The sum takes the overall distribution through the program to N1.09 trillion and was distributed to three agriculture projects in January and February.
The initiative has so far benefited more than 4.6 million smallholder farmers who cultivate (or raise) 21 agricultural commodities on 6.02 million hectares of farmland, according to a statement released by the top bank following the Monetary Policy Committee (MPC) meeting conducted on Monday and Tuesday.
A further N23.7 billion was paid out during the same time period as part of the bank’s commitment under the N1 trillion Real Sector Facility, and another N3.01 billion was paid out under the N3 trillion Nigerian Electricity Market Stabilization Facility, which aims to lower commercial risk and boost efficiency in the power sector.
“The Bank released the sum of N23.70 billion under the N1 trillion Real Sector Facility to eight new real sector projects in agriculture, manufacturing and services. Cumulative disbursements under the Real Sector Facility currently stand at N2.43 trillion, disbursed to 462 projects across the country, comprising 257 manufacturing, 95 agriculture, 97 services and 13 mining sector projects…”
“The Bank also released N3.01 billion under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital and operational expenditure of distribution companies (DisCos) aimed at improving their liquidity status and aiding their recovery of legacy debt. This brings the cumulative disbursement under the facility to N254.39 billion,” the authority revealed.
After the CBN’s promise to start winding down its special interventions, which critics claim are the main reason for the nation’s inflation, which reached 21.91 percent last month, commitment to the three programs raised the CBN’s balance sheet by N3.36 billion in January and February alone.
The bank announced last year that it will start to scale back its interventions while continuing to assist industries like real estate that are vital to economic growth and job creation.
The monetary authorities set the ABP repayment rate at 52.39 percent. Chipping in “was not due for repayment because they are under moratorium due to the COVID-19 forbearance granted to beneficiaries of the CBN’s interventions in March 2020 and extended to February 28, 2022”, a statement by the CBN stated.
However, the International Monetary Fund (IMF) noted that as of January 12, 2023, over 76% of the loans given to farmers under the ABP were still unpaid in its country report titled “Nigeria: Selected Issues.”
The Fund claimed that the inability of agricultural financing in Nigeria to boost productivity was due to “the difficulty in targeting the correct recipients.”
The institution had earlier issued a warning that the CBN’s increased intervention programs were a key contributor to inflation and were displacing commercial credit.
The MPC increased the policy rate by more than 50% in the last year in an effort to control inflation. Sadly, despite the aggressive liquidity tightening’s ten-month duration, the rate of inflation growth has continued to be optimistic. It has increased from 16.91 to 21.91 percent year over year.
Dr. Chiwuike Uba, a development economist, claimed in an exclusive interview with The Guardian that interest rate increases do not address 90% of the drivers of Nigerian inflation. He thinks that the CBN’s sustained balance sheet growth will heighten inflationary pressure.
“Over 70 per cent of inflation is driven by the exchange rate (depreciation of the naira), with diesel and aviation accounting for over 11 per cent and about seven per cent by other exogenous shocks. Interestingly, the contribution of the money supply to inflation is below 10 per cent.”
“Yet, the policy direction of the CBN largely focuses on the money supply, without the effort needed to address ways and means and the question of the exchange rate. The CBN’s contribution to the federal government through ways and means is about 40 per cent of the total money supply, which in turn contributes to inflation,” the economist concluded.
