The Central Bank of Nigeria (CBN), while promising to scale back its interventions, disbursed new N12.65 billion this year alone through its flagship Anchor Borrowers’ Programme (ABP), Entrepreneurng report.
The sum takes the overall distribution through the program to N1.09 trillion and was distributed to three agriculture projects in January and February.
The initiative has so far benefited more than 4.6 million smallholder farmers who cultivate (or raise) 21 agricultural commodities on 6.02 million hectares of farmland, according to a statement released by the top bank following the Monetary Policy Committee (MPC) meeting conducted on Monday and Tuesday.
A further N23.7 billion was paid out during the same period as part of the bank’s commitment under the N1 trillion Real Sector Facility, and another N3.01 billion was paid out under the N3 trillion Nigerian Electricity Market Stabilization Facility, which aims to lower commercial risk and boost efficiency in the power sector.
Under the N1 trillion Real Sector Facility, the Bank approved the issuance of N23.70 billion for eight new real sector projects in the industrial, services, and agriculture sectors. In total, N2.43 trillion has been paid out under the Real Sector Facility to 462 projects across the nation, including 257 projects in the manufacturing, 95 projects in the agricultural, 97 projects in the services, and 13 projects in the mining sectors.
The Bank also disbursed N3.01 billion under the Nigerian Electricity Market Stabilization Facility (NEMSF-2) for capital and operational expenditures of distribution firms (DisCos) to enhanceassistquidity situation and assist in the recovery of legacy debt. The total distribution under the facility is now N254.39 billion, according to the authority.
After the CBN’s promise to start winding down its special interventions, which critics claim are the main reason for the nation’s inflation, which reached 21.91 percent last month, commitment to the three programs raised the CBN’s balance sheet by N3.36 billion in January and February alone.
The bank announced last year that it will start to scale back its interventions while continuing to assist industries like real estate that are vital to economic growth and job creation.
The monetary authorities had estimated that 52.39 percent of ABP was repaid. The remaining amount “was not required to be repaid because they were subject to a moratorium because of the COVID-19 forbearance provided to beneficiaries of the CBN’s operations in March 2020.”
The depreciation of the naira, which accounts for over 70% of inflation, is also responsible for over 11% of it in the case of diesel and aviation and over 7% in the case of other exogenous shocks. It’s interesting to note that the money supply contributes less than 10% to inflation.
Conclusion
Yet, the CBN’s policy approach predominantly concentrates on the money supply, without making the necessary effort to address ways and means of the exchange rate issue. Almost 40% of the total money supply is provided by the CBN to the federal government through other channels, which furthers inflation, according to the economist.
Source: The GuardianÂ
