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Nigeria: Central Bank Governor Emefiele Optimistic as InfraCo Set to Commence Operations

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has expressed enthusiasm with the Infrastructure Company Limited (InfraCo) slated to commence in two months citing that the strategic projects it would fund would speedily foster economic activities and inclusive growth.

He also noted that the policies created to ensure stability in the exchange rate saw more transactions flowing through the official Investors & Exporters FX window (I&E FX Window) which raised its average daily Fx turnover to $250 million from $40 million in April 2020.

Emefiele said this on Friday at the 56th Chartered Institute of Bankers (CIBN) Annual Bankers dinner in Lagos.

Speaking on InfraCo, he said: “With the decline in revenues due to federal and state governments as a result of reduced receipts from the sale of crude oil, alternative ways of funding infrastructure are critical if we are to ensure sustained growth of our economy. As we are all aware, the cost of logistics is often seen as a significant impediment to the growth of businesses in the country.

“In recognition of the role improved infrastructure could play in the development of our economy, along with the need to leverage private sector capital in funding the over N35 trillion deficit, which is the estimated amount required to build an efficient infrastructure ecosystem in Nigeria, the Central Bank of Nigeria (CBN) working in partnership with critical stakeholders such as the Nigerian Sovereign Investment Authority (NSIA) and African Finance Corporation (AFC) set up Infracorp. Infracorp is expected to raise over N15 trillion to support investment in critical infrastructure in Nigeria.

“So far, N1 trillion has been provided as seed funds by the promoters to support the operations of Infracorp. We recently appointed four fund managers, and a Management Team has been selected to run and manage Infracorp.

Over the next two months, Infracorp will kick off its operations by targeting strategic infrastructure projects that would help catalyse further growth of our economy. Infracorp is expected to set the standard template that will help in enabling greater private sector funding for public infrastructure projects in Nigeria.”

On the exchange rate management, he added: “As a result of our demand management policy, the naira has remained largely stable around N411/US$1 at the I&E window particularly since the discontinuation of FX allocation to Bureau De Change operators along with the convergence between the CBN and NAFEX rates. Banks are now able to meet the demands of their customers seeking forex for SMEs, school fees, medical and PTAs, which has reduced the need of customers to rely on alternative providers of foreign exchange. Average daily Fx turnover at the I&E window is now over $250 million, up from $40 million in April 2020.”

He further noted that Nigeria’s external reserves are supported by our demand management policy and that in addition to support from the successful issuance of the $4bn Eurobond and the IMF SDR, our external reserves today stands at over $41.4bn which is enough to support 9 months of imports.

He noted that this is just a morale booster for both foreign direct and portfolio investors willing to invest in the economy, but it provides significant fire power to support our domestic industries that need to import critical machines and equipment for domestic production and exports.

Furthermore on his 2022 policy focus he added: “I would like to state that notwithstanding these positive indicators, our economic growth remains fragile, as our unemployment and inflation rate remain at levels that are not very supportive of growth. Second, continued implementation of our intervention efforts would need to be undertaken to sustain the recovery efforts and stimulate further growth of the economy. Third, given population growth at about 2.7 per cent annually, it is important that we continue to deploy measures that will enable our economy to attain annual growth rates of over five per cent.”

“Through the pandemic we are aware that our policy responses are often more effective when we work with the private sector. For example, the CACOVID alliance played an instrumental role in reducing the negative effects of the pandemic, by providing palliative support to families affected by the virus and in rebuilding our healthcare institutions.

“Leveraging the strength of the private sector will be critical in mobilising funds that are needed toward building a more resilient and stronger economy. We intend to strengthen collaborations with the private sector in order to support investments in critical sectors such as infrastructure, and ICT, in addition to ongoing efforts to build a stronger agriculture and manufacturing base in Nigeria.”

“As a result, all efforts in 2022 must be made to ensure that we maintain our focus on improving access to finance and credit for households and businesses, mobilising investment to boost domestic productivity, enabling faster growth of non-oil exports, and supporting employment generating activities,” he added.

Nume Ekeghe