The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has predicted that the nation’s economy will likely come out of recession by the 4th quarter of 2016 when the result of the various measures put in place by Federal Government and the monetary authorities becomes manifest.
One of such measures, according to him, is the decision of the CBN to establish a bridge fund for the government to utilise to stimulate the economy whenever there is a need for it.
Emefiele, who spoke to media executives in Lagos on Saturday, said:
“We are already in the valley, the only direction is to go up the hill and the government is doing everything possible to ensure that we move up the hill. I am optimistic that based on the actions being taken by the monetary and fiscal authorities, the fourth quarter results will show evidence that we have started to move out of the recession.
“The worst is over. The Nigerian economy is on the path of recovery and growth. So, please if you are a bystander or sideliner, you are losing; join the train now before it leaves the station.”
While explaining the reasoning behind the bridge fund, the apex bank boss said, “Both the monetary and fiscal authorities are working together and that is why you can see a situation where today even when we have revenue shortage or deficit, the monetary authority is trying to bridge the gap.
“We said to the fiscal authority that we can give you a bridge to go ahead and spend, and when you obtain the foreign loan that you are negotiating, or when your revenue improve, you can repay the bridge that we have created for you in order to stimulate spending. That is a practical case of collaboration between the monetary and fiscal authorities.”
Following introduction of a flexible exchange rate regime, Emefiele said foreign investors’ interest in the Nigerian economy was gradually increasing, adding that in the last three months, almost $1bn in Foreign Direct Investment had come into the country.
He stated, “I wasn’t optimistic that the FDI would come initially, but with what we have seen in three months, almost $1bn, I feel very confident that there will be more inflow into the system and more and more people will have foreign exchange available for them to do their business.
“That will improve industrial capacity. The rate may be high now, but there’s high possibility that with more availability of foreign exchange, the rate will come down. I am very optimistic that a lot of positive things will happen.
“I have talked about how the fiscal authority is trying to push in liquidity to stimulate consumption, demand consumption expenditure; and of course, when consumer consumption is stimulated, demand for goods will go up and if the demand goes up, the industrial capacity will improve. If we maintain a steady course in the way we are going, and if all those who have foreign exchange repatriate them, more and more people will have foreign exchange to do their business, that will improve industrial capacity.”
Another way to inject liquidity into the system, according to the CBN governor, is for the Federal Government to sell some of its assets in the oil and gas industry in order to raise money.