13 October 2015, Abuja – Despite the growing concerns over the impact of declining revenue resulting from low oil prices for over a year, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has said the Nigerian economy is not heading towards recession, adding that the current dip in the nation’s revenue was a global development, which is not peculiar to Nigeria.
Emefiele, who spoke at the end of the IMF/World Bank annual meetings in Lima, Peru, on Sunday evening, said rather than interpreting some of the recent monetary and foreign exchange policies by the central bank as a sign of an economy sliding into recession, the challenge before Nigerians is to accept the policies as a way of reversing declining revenue.
He said: “Nigeria is not sliding into recession. We have had two quarters of slow growth; even the global economy has revised its growth outlook from 3.8 per cent in April to three per cent at this meeting.
“That of Africa has been revised from five per cent to 3.75 per cent at this meeting. But it is even projected at 4.25 per cent in 2016. So everyone is affected.
“What we are saying is because we have seen two successive quarters of slow growth, we all need to embrace the policies that we are putting in place both by the monetary and fiscal authorities so that we can see a reversal, so that we can see increased growth, not slowing growth, so no one has talked about the fact that Nigeria is going into recession.
“We are only saying we need to work hard to begin to reverse the trend so that we can move towards positive growth rather than slowing growth.”
Pointing out that the effect of the commodity crisis was a global one, the CBN governor said the slowdown as a result of the drop in commodity prices coincided with the end of quantitative easing in the US to the extent that the Federal Reserve Bank has been contemplating raising rates through the sale of assets.
He added that geopolitical tensions had also affected many economies and forced them to slowdown, and in some cases had slid into recession.
He maintained that the recent exit of foreign investors from the Nigerian bond and equities market was not peculiar to Nigeria, adding that about $48 billion was the value of capital outflow from emerging and frontier markets in the third quarter of the year.
Emefiele further explained that what was being experienced on the global economic scene was a situation whereby investors were looking at economies where they felt there are opportunities because of the fear that the drop in oil price could affect the economies that depend on oil exports.
“So we have to solve our problems ourselves,” he said, stressing the need for all to embrace all the policies being put in place.
On the issue of foreign exchange curbs, Emefiele said there was no plan to remove the restrictions placed on certain category of items from the foreign exchange market.
He said the impact of low commodity prices was affecting the nation’s economy, a development he said underscored the need for the central bank to prioritise the use of foreign exchange for materials that cannot be produced locally or essential ones.
He said some manufacturers had even drawn up a new list of items which should be excluded from the foreign exchange market, but assured his audience that no new ban would be imposed until the impact of initial measures begins to manifest.
He explained that the IMF/World Bank meetings dwelled essentially on what could be done to reverse slowing global growth and what kind of specific solutions could be provided for different economies in order to turn the situation around.
Giving his account on the various meetings held in Peru, the governor said: “Aside from the World Bank and IMF meetings that we held, we also held several meetings on the sidelines regarding development.
“We also had meetings with some potential investors, who have shown tremendous interest in Nigeria; we held meetings with some international banks, who are seeking to develop their relationship with Nigeria, the CBN as well as with the Federal Ministry of Finance.
“We also held meetings with some rating agencies to provide insight into the Nigerian economy and what we are doing to support and grow the economy.
“We also discussed ways the IMF and the World Bank can assist African countries in enhancing financing for sustainable development.”
The meeting, he said, also raised issues on those economies affected by the drop in commodity prices and in the case Nigeria, “there was the need to diversify from a single economy, that is oil, and that we are already doing. And I want to seize this opportunity to thank Mr. President for the support he has given in most of our interventions to diversify the economy away from oil”.
These, according to him, include the intervention fund for agriculture or sourcing finance for some infrastructure projects.
- This Day