CBN Transitioning from Development Finance Interventions: Impact on Projects and Farmers
The Central Bank of Nigeria (CBN) has recently announced a substantial policy shift, with the decision to discontinue all development finance interventions by the year’s end. This decision will have a direct impact on over 4.6 million farmers and more than 1,358 projects that have previously benefited from various CBN initiatives. Consequently, these beneficiaries will now be required to commence repayment of over N5.25 trillion in loans that were previously provided by the CBN.
Dr. Olayemi Cardoso, the Governor of the CBN, has expressed the intention to redirect the institution away from the developmental financing path pursued by his predecessors. Under his leadership, the apex bank will prioritize monetary policy and advisory roles instead. This decision comes in the wake of the suspension and prosecution of the former governor, Godwin Emefiele, and the removal of the acting governor, Adebisi Shonubi.
Previously, the CBN’s involvement in development finance programmes and policies, such as the removal of certain items from the foreign exchange eligibility list, was a notable initiative. This programme, introduced during the tenure of Sanusi Lamido Sanusi and fully implemented under Emefiele, aimed to encourage backward integration.
Another significant initiative was the anchoring of the borrowers’ programme (ABP), which provided over N1.09 trillion to more than 4.6 million farmers across the country. In total, the CBN disbursed over N5.25 trillion to various individuals and companies, encompassing several intervention programmes.
Data sourced from the apex bank indicates that funds were disbursed under programmes such as the ABP, the 100-for-100 Policy on Production and Productivity, the Nigerian Electricity Market Stabilisation Facility, Agribusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS), and Micro, Small and Medium Enterprise Development Fund (MSMEDF), among others.
The impact of these interventions is evident, with a cumulative amount of N2.56 trillion being disbursed to 462 projects across the country under the Real Sector Facility as of May this year. Additionally, the ABP has benefitted over 4.6 million smallholder farmers, with N1.09 trillion disbursed to farmers involved in agricultural activities.
The decision to discontinue direct quasi-fiscal interventionist activities and instead utilize orthodox monetary policy tools aligns with the governor’s emphasis on refocusing the CBN on its core mandate of ensuring price stability. Cardoso cited the need for the CBN to refrain from engaging in activities that blur the lines between fiscal and monetary policies, thereby taking it into areas where it has limited expertise.
This transition has put into question the fate of numerous projects and farmers who had been relying on the CBN’s intervention funding. The potential implications of this policy shift raise concerns about the repayment of outstanding loans and the future accessibility of financial support for farmers and projects.
In conclusion, the CBN’s decision to cease development finance interventions marks a significant policy shift with far-reaching implications for a multitude of beneficiaries. As the apex bank transitions towards a focus on monetary policy and advisory roles, it remains to be seen how the impacted projects and farmers will navigate the changes and potential challenges ahead.
References:
[1] “CBN ends intervention funding for 1,358 projects, 4.6m farmers,” by Leadership Newspaper:
[link to the original article]
