CBN Intervention Towards Sustainable Growth

A team from the Central Bank of Nigeria last week went around Lagos, for an on-site monitoring and evaluation of some projects that are being funded by the several interventions, which it had provided. Nume Ekeghe was on the tour and writes on the progress of some of the projects.

The Nigerian economy has over the years been in need of capital as businesses struggle for the needed funding to grow their businesses while the government could not meet up with infrastructure gaps that would speed up development and growth. For a company such as The Candel Company Limited, an agrochemical producing company within the Lekki Free Trade Zone, intervention fund from the Central Bank of Nigeria (CBN) had revived it after it nearly went under. The CBN has over the years pushed out N8.8 trillion in intervention funds for critical sectors of the economy. According to CBN Director of Development Finance, Yila Yusuf, the department responsible for interventions to the various stimulating sectors of the economy, funding the various projects through its intervention funds was a multi-targeted strategy aimed at not just boosting economic growth and development whilst creating jobs, but also a means of growing the country’s export earnings. One of the infrastructural projects being funded by the CBN intervention is the Lagos Rail Project, which is expected to begin test run by the end of this year and commence full operations by the end of the first quarter of 2023.

The Rail Project

Speaking during a tour of the Red and Blue lines of the rail project in Lagos, Yusuf noted that the apex bank had disbursed most of the fund for the project, which he described as a “quite impressive signature project”

While stating that the on-site monitoring and evaluation of projects is to ensure that funds collected under the intervention funds are well utilized, he said for the rail project, “it exceeds our expectation.”

With a total of N68 billion to be disbursed for the rail project, he said between 750,000 and one million people will, on a daily basis, use this infrastructure, adding that it would contribute to national output.

“We were here sometime last year and construction is still ongoing, however there has been major progress. It gives me joy to also see a lot of Nigerians working on site, minders doing welding or some form of construction. We are happy with the progress.

“Most importantly, for us as central bankers want to see how this will contribute to output. It is going to be multimodal, so there’s going to be water transport, there’s also going to be the bus ride. Also, we look forward to other states emulating the kind of infrastructure that’s been put in place. They can come learn from Legos and get the financing to be able to ensure that the state can get world-class infrastructure, “he said. On her part, the Managing Director of the Lagos Metropolitan Area Transport Agency, Abimbola Akinajo, who is in charge of the project, explained that the red and blue lines is estimated to move between 750,000 and one million passengers on a daily basis as it would be operating at a tree minutes interval. To ensure that there is not disruption of movement within the system, she said, “We are building an IPP for it that will be dedicated to so we will have dedicated power for the electrification of the rail. We are also talking to Eko Disco to ensure that we have a dedicated line to ensure that there is never going to be a stop in power supply between Eko Disco and the IPP.

“We have a rotary UPS system that will ensure that there will never be a stop if the Eko Disco’s main distribution goes down, the UPS picks up until the IPP picks up.” Explaining the multi modal system of the rail she said, within the rail station “we have bus services which will also function. The regular buses are also integrated with the rail part of the interchange. We will also have a jetty and that is on the Marina which now becomes a transport hub that it always was for Lagos that we hope will regenerate the area from a business district perspective.”

Investments in Energy Sector

Speaking on the investments made in the energy sector, Yusuf noted, “We realised that Nigeria has in excess of seven million metering gap, and we are even now close to 10 million. Phase zero is just one million of which Ikeja Electric has already met and exceeded the target that has been sent. So for phase one, we are looking at three million metres across the entire disco. He noted that energy takes about 24 per cent of the portfolio that is out. For Ikeja Electric, he said, “They have showed us some of the projects the funds have been disbursed for; both on the national mass metering programme and then the OPEX and CAPEX. We are very impressed with what we have seen so far. Ikeja Disco has been very innovative.

“As we continue to tailor some of these interventions, we are also seeing the plans that they are going forward to be able to solve the perennial energy problems that we have.”

Speaking, the Chef Executive of IKEDC, Folake Soetan said, “The national mass metering and phase zero which is focused on ensuring that customers are metered and another intervention was for us to expand our network to also ensure that we relieve transformers that are overloaded to ensure that customers have more energy and OPEX as well.

“The funds that we are getting from central bank is meant to help increase energy to help reduce losses and to improve power that we’re giving our customers and we’ve gotten over N40 billion now, and we’re still working with CBN, to ensure that we get more.”

Funding the Real Sector to Boost FX

While on the inspection of companies which had accessed the various CBN intervention funds within the Lekki Free Trade Zone areas, the Director of Banking Supervision Department of the CBN, Mr. Mustapha Haruna said companies who keyed into the various interventions such as anchors borrowers’ program, Real Sector Support Facility Discretionary Cash Reserve Ratio (RSSF- DCRR), and others would be a plus to the foreign exchange earnings drive of the country.

The CBN team had inspected the facilities of The Candel Company Limited, an agrochemical manufacturing company which had accessed N2 billion under the CBN Commercial Agric Credit Scheme, Pinnacle Oil and Gas, which has a tank farm, Sana Building Systems (SBS), a steel construction company with capacity to export as well as the Tollerams Group which has invested billions of dollars in the LFZ.

Haruna had noted, “There is a clear validation of the strategic wisdom behind the various interventions of the Central Bank of Nigeria particularly to support the real sector. Candle stands at two critical junctures. One is the manufacturing outfit, as you recall recently, the central bank introduced the RTX 200 policy designed to boost the non-oil sector and what Candel is doing here is quite complementary to that policy.

“The support the central bank has given in terms of promoting the growth of the real sector is quite strategic. And given the potential benefits, both in terms of employment generation and the impact across the entire value chain is quite massive. We need more of these types of efforts on the part of the private sector.

“I supervise the banks and banks need bankable projects like this to be able to thrive. So, there’s a sense in which all these dots connect all for the benefit, ultimate benefits of promoting the growth and development of the Nigerian economy at large.”

Also, the Director, Trade and Exchange Department, Ozoemena Nnaji alluded that some companies who had gotten intervention to grow their businesses are now enabling Nigeria increase its non-oil export earnings.

“SBS is actually exporting some of their products here to our neighboring countries, and that will earn us some foreign exchange. We hope also that can benefit from it RT200 export more, so that I can get the benefit of the rebate.

“Also, the multiplier effect of the company is huge, because we have people building this product to neighboring countries of Cameroon and Ghana where they have done business, and also have companies here that is utilising their materials and their product, ”he said.

On his part, the Head, Legal Services Department of CBN, Mr Kofo Salam-Alada, during a visit to Candel Company Limited., called on banks to support Nigerian companies to grow production in the country.

“With what the company is doing I believe that bankers should actually start coming for them; it’s not just the Central Bank’s Intervention Funds, Nigerian banks should actually seek them to see how they can partner with them to drive it forward.

“The key thing that Nigerians must also know is that we need to support our own, not just in terms of employment generation; for the CBN that is interested in increasing foreign exchange in this country, it is something that needs to be supported,” he said.

President SBS, Mr. Ken Krieger praised the inventions of CBN in the real sector and his company.

He said: “This factory is the result of the funding that we’ve received and without that support, honestly, we could not have made it happen. So, we’re very grateful that the CBN is diligent in building the economy. We are now exporting into Cameroon, currently; we have projects quoted for Ghana and the Ivory Coast also.