The Central Bank of Nigeria (CBN) wants the N2 trillion pension fund unloaded for the purpose of growing critical sectors of the economy, a move viewed as a fresh response to the huge infrastructure gap in the country.
According to the CBN, the proposal will ease the burden on wealth and employment opportunities, sweetening the prospect of a fresh rush of investments in key sectors of the economy.
“If we can unload the N2 trillion in pension funds, imagine what that would do for the different sectors like power, refineries, securities, transportation and by extension employment and productive output,” said Sanusi Lamido Sanusi, the CBN governor, who spoke on the impact of the intervention funds recently given out to various sectors of the economy at single- digit interest rates.
Sanusi said if that much money (N2 trillion) could be made available as cheap funds to the different sectors, there would be a noticeable economic transformation.
“Development is not about rate of growth of Gross Domestic Product (GDP), inflation, foreign exchange or International Monetary Fund (IMF) statistics, it is about increase in employment that affects human beings”, said Sanusi.
He honed in on revelation by Munira Shonibare, managing director of IO Furniture, one of the beneficiaries of the intervention fund, that the injection of N500 million at 7 percent interest rate, brought about a ten-fold growth in output.
He said, “if as little as N500 million could make such an impact in a relatively small firm, the unloading of N2 trillion would go a long way in revamping the economy.”
He recalled some analysts saying the CBN governor was going beyond his brief, and that dolling out intervention funds was not one of the functions of the CBN.
He challenged them to name any real sector firm which borrowed money at 25 percent from commercial banks and has not buckled.
“How can you fund power with a 25 percent loan from commercial bank or build roads?”, he queried.
“That is why we do not have roads, power, refineries and other infrastructure”, he added.
Sanusi reminded critics that when he was scrutinised by the Senate before his appointment, he did not hide the fact that as CBN governor, he would do what was necessary to develop the economy.
He said what the CBN has done, is to adopt an accommodative monetary policy which has seen it increase its balance sheet by N500 billion. It will be recalled that N200 billion was given to manufacturers as intervention fund, while aviation got the remainder N300 billion.
In addition to asking for cheaper lendable funds to the critical sectors, he advised that budgets should be structured in such a way that they would allow the economy breathe.
Sanusi said that in the past, for instance, the United States Federal Reserves were not as huge as they are today. He said people should stop comparing the Nigerian central bank with other central banks because the requirements of the different countries differed.
For him, the Nigerian central bank must use its balance sheet in a manner that it contributes to the growth of the real sector.
Aigboje Aig-Imoukhuede, managing director and chief executive of Access Bank, said the Bankers Committee meeting held at Enugu in 2009, gave birth to the idea of an intervention fund, praising the products of IO Furniture and saying they were world-class.
Fola Adeola, managing director and chief executive of Sterling Bank, said the intervenetion fund had helped firms that were already bowing to pressures from high interest rates before the intervention resurrected some of them.
Sanusi however said the CBN could not possibly reach out to all the firms seeking cheep funds.
