The Central Bank of Nigeria (CBN) says it saved Nigeria from a major food crisis during the thick of the COVID-19 lockdown.
The NESG, in a statement on Monday, had said a huge gap exists between food production and requirement of Nigerians despite the huge sums disbursed by the CBN under its intervention programmes.
In response, the CBN said it engaged in development finance to address the credit needs of the sectors critical to improving livelihoods and reducing poverty.
“It is important for the NESG to note that our intervention programmes in the agricultural sector were a key contributor to the resilience of the agricultural sector during the crisis, as
the sector experienced positive growth of 1.6 percent in the second quarter of the year despite the lockdown.
“As the NESG may be aware, as a result of the COVID-19 pandemic, Vietnam, Cambodia, India, and Thailand placed export restrictions on the exports of critical food items, including rice and eggs.
“By alluding to the fact that money cannot address constraints in the agriculture sector, the NESG failed to realize that access to credit is listed among the three major challenges faced by farmers and businesses in Nigeria.”
According to the CBN, 103, 189 beneficiaries of its development finance activities had received N59.12 billion through the NIRSAL Microfinance Bank as of August 2020.
The apex bank also refuted claims that its lending process did not have a proper framework explaining that participating financial institutions carry out due diligence of applicants following which an additional assessment process is embarked upon by the CBN before disbursements are provided.
The CBN said although it is not opposed to the reopening of the borders, the real reason for the border closure was economic sabotage arising from the smuggling of fake products, drugs, small arms and agricultural items.
It quoted the International Trade Centre as saying Benin Republic imports as much as rice as China and nearly as much frozen chicken as the United Kingdom.
“In which country does the NESG think all these rice and chicken end up? How then can a Nigerian rice farmer or poultry owner survive?” it said.
It explained that banks and Bureau de Change operators receive forex on a weekly basis for final sales to parents paying school fees, patients settling medical bills abroad, SME traders
importing small-scale inputs and raw materials, and general travellers.
“In the retail window, banks submit a detailed list of applicants who are then allocated foreign exchange based on availability. Given that these submissions are first scrutinized by the banks and are accompanied by the provision of significant documentation, we do not understand the extra transparency being called for by the NESG.
“Based on very limited information and cross-country exposure, the NESG refers to the CBN’s recent directive, which simply sets a floor on saving rates as “price-fixing”. Given that in an ideal economic textbook/theory, saving should be equal to investment, we expected total deposits should closely mirror total loans.
“Many rich cooperates have simply been content with saving their cash balances and collecting huge interest payments, rather than expanding their investment, which should lead to hiring more people and producing more goods.”
It said many central banks carried out similar interest cuts on savings deposits.
“In fact, some Central Banks, including the European Central Bank, the Bank of Japan, Denmark’s Central Bank and the Swiss National Bank, are now operating “negative interest rates”, which means customers pay banks to keep their deposits,” it said.
It also described comments on the revision to the Bank and Other Financial Institutions Act 2020 (BOFIA) as “total ignorance or malicious intent on the part of the NESG”.
The NESG had said the act contains clauses that confer immunity on CBN officials and exempts actions by the CBN from judicial review.
The CBN explained that the provision already exists as section 53 in the old act and section 49(1) of the then BOFIA of 1991.
It also said similar clauses exist in Central Bank of Nigeria Act 2007 (section 52), the NDIC Act 2006 (section 55), the Investments and Securities Act 2007(section 302) and AMCON (Amendment) Act 2020.
“The said provision is to set a threshold against which suits against public officers must be filtered, such that for a suit to be maintainable it must scale that threshold by proving bad faith on the part of the pubic officer. It is not a bar against action,” it said.
Source: The Cable