In its latest move to further rein in inflation, the Central Bank of Nigeria (CBN) has unveiled plans to mop up a total of N200.322 billion from the Nigerian banking system through a special Open Market Operation (OMO) at the rate of 16 per cent per annum.
Rising from the 333rd Bankers’ Committee in Lagos, the CBN said its decision to mop up liquidity was in reaction to the maturity of N206 billion on Thursday, June 15, 2017.
Disclosing this to newsmen, CBN’s Acting Director in charge of Corporate Communication, Isaac Okorafor, explained that the apex bank decided on the rate of 16per cent per annum due to the falling rate of inflation, which he noted would continue to fall.
It would be recalled that CBN on Monday, June 12, 2017 released its Treasury Bills issue Programme for the third quarter of 2017 in which it disclosed that the maturity dates for the various tenors would be June 15, June 22, July 6, July 20, August 3, August 17 and August 31, 2017, respectively.
Speaking at meeting CBN’s Director of Banking Supervision, Mr. Ahmed Abdullahi maintained that the economy would record significant improvement by the third quarter of this year, citing stability in the foreign exchange market which has achieved convergence in the official and parallel markets.
According to him, confidence in the economy is gradually building up which had shown in the downward trend in the inflation rate and the positive development recorded at the capital market.
The Committee noted with delight the improvement in economy in recent times, but observed that the economy is still in the negative but the size of the negative growth has reduced hoped that by the end of the end of the third quarter there will be positive growth as there are a number of indices that are pointing toward that.
The meeting observed that Inflation is trending downwards as it is about 16.25 per cent from 18 per cent that it was while the exchange rate has largely stabilized, as there is convergence at both the FX, Importer and Exporter window as well as the BDCs’ rate.
He said, the economy will remain robust now that the upward growth in most of the sectors of the economy. The FX window in the last 6 weeks has recorded over $2 billion which has been reregistered as inflow and that has helped in stabilizing the market. With other windows, we have seen activities that have helped in building confidence in the market generally.
Also, Managing Director of the Standard Chartered Banks, Bola Adesola gave an update on the agriculture and small enterprise equity fund.
Adesola said that the equity fund was a decision held after the last Bankers’ Committee’s retreat last month with a commitment by banks to support agriculture and SMEs in a sustainable way.
“After the audited results of the banks have been published we all contributed five percent of our Profit After Tax (PAT) to a fund in CBN towards contributing equity to agriculture, small and medium enterprises. As you know, many companies cannot just survive on debt because of the cost of debt and so long term capital is required to catalyze the growth of SMEs and make them more viable and sustainable,” he said.
She also disclosed that there had been a contribution of N26 billion in the equity fund while the committee was still working on the framework as well as looking at partnerships. “ We are looking at co-investing with private equity firms as well and the objective is to
Catalyze growth in SMEs to ease access to finance to build capacity in the agriculture and SME sector to create jobs and ultimately to improve prosperity.
“The economic development of the banker’s committee is working with development finance and legal department and supervision in the CBN. “We also want to ensure that we have the right governance around the equity fund and it is our own contribution to economic growth and prosperity in the country,” she added.
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