UPDATED: Coronavirus: CBN to inject additional N1trillion in Nigerian economy

With the coronavirus pandemic rapidly ravaging the global economy, the Central Bank of Nigeria (CBN) on Wednesday announced N1 trillion intervention in all critical sectors of the economy.

The CBN governor, Godwin Emefiele, said the stimulus package is in addition to the regime of incentives contained in a six-point palliative announced on Monday to ameliorate the impact of the coronavirus, otherwise called COVID-19, on the Nigerian economy.

He challenged Nigerians to take advantage of what appears to be an adversity into an opportunity for development and growth in the economy.

Pandemic

Since the outbreak of the deadly virus first reported in Wuhan, China, the global economy has been shaken to its foundation, with disruptions transcending all sectors.

These include disruptions in supply chains, cancellation of international travels and events as well as restriction of movement between countries.

Nigeria and other resource-dependent countries appear to be the worst hit, with the virus driving crude oil prices at the international market below approved benchmarks and estimates in Nigeria’s 2020 federal budget.

Although the federal government has already constituted a committee to review the budget fundamentals, economic analysts are already anticipating a meltdown capable of stirring another economic recession.

Palliatives

On Monday, the apex bank unveiled what it called its first set of policies to cushion the negative impact the virus on Nigerian businesses and the economy.

They included the immediate cut on interest rates of all applicable CBN intervention facilities from nine per cent to five per cent per annum for one year, effective March 1 and the creation of N50 billion targeted credit facility for small and medium scale enterprises as well as households impacted by the COVID-19 pandemic.

Also, it announced a further extension of the period of grace given businesses for the repayment of the loans by one year on all principal facilities, particularly intervention loans, effective March 1, 2020.

The CBN said the latest intervention is to boost local manufacturing and ensure import substitution in the economy as a way of providing succour and creating more jobs to the people directly impacted by the deadly virus.

Mr Emefiele said the plan is in addition to about N100 billion in loan in 2020, aimed at supporting the health authorities to ensure laboratories, researchers and innovators work with global scientists to produce vaccines and test kits in Nigeria to prepare for any major crises ahead.

To work out the modalities for the disbursement of the stimulus package, the CBN governor said its management is scheduled to meet with the Bankers’ Committee on March 21.

Private sector

Mr Emefiele said an implementation committee will be set up next week to mobilise the private sector contribution of N1.5 trillion Infrastructure funding that will link farming communities to markets as agreed at the recently concluded “Going for Growth” Roundtable last week.

Given the plunge in the price of crude oil, which dropped to $25 per barrel on Wednesday, with its attendant low accretion to oil revenues, the CBN governor directed all Deposit Money Banks to increase their support to the pharmaceutical and healthcare industries.

The support, he said, would enhance local drug manufacturing, increase bed count in hospitals across Nigeria, support the funding intensive care as well as in training, laboratory testing, equipment and research & development.

Mr Emefiele said the CBN will release details of how the unveiled facilities would be accessed and released.

‘Situation room’

He also said a Financial Markets Situation Room would soon be set-up to monitor global markets and advise the bank on adequate response.

He advised all Deposit Money Banks and other regulated entities in the banking industry “to trigger their business continuity plans to ensure that their staff and families are protected, and their operations remain largely undisrupted”.

He also advised the banks to adhere strictly to the directives, advice, and notices from the Federal Ministry of Health, National Centre for Disease Control and other relevant government agencies on the national response measures to COVID-19.

As a way of checking the possible spread of the virus, he urged the institutions to ensure regular and appropriate sanitisation of their premises and make available in all their locations adequate sanitisation materials and also to discourage large gatherings.

The CBN assured it will continue to monitor all developments on the outbreak “and design appropriate monetary policy response to protect the people and economy of Nigeria”.