CEM REPORT, ECONOMY | The Nigerian economy has remained resilient despite enormous vulnerability, especially from the slipover effect of external shock, the Central Bank of Nigeria (CBN) has said.
The CBN adds that Nigeria’s economy has faired comparatively well when compared with other economies.
This is as he said that the banking sector has continued to remain sound and accommodating of growth.
The CBN Governor Godwin Emefiele, speaking at the 57th Bankers Dinner, held at the Eko Hotel in Lagos, explained that although the nation was not insulated from external shock, monetary policy has helped cushion the effect of such slipovers on the economy.
He noted that despite the brief recession in Q2 of 2020, the nation’s economy has recorded eight consequently quarters of positive output.
He added that “domestic growth rated improved from negative 1.92% in 2020 to 3.4% in 2021 and further to 3.54% during Q2 of 2022.”
Emefiele attributed the growth to a vibrant non-oil sector which continues to record growth since the third quarter of 2020.
He noted that “the non-oil sector recovered from -1.25% in 2020 to 4.77% in Q2 of 2022.”
He explained that the CBN’s intervention remains a major contributor to the vibrant performance of the non-oil sector.
He added that the performance represents the impact of policies on cost of housing, Micro, Small and Medium-Sized Enterprises (MSMEs), and other high-impact economic sectors.
Furthermore, Emefiele stated that the CBN’s intervention has especially strengthened the agriculture and services sector which has continued to propel the nation’s domestic growth rate whilst the oil sector growth rate falters.
“Our agricultural sector remains the critical factor behind the continued resilience of the domestic economy. This is an affirmation of the success of the CBN initiative in the non-oil sector particularly in the agric sector which has helped to boost domestic output.“
He maintained that to further boost the nation’s economy, the manufacturing sector, MSMEs need to be re-enforced in view of the supply chain that has exposed vulnerabilities of many economies.
“Our manufacturing sector, MSMEs sector need to be re-enforced not only to support the domestic need but also to become internationally competitive. This is in view of the massive supply chain disruption that has exposed the dependence and vulnerabilities of many economies.”
He added that “as the ratio of GDP Credit to Core Real Sector grows from 9.4% in 2018 to almost 15% in September of 2022, it’s our objective to gradually drive the ratio to above 15% to ensure adequate support of the sector activity in Nigeria.”
Notably, the apex bank governor said the banking sector has continued to remain sound and accommodating of growth.
He explained that MPL ratios are concurrently under 5% while capital adequacy and equity ratio remain above requirements at 13% and 40% respectively.
However, he noted that the apex bank would “maintain a strong oversight of the banking institutions to quickly identify vulnerabilities and ensure banks take any suitable means to militate any potential risk.”
On the state of the economy, the CBN governor stated that the nation’s economy is doing comparatively well when compared with its pairs amidst global economic vulnerabilities.
“An analysis of our recovery effect and core market current output suggest that the Nigeria economy and its banking sector have faired comparatively well when juxtapose with our pairs. Like many emerging markets, Nigeria’s GDP growth has so far remained positive even as global conditions plunged into strong waters.”
On the inflation rate, Emefiele noted that the inflation rate in comparison to other economies has however swelled in relation to global trend.
“A quick comparison of the rate for September 2022 indicates that Nigeria’s inflation at 20.77% is high but not among the worse in the world.”
In terms of inflation growth acceleration, he added that Nigeria is among the lowest as inflation grew from about 16% in October 2021 to 21.9% in October 2020.
“Over the same interval, Morocco’s inflation rose five folds from 1.7% to 8.3%, while Ghana over the same period rose 3 fold from 11% to 37.2%.”