The Federal Executive Council [FEC] rose from its weekly meeting on Wednesday with a conviction that there had been a steady growth in the country’s Gross Domestic Product (GDP) and a moderation in inflation.The revelation is following a brief to the council by the Central Bank Governor, Lamido Sanusi who said that the growth is particularly from the agricultural sector.
Mr. Sanusi said the interbank and other money market rates including lending, foreign exchange market and recovery of the capital market have continued to improve.
Minister of state for Information and Communications,Mr. Labaran Makuwho who joined the Information And Communications Minister, Professor Dora Akunyili in the press briefing, told state house correspondents that the implementation of the banking sector reform has continued to engender confidence in the system and that credit by the rescued banks continues to grow while most of them returned to profitability.
The Central Bank Governor, Mr. Sanusi Lamido told the council that the economy is at the growth rate of 7.8 %.
The CBN, Bank of Industry (BoI) and commercial banks in Nigeria have signed a contract to execute a N500 billion deal to fund the power and manufacturing sectors, thereby marking a remarkable departure from words to action.
The deal, which was supervised by Vice President Namadi Sambo at a ceremony at the Presidential Villa, aims to revolutionise funding for the real sector and breathe life into the ailing industries.
Sanusi said he is optimistic that the manufacturing sector will soon be revived with the implementation of the 500billion Naira deposit money out of which 130 billion has been granted, the performance of the economy which the apex bank governor presented is for the second quarter of the year, "to realign economic policies to the financial reforms" as a way of encouraging "credit flow into the real and strategic sectors of the economy." Sanusi said.
Vice President Sambo was impressed by what he termed as "the creative intervention" by the CBN team said: "The sector has suffered immensely from infrastructural problems and access to credit, especially the manufacturing sector suffered. The manufacturing sector is critical to our Vision 20:2020 and Millennium Development Goals (MDGs) targets.
"This realisation obviously influenced the CBN in its latest efforts. This is a creative initiative to revive and improve access to credit to SMEs and improve liquidity for the participating banks. It will also create employment.
"It is a reprieve for those borrowing as it would enhance the liquidity of the banks. Our banks need to drive the economy and meet global competitiveness. The money is in two components. One part is N200 billion for small and medium enterprises, and the manufacturing sector. Already, approval has been granted for over 60 per cent of the fund. The second component is for funding for the power sector.
"This intervention is coming when government is initiating several other efforts to revive several sectors of the economy. For the first time, a government in this country is coming up with a total package to address the problems of the economy. I wish to praise the CBN management for driving the process. I am glad that the banks have also bought into the scheme. I hope that the banks would match the efforts of government within the stipulated time."
Speaking earlier, the Central Bank Governor, Sanusi Lamido Sanusi stressed that the growth of the economy was dependent on the growth and resilience of the real sector.
He said: "Things must change. We believe that the banking industry can be the catalyst for the sector. Every bank that has participated in the N130 billion we disbursed is to contribute its own share by at least N65 billion. Beyond providing finance, we are providing advice and impact assessment to aid the growth of the manufacturing sector.
"What we are doing now is a key mandate of the CBN which has over the years been relegated to the background. We will henceforth ensure that the developmental roles of the CBN would be refocused. It is a new era for all of us. Our target is economic growth, poverty alleviation and wealth creation."
On her part, the Managing Director of BoI, Evelyn Oputa, described the occasion as historic while the Manufacturers Association of Nigeria (MAN) urged the banks to change their attitude and embrace lending to the real sector. President of MAN, Bashir Borodo praised the CBN’s efforts, saying it is "the way to go."
At its meeting with Sanusi, the FEC approved January 1, 2012 as the effective date for convergence of accounting standards in Nigeria with International Financial Standards (IFRS). It urged the CBN to shield the newly established Assets Management Company of Nigeria (AMCON) from the sharp practices and financial engineering of the past that have plunged global and natural economies into avoidable crisis.
Sanusi’s report to the Council explained that the nation’s economy is "on sustainable growth, especially the non-oil sectors led by agriculture, retail trade, services and construction."
He added: "There had been steady growth in GDP moderation in inflation. Inter-bank rates and other money market rates including lending also moderated. The foreign exchange market was substantially stable, while the recovery in the capital market continued. However, the growth in monetary and private sector credit aggregates remained sluggish."
He regretted that Nigeria has "an economy in which you do not have power. If you don’t have electricity, you cannot attract investors. You cannot improve production. We don’t have power because the reforms that ought to have been carried out in four years have not been done. We keep talking and talking and talking and we have not yet created the right environment. I am saying that we have got to have a regulator (especially in the power sector). We have got to have good input for gas pricing. It will encourage investment. Deregulate electricity prices. This N7 is a myth because nobody can get power at that price. Ghana is paying N22. If we increase it to N22 and you increase gas prices, investments will come into power. We have not done that. That is the issue.
"We are spending N500 billion subsidies on petroleum products and nobody will invest in refineries if they believe that their business model is predicated on government subsidy. We are borrowing N500 billion on subsidies every year. We are borrowing money and we are leaving future generations to pay the debt. And the benefits of these subsidies are far outweighed by the long-term cost to the economy. So, the reality is that the government is not pursuing the right economic policies. And nothing in the banking reform will fix the economy unless you fix policy. And I say this as an adviser to the government."
The Minister of Information and Communications, Prof Dora Akunyili told journalists at the end of the Council session that the body resolved that the CBN and the Economic Management Team should properly coordinate to ensure that the nation’s economic reforms are properly channelled towards the real sectors of the economy.
Said Maku: "Council appreciated the candour and depth of the CBN governors’ report on the economy, especially his determination to press ahead with critical reforms in spite of pressures from vested groups to derail the reforms which have saved the nation’s financial sector from deep crisis. The need for deeper reforms in the energy, petroleum and power sectors was emphasized to realign economic policies to the financial reforms to encourage credit flow into the real and strategic sectors of the economy."
Speaking on the January 1, 2012 effective date for convergence of accounting standards in Nigeria with International Financial Standards (IFRS), Akunyili, noted that "accounting standards are benchmarks for the preparation of financial statements by private and public institutions. Individual nations used to set their accounting standards until the widely reported financial scandals involving WorldCom and Enron in 2001."
The Council approved the contract for the development of irrigation on 1,500 hectares of land and associated infrastructure, being Phase 1 of Tada-Shonga irrigation project located at Tada-Shonga in Kwara State. It is to cost a total of N3.26 billion.
Prof Dora Akunyili also revealed that from the ministry of science and technology, FEC has approved the ratification of the statute of the International Renewable Energy Agency [ITEA], Nigeria is said to have participated in the formative state of the agency.
FEC also approved the expansion and completion of the Bagwai Irrigation Project in Kano state to the tune of 5.438billion Naira.
The minister of water resources also got approval for the development of the 1500 archers and associated infrastructure at the phase one of the Tada-Shonga irrigation project in Kwara state, the project is to cost 3.263billion Naira.
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