The Concept of Central Bank of Nigeria 100 for 100 Policy

The Concept of Central Bank of Nigeria 100 for 100 Policy

Introduction

The Central Bank of Nigeria (CBN) cashless economy policy is of no doubt an essential to the development of Nigeria’s economy. The Central Bank of Nigeria (CBN) has launched a new policy to financially support 100 targeted private sector companies in 100 days. Godwin Emefiele, CBN governor, said this on Monday in Abuja during the launching of the eNaira project. The financial instrument titled “The 100 for 100 PPP – Policy on Production and Productivity,” Emefiele said the CBN would advertise, screen, scrutinise and financially support 100 targeted private sector companies in 100 days, beginning from 01 November 2021. Data from the National Bureau of Statistics (NBS) show that the unemployment rate increased to 33.3 in March 2021 from 27.1 in December 2020.

At the launch of the Central Bank Digital Currency (CBDC), known as the eNaira on October 25, 2021 in Abuja, Godwin Emefiele, governor of the Central Bank announced the introduction of the 100 for 100 PPP. It is a financing scheme designed to provide targeted funding (in Naira) under existing CBN’s intervention programmes to 100 high-impact companies and projects every 100 days.

In line with the policy of the Federal Government of Nigeria (the “FGN”) to diversify the economy and encourage local manufacturing of goods, the Central Bank of Nigeria (the “CBN”) on November 1, 2021, issued the 100 for Guidelines for the Implementation of the 100 Policy on Production and Productivity (the “Guidelines”) , under the 100 for 100 Policy on Production and Productivity (the “Policy”).Precisely, between 2016 and 2020 the domestic economy grew at compound annual growth rate (CAGR) of 0.6 percent, while Industry recorded a flattish CAGR of 0.05 percent, with manufacturing (about 42.0% of Industry) contracting by 0.03 percent.

In 2020, the Industry GDP sharply fell by 5.9 percent relative to a downturn of 1.9 percent for the broader economy. Hence, channeling of efforts to enhance the productive capacity of the economy would reverse the negative trend of high unemployment rate (33.3% in Q1:2021), boost output, and reduce import bills. In an effort to stimulate the flow of credit to the real sector of the economy in order to reverse the nation’s over-reliance on imports, the CBN established the 100 for 100 Policy for Production and Productivity (100 for 100 PPP), said Philip Yila Yusuf, director, development finance department.

The Concept of Central Bank of Nigeria 100 for 100 Policy

Quarterly, starting from 1 st November 2021, the initiative shall select 100 private sector companies with projects that have potential to significantly increase domestic production and productivity, reduce imports, increase non-oil exports, and overall improvements in the foreign exchange generating capacity of the Nigerian economy. The initiative, which shall be bank-led, will be rolled over every 100 days (that is, quarterly) with new set of companies selected for financing under the initiative. The initiative shall be implemented in collaboration with relevant stakeholders with focus on micro and macroeconomic impacts, in terms of contribution to GDP and exports, sustainable jobs created, local content development, production output, and capacity utilisation and integration into the global value chain.

 THE CONCEPT OF CENTRAL BANK OF NIGERIA 100 FOR 100 POLICY

The initiative, 100 for 100 PPP, is a financial instrument designed to create the flow of finance and investments to enterprises with potential to catalyse sustainable economic growth trajectory, accelerate structural transformation, promote diversification, and improve productivity. The Central Bank of Nigeria has disbursed N68.13bn to beneficiaries under its 100-for-100 Policy on Production and Productivity since the commencement of the intervention. According to the bank, the CBN Governor, Godwin Emefiele, disclosed this in Lagos after the last Monetary Policy Committee meeting. “Furthermore, under the 100 for 100 Policy on Production and Productivity, the Bank has released N9.98bn for five projects, bringing the cumulative disbursements under the intervention to N68.13bn for 48 projects, comprising 26 in manufacturing, 17 in agriculture, three in healthcare and two in the services sector,” he said.

According to the guidelines for the implementation of the initiative, the CBN fixed the maximum loan amount that a participant could get at N5bn.he CBN stated in the guideline that the initiative would select 100 private sector companies with projects that have potential to significantly increase domestic production and productivity, reduce imports, increase non-oil exports, and overall improvements in the foreign exchange generating capacity of the Nigerian economy. “The initiative, which shall be bank-led, will be rolled over every 100 days (that is, quarterly) with a new set of companies selected for financing under the initiative,” it stated.

MERIT OF CENTRAL BANK OF NIGERIA 100 FOR 100 POLICIES

1. The broad merit of this new CBN’s 100 for 100 PPP financial instruments is to reverse the nation’s over-reliance on imports, by creating a platform that targets and supports the right companies and projects with potential to immediately transform and jumpstart the productive base of the economy
2. The central bank of Nigeria 100 for 100 policies will catalyse import substitution of targeted commodities

iii. It will also increase local production and productivity

1. It will help in increasing non-oil exports; and
2. The 100 for 100 policy will improve foreign exchange earning capacity of our nation economy.
3. The initiative, projects that must catalyse sustainable employment-led economic growth through increased domestic production and productivity in the near term.

vii. the policy will lead to percentage increase in production output of financed companies; percentage increase in capacity utilisation; percentage increase in export volume; percentage increase in export value; percentage decrease in import volume of industrial raw materials; percentage decrease in import value of industrial raw materials; increase in number of jobs created.

 DEMERIT OF CENTRAL BANK OF NIGERIA 100 FOR 100 POLICIES

1. Monthly interests on the facility shall be amortised and transferred quarterly with principal repayments to the CBN which is not good for a business that is just started newly
2. The procedure for eligibility to cumbersome 90 percent of newly established businesses can not apply for example, “Evidence creditworthiness of the company, its promoters and directors” most of the businesses does not have
3. The successful beneficiaries would be published in National Dailies for Nigerians to verify and confirm with details of facility granted, operating sector, manufacturing activities financed, and PFI. This may lead to insurgency and insecurity.
4. Ethnic and religious tensions (Muslim north, Christian south) will come into play ass the application may be subjected bias

Conclusion

The Policy is a very laudable initiative that has been introduced by the CBN. There are no doubts that if it is properly implemented, it will be of great benefit to the economy. It is hoped that the manner of implementation will ensure that the Policy becomes a huge success. Therefore, As the true African Giant, we must fold our sleeves and do everything possible to stop the incidence of importing anything and everything.

Proactive steps on the part of stakeholders in the private sector in collaboration with the government in supporting the growth of sectors such as Manufacturing, ICT, and Infrastructure, will strengthen our ability to deal with the challenges of COVID-19, and stimulate further growth of our economy. President Muhammadu Buhari has made significant efforts at reducing our economy’s over-reliance on imports for food and industrial raw materials, towards one that is self-sufficient and self-reliant, with strong commitment towards ensuring that Nigerians produce what they eat and eat what they produce.

In line with the administration’s policy focus to stimulate domestic production and productivity, the Central Bank of Nigeria (CBN) has continued to introduce various policy measures, in the form of interventions, to stimulate low-cost and sustainable financing to priority sectors and segments of the economy.

References

Chris Ngige (2021) 100 million Nigerians out of poverty. Retrieved from https://www.cbn.gov.ng/out/2021/ccd/1004100.pdf

https://businessday.ng/news/article/economy-to-benefit-as-cbn-implements-100-for-100-policy/

Emefiele, G. (2021). A Keynote Address at the 56th CIBN Annual Bankers Dinner November 26th 2021 Lagos, Nigeria.

Central Bank of Nigeria, ‘Guidelines for Implementation of 100 for 100 Policy on Production and Productivity (10 for 100 PPP)’ (1 November 2021) <https://ww- w.cbn.gov.ng/Out/2021/CCD/1004100.pd- f> accessed 7 December 2021.

Central Bank of Nigeria, ‘N300 Billion Real Sector Support Facility (RSSF) Guidelines’ https://www.cbn.gov.ng/out/2015/dfd/re-al%20sector%20sup- port%20facility%20guidelines.pdf Accessed 7 December 2021