The monetary policy committee of the Central Bank has predicted that Nigeria’s economy would avoid a recession by the third quarter on the back of various interventions taken by both monetary and fiscal authorities to mitigate the combined effects of the COVID-19 pandemic and oil price shock despite projections by both the IMF and Federal Government that the economy would contract in 2020 by -3.40 per cent.
First quarter GDP figures released by the National Bureau of Statistics showed that Africa’s largest economy grew slower, with real GDP printing 1.87percent year-on-year compared with 2.55percent year-on-year in the previous quarter and 2.10percent year-on-year in Q1-2019.
The oil sector with 9.5percent contribution to GDP rebounded, growing by 5.0percent year-on-year (compared to -1.50% in Q1-19). On the other hand, output in the non-oil sector, which contributed 90.5percent to GDP printed a disappointing 1.55percent year-on-year growth in Q1-20, a 95bps lower than the rate recorded in the first quarter of 2019, as well as 71bps lower than the growth rate achieved a quarter ago.
According to the apex bank, under its N100 billion Healthcare Sector Intervention Fund, it has approved and disbursed a total of N10.15 billion for some projects for the establishment of advanced diagnostic and health centres and the expansion of some pharmaceutical plants for essential drugs and intravenous fluids.
Also, as part of the N1trillion intervention targeted at Agriculture and Manufacturing firms, CBN has further disbursed N93.2bn under the Real Sector Support Fund to boost local manufacturing and production across critical sectors. This consists of over 44 greenfield and brownfield projects.
The apex bank also noted that it has approved N10.9 billion to 14,331 beneficiaries under the N50 billion Targeted Credit Facility for households and SME’s, out of which N4.1billion has been disbursed to 5,868 successful beneficiaries.
The committee gave a clean bill of health to the country’s banking system as shown by the increase in total asset by 18.8 per cent and total deposits by 25.52 per cent year-on-year.
The performance of the Loan-to-Deposit Ratio (LDR) policy which was introduced in July 2019 showed that total credits increased by N3.1 trillion or 20.45 per cent, with manufacturing, retail & consumer loans, general commerce and agriculture as major beneficiaries. The Non-Performing Loans (NPLs) ratio decreased to 6.58 per cent at end-April 2020 compared with 10.95 per cent in the corresponding period of 2019 due largely to recoveries, write offs and disposals.
The development was adjudged by the Committee as a sign of reasonable stability in the banking system and urged the Bank to maintain its toolkit of prudential and regulatory measures to ensure that NPLs stay below the prudential benchmark of 5.0 per cent.
The Committee urged the Federal Government to continue exploring options of partnership with the private sector to fund investment in infrastructure. This would aid employment generation, support production and boost output growth. The Committee also reiterated the need for both direct foreign and domestic investments to support growth in key sectors of our economy, including Nigerian auto manufacturing, aviation and rail industries.
