DEVELOPMENT FINANCE.......CBN to set up $39.4 billion infrastructure dev. company

 

DEVELOPMENT FINANCING

Introduction

The Central Bank of Nigeria (CBN) has secured the Federal Government’s approval to set up a $39.4 billion (N15 trillion) infrastructure development company in collaboration with the Sovereign Wealth Fund, to invest in the country’s critical transport network.

The venture, which is expected to leverage local and international funds, are projected to cover an initial 5-year period.  This entity will be co-owned by the CBN, AFC and the NSIA respectively.

The disclosure is part of the statement made by the CBN Governor, Godwin Emefiele, during the last Monetary Policy Committee (MPC) meeting on July 20, 2020.

This entity, which will be wholly focused on Nigeria and Nigerians alone, will be co-owned by the CBN, African Finance Corporation (AFC), and the Nigeria Sovereign Investment Authority (NSIA).

However, it will be exclusively managed by an Independent Infrastructure Fund Manager (IIFM) that will mobilize local and foreign capital to support the Federal Government in building the transport infrastructure required to move agriculture and other products to processors, raw materials to factories, and finished goods to market.

The MPC also noted, albeit with satisfaction, the CBN’s immediate work on the updates and timelines for the establishment of this much-needed entity.

Experts have pointed out that the poor state of infrastructure and the huge infrastructure deficit seriously puts at risk, the current administration’s plans to industrialize the country and establish a vibrant agricultural sector to encourage economic growth.

This initiative is to help fix the nation’s dilapidating road network and railway lines to tackle decades of decay that has stunted economic growth and made it difficult to move agricultural products from the rural areas or farms to processing plants and finished goods to the markets.

Meanwhile, The value of loans given to the private sector by Nigerian banks increased by N3.5 trillion –from N16.251 trillion in June 2019 to N18.632 trillion as at the end of May 2020.  This is according to data obtained from the Central Bank of Nigeria. According to the data, this growth represents an increase of 21.53%.

Breakdown of loans

At the end of June 2019, a total of  N15.13 trillion was given to the private sector. The figure increased to N15.61 trillion by the end of July 2019 before dropping to N15.56 trillion at the end of August 2019.

Out of the total N18.63 trillion credit to the private sector in May 2020, the Oil and Gas industry (downstream, natural gas and crude oil refining) attracted N3.60 trillion.

This was followed by the Manufacturing sector which attracted N1.99 trillion within the same period.

The General Services segment also attracted N1.60 trillion in May 2020.

The Finance, Insurance and Capital market segment followed with a N1.32 trillion credit.

The Oil and Gas sector (upstream oil and gas services) attracted N1.29 trillion in May 2020.

Trade and General Commerce attracted N1.25 trillion.

During the year, credit to the private sector hit the highest in May 2020 at N18.53 trillion.

On the other hand, credit to the government rose to the highest at N1.55 trillion in January 2020.

A closer look shows that credit to government was at its lowest at N1,21 trillion by August 2019.

Drivers of the credit

In the Central Bank of Nigeria’s Monetary Policy Committee (MPC) meeting communique, which included the personal statements of members of the apex bank’s MPC, Kingsley Obiora, Deputy Governor, CBN, stated that the credits were driven especially by demands from the manufacturing sector, consumer credit, general commerce, information and communication, and agriculture, among others. He said:

“Under the circumstances, the financial system has maintained a sound and stable position, following effective interventions by the CBN.

“Non-performing loans (NPLs) decreased to 6.4% at the end of June 2020, compared to 9.4% in the corresponding period of 2019, reflecting recoveries, write-offs and disposals.”

CONCLUSION

Friends, Jesus is coming soon.  If you have not yet received Him as Lord and Saviour, I plead with you to do it now. 

If you are ready to surrender your heart to Christ, say this prayer: 

Heavenly Father, I come to You in the name of Jesus Christ.

I believe that Jesus died for my sins and rose again for my justification. I repent of my sins and ask for forgiveness. I ask Jesus to come into my heart and reign as my Lord and Saviour.  I receive Him by faith, I am born again!

FIRE...