CBN faults governors’ alarm on recession

The Central Bank of Nigeria (CBN) has dismissed the alarm raised by governors that the economy may relapse into recession by the middle of next year.

Zamfara State Governor Abdulaziz Yari, who doubles as the Chairman of the Nigeria Governors’ Forum (NGF), urged incoming governors to brace for another round of recession.

It was at the opening of a three-day retreat for returning governors and governors-elect in Abuja on Monday.

But the CBN Deputy Governor, Economic Policy, Dr. Joseph Nnanna, who represented CBN Governor Godwin Emefiele, dismissed the governors’ claims at the public presentation of the Spring 2019 edition of Regional Economic Outlook (REO) by the International Monetary Fund (IMF) in Abuja.

“We are making smooth progress towards growth and by end of 2019, all things being equal, we are going to likely have between 2.8 per cent and three per cent GDP (Gross Domestic Product) growth rate,” he said.

Nnanna noted that “since the third quarter of 2016, when we started coming out of recession, we have embarked on tight monetary policy in all its ramifications.

“Right now, we are on the path of achieving our price stability goal of single-digit inflation. Are we going to witness increased inflation or are we sliding back into recession? My answer is no. But is that adequate? My answer is no. Three per cent GDP real growth rate is not enough for Nigeria where our population growth rate is 3.2 per cent. Per capita growth rate is still negative but definitely, we are not going through the era of 2016 when we had a recession. That won’t happen –  hopefully. Not under CBN watch.”

The major problem afflicting Nigeria’s labour sector, Nnanna said, is more of underemployment than outright unemployment “because majority of Nigerians are employed one way or another, but they are functioning below capacity. They are engaged in the informal sector, which is not performing optimally. We also have a huge infrastructure deficit. Infrastructure is the major constraint to economic development and growth. This has to be repaired.”
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Nnanna advised governors and other policymakers to tackle the menace of non-inclusive growth because “it is inclusive growth that we need in Nigeria than any other thing”.

The apex bank’s deputy governor used the opportunity to assure existing and prospective portfolio and foreign direct investors that they will not encounter problems repatriating either their profits or capital.

He said: “For the money market, our promise to external investors, be they portfolio investors or foreign direct investors, is that we are going to continue to maintain positive relationship.

“And the yield in Nigeria is comparative, if not more superior to the yield in other emerging market economies. Those who want to invest in the last frontier markets, the place to be is here.

“Nigeria’s I&E forex window is a market for willing seller and willing buyer. CBN will not intervene in that market to fix prices. Since this market was introduced in mid-2017, total transaction in the market amounts to $109.1 billion. The inflows through the CBN, as at today, is $16.5 billion while outflows amount to slightly under $10 billion.”

Earlier, the Director, African Department at IMF, Mr. Abebe Selassie, had urged the Nigerian authorities “to keep inflation down and also grow the non-oil revenue, if the economy must perform optimally. The IMF chief said that its projected 2.1 per cent growth for the Nigerian economy in 2019,  “doesn’t reflect the potentials of Nigeria”.

He advised that monetary policy needs to be calibrated with an eye on keeping inflation down and facilitating exchange rate.

For Nigeria, Selassie noted that the IMF sees some economic recovery, adding that growth in 2018 was close to two per cent and 2.1 per cent is projected in 2019 but this is well below the potentials that this economy has.

He said: “Nigeria needs to maximise its potentials and grow its non-oil revenue. Non-oil revenue is too small, about four per cent to GDP, thus it’s important for government to generate more resources to meet infrastructural deficit.”

Finance Minister Mrs. Zainab Ahmed, who was represented by the Permanent Secretary, Special Duty, Dr. Mohammed K Dikwa, said the incumbent government has spent about N4.5 trillion on the productive sector of the economy for massive job creation to reduce insecurity and infrastructure development.