the scourge.

“The funds were used to support three key priority areas such as development of 39 fully equipped isolation centres including Intensive Care Units (ICUs) and molecular testing labs and procurement of medical equipment such as PCR test kits across the country;  provision of palliatives in the form of essential food items to 1.7 million households, an equivalent of 8 million Nigerians; and  improving awareness in rural awareness on the COVID-19 virus and capacity building for community health workers,” he said.

Emefiele said the CBN created a N1 trillion facility in loans to boost local manufacturing and production across critical sectors; of which 53 major manufacturing projects, 21 agriculture related projects and 13 service projects are being funded from this facility.

“Creation of a N100 billion intervention fund for pharmaceutical companies and healthcare practitioners to expand and strengthen the capacity of our healthcare institutions. We have increased this fund to N200 billion to accommodate more players in the healthcare sector, such as phytomedicine practitioners and manufacturers of medical devices and vaccines. Our primary focus is to create a hub where medical officers can have access to diagnostic equipment to carry out quality medical services at an affordable price for Nigerians,” he said.

He explained that so far, over N107.7 billion has been released to support 114 healthcare projects, including six  greenfield (new) and 108 are expansionary (brownfield).

The projects financed included cancer treatment centres, medical diagnostics, pharmaceuticals, dental services, eye clinics, and other healthcare service providers. “We are happy to inform you that the intervention programs have contributed to the increased bed space in our hospitals, and improved healthcare productivity as evident in the increased number of successfully treated Covid 19 patients,” he said.

“These developmental initiatives combined with our monetary and financial policies have helped to support the recovery of our economy and in re-aligning general macroeconomic conditions,” he said.

Emefiele disclosed that Covid also pushed the global financial conditions to tighten as investors withdrew over $120 billion in portfolio flows from emerging and frontier market countries in the first half of 2020.