Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele, is leading banks in engagement with the nation’s trade partners and creditors in a bid to sustain confidence and preserve foreign trade commitments.
Speaking after a meeting with banks’ Chief Executive Officers in Lagos, Emefie said: “Engagements will be held with correspondent banks, trade creditors, trading partners regarding existing Letters of Credit (LC) and trade commitments. The industry is committed to resolving these commitments in a comprehensive and orderly way. There will be transparent and open communication with all counterparties.”
This move is a follow up to the six policy measures earlier announced by Emefiele designed to inject N3.5 trillion into the economy with the aim of sustaining economic growth in spite of the severe impact of the COVID-19 on the economy.
These measures include Extension of a moratorium on existing CBN intervention facilities by one year; Reduction of interest rate from nine per cent to five per cent on all applicable CBN intervention facilities, effective 1st March 2020; and the creation of a N50 billion targeted credit facility for SMEs in the tourism and trade sectors, who are likely to be hit the hardest by the pandemic.
Others are providing credit support to the players in the healthcare industry who intend to scale up their local operations; Encouraging regulatory forbearance from DMBs on loans to critical economic sectors particularly oil & gas, agriculture and manufacturing; and strengthening of the CBN LDR policy.”
In addition to these measures, the Bankers Committee, led by Emefiele, announced special foreign exchange funding and credit facility for leading pharmaceutical companies.
“Given that this crisis is first and foremost a public health crisis. we are paying particular attention to our health industry. As aforementioned, global supply chains have been disrupted including dominant drug supply channels from China and India. In fact, many countries have or are planning to ban the export of drugs and medical supplies from their countries. Clearly, we have no choice but to produce these items locally.
“Thus the Committee has identified a few key local pharmaceutical companies who shall be granted Naira and FX funding facilities to support procurement of raw materials and equipment required to exponentially increase local drug production in Nigeria. These include but are not limited to Emzor, Fidson, GSK. May & Baker, Unique Pharma, Swiss Pharma, Neimeth, Sagar, Orange Drugs, Dana Pharma, etc, Emefiele said.
Analysts commend stimulus measures
Meanwhile, the stimulus measures introduced by the Emefiele led CBN have attracted commendation from analysts, who describe the measures as necessary to forestall another economic recession.
According to analysts at Lagos based investment firm, Cardinal Stone Partners, the policy responses are likely to provide a calming effect.
“We believe the soothing measures could help manufacturers cover important obligations and keep plants running to meet domestic demand without inordinately raising prices to account for the rising cost of raw materials. The measures to support pharmaceutical and healthcare companies are also positive, given the shutdown of countries across the globe, ongoing spread of the COVID-19 virus in Nigeria, and sustained panic buying of pharmaceutical products domestically,” they said.
Also commending the measures, analysts at Lagos based Vetiva Capital Management Limited, said, “Although the central bank possesses limited ammunition to forestall a recession, lowering interest rates, targeted credit support, and macroprudential forbearance will provide some cushioning to the adverse economic impact that the pandemic may have on the Nigerian economy.”