Monday 25 April 2016

Forex scarcity gives local production top priority - CBN Governor, Godwin Emefiele

CBN Governor, Godwin Emefiele
Central Bank of Nigeria (CBN) Governor, Mr. Godwin Ifeanyi Emefiele has described the current scarcity of foreign exchange confronting the country as good riddance, saying local production of various essential goods are now being given top priority.

Emefiele said this during a tour of the farmlands cultivated under the Anchor Borrowers’ Programme in Kebbi State over the weekend. He stated that the commitment of stakeholders and the expected output from Kebbi State alone had proved critics of the central bank’s policy measures wrong.

In a statement from the CBN, Emefiele, who was full of praise for the farmers and the Kebbi State Government for their determination and commitment, said that with the level of success attained under the pilot project in the state, in addition to what he saw at the Sunti Golden Sugar Estate in Niger State recently, it was becoming more of a reality that the country can produce enough food to feed itself and even export in no distant future.

The CBN governor held the view that with agriculture being the bedrock of genuine economic growth of any nation, Nigeria could not be an exception.
“As such, Nigeria with large expanse of arable land ought not to be spending huge amounts of money importing food items at the expense of other competing needs,” he added.
Emefiele stated that the success recorded by the rice farmers in Kebbi State has rekindled hope in the ability of Nigeria to be self sufficient in rice and wheat production, adding that with the sum of N210,000 granted to each farmer, they were able to cultivate a hectare of rice.

He disclosed that 78,581 farmers were mobilised in the state under the Anchor Borrowers Programme. The farmers are already looking forward to a total of one million metric tonnes of rice this year, he added.

Speaking further on what the programme has been able to achieve, the CBN governor stated that with the disbursement of N4.9 billion as loans to the farmers, over 570,000 direct jobs had been created with the multiplier effect that, 70,871 rural farmers now own and operate bank accounts and are captured under the Bank Verification Number (BVN) biometric project, adding that the timely supply of inputs to 73,001 farmers was achieved.

According to Emefiele, the performance of the programme also vindicated the stance of the central bank that with the right incentives and the necessary support, Nigerian farmers would be able to fill whatever gaps that exist between the demand and supply of agricultural products like rice, wheat, cotton and palm produce.

On his assessment of the programme, the Minister of Agriculture, Chief Audu Ogbeh, said the level of activities in the rural areas visited by the team showed that with Kebbi State alone targeting one million tonnes of rice of the projected seven million tonnes required by the entire country, self sufficiency in rice production was very much in sight by the time 12 other states identified as rice producing belts harvest their produce.

He commended the efforts of the CBN for reinventing agriculture into a profitable business venture.

The minister further stated that rural areas remained the catalyst for viable economic development and as such deliberate efforts were being directed at opening up the rural areas.

Meanwhile, the CBN last week allocated a total of $186,356,794.86 to 15 commercial banks and four merchant banks as demand for the greenback continued to rise.

The amount sold to the banks last week was higher by $8,479,981 compared to the preceding week, according to the banks’ returns on forex utilisation.

Demand was buoyed by dollar purchases by Dangote Group which got a total of $14 million from different banks, the Nigerian Security Printing and Minting (NSPM or the mint) Plc which purchased $9,740,000 for its foreign loan repayment, and Forte Oil Plc which also purchased $6 million during the week.

FirstBank of Nigeria, which got $31,427,590 from the CBN, returned to the first spot. The bank sold forex to 578 customers – corporates and individuals. NSPM which bought $9.74 million, was FirstBank’s biggest customer for the week. The mint was followed by Forte Oil which got $6 million and Dangote Cement which purchased $5 million from FirstBank.

Also, Stanbic IBTC was allotted $16,495,298.46 to come in second place. Stanbic IBTC sold forex to 132 customers, of which 76 of them repatriated funds from Nigeria’s equities and fixed income money markets.

Diamond Bank Plc with $13,671,749.59 held the third slot. The bank sold dollars to 221 customers and its biggest customers in the week under review were Hyde Energy Limited ($1.521 million), Bua Sugar Refinery Limited ($1 million), Dozzy Oil and Gas Limited ($2.539 million), Standard Metallurgical Company Limited ($2.735 million), and Dangote Cement ($2 million).

Guaranty Trust Bank Plc (GTBank) with $13,474,564.26 returns on forex utilisation held the fourth position. The bank sold the greenback to 209 customers. GTbank’s biggest customers during the week were Dangote Industries Limited ($2 million), Iris Smart Technologies Limited ($1.699), and Lufthansa Air.

Zenith Bank Plc with returns of $12,914,395.81 occupied the fifth position. It sold the greenback to 274 customers, of which the National Salt Company of Nigeria (NASCON) got $4.962 million.

United Bank for Africa Plc (UBA) reported returns of $11,912,969.93 to occupy the sixth place. It listed 208 customers to which it sold the greenback including those who bought to pay school fees abroad, for personal travel allowance (PTA), and for the importation of industrial raw materials and other equipment.

UBA’s biggest customers during the week were NFE Industries Limited ($1.764 million), Matrix Energy Limited ($1.877 million), and IATA ($1 million).

First City Monument Bank Limited (FCMB) with $11,755,450.41 stood in the seventh place. Its biggest customer during the week was the Dangote Group which bought $ 5 million from the bank.

A report by Afrinvest West Africa Limited indicated that the CBN was still unable to adequately meet the dollar demands of banks on behalf of their customers, “as the central bank continues to refund deposit money banks for huge volumes of unfulfilled bids at the weekly forex auctions”.

According to the report, the impact of forex unavailability was being felt across sectors, especially the petroleum sector as difficulties with importation of refined products continues to adversely affect economic output.

In another report, Renaissance Capital Limited (RenCap) said it foresees Nigeria’s forex policy becoming more flexible by mid-2016.

The firm, in a report sent out at the weekend, said it expects the country’s policy-based budget support to spur a change in the CBN’s forex policy.

According to RenCap, this was the case the last time Nigeria sought financing from development finance institutions in 2009.

President Muhammadu Buhari’s government has described its first budget, which is yet to be signed into law, as reflationary.

Credit: Obinna Chima

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