Some financial economists on Tuesday commended the Central Bank of Nigeria (CBN) for coming up with some policy measures to ameliorate the effects of coronavirus pandemic on the country’s economy.
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The experts who gave the commendation in separate interviews with the News Agency of Nigeria (NAN) in Lagos, commended the apex bank for not waiting for something to happen before intervening.
NAN reports that the apex bank announced reduction of interest rates in all its intervention facilities from nine per cent to five per cent per annum for one year.
The bank also extended moratorium of all CBN intervention facilities on all principal repayment for one year effective from March 1.
The CBN directed all financial institutions to provide new schedule for all facilities for their beneficiaries.
It also created a facility through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), Microfinance banks to support households and Micro, Small and Medium Enterprises that had been hit by COVID-19, among others.
Prof. Ndubisi Nwokoma, the Director, Centre for Economic Policy Analysis and Research, University of Lagos, Akoka, described the measures “as a short term response to COVID-19”.
“The action of CBN is, in my opinion, a welcome move to reduce cost capital for the private sector, particularly for SMEs where CBN intervenes through its development finance initiatives to stimulate production,” Nwokoma said.
The economist said COVID-19 devastated many economies as global production and demand for intermediate goods fell drastically even in countries with less incidence of infections and accompanying deaths.
He noted that the disease had been causing Central Banks worldwide to respond to the effects on the economy by cutting interest rates to stimulate demand.
He said the U.S. Federal Reserve recently cut rates to enhance quantitative easing.
According to him, Nigeria is in this later category.
He added that COVID-19 had made demand for our oil to fall sharply and macroeconomic stability threatened with naira depreciation, oil revenue reduction and threat to the implementation of the 2020 budget.
In the same vein, the Chief Executive Officer of Arvo Finance, Mr Ayotunde Bally, described the apex bank’s measures “as a good initiative”.
Arvo is a fintech solution that provides fast unsecured loans to consumers with the aim to bridge the gap between commercial banks and the underbanked Nigerians.
Bally said: “It takes into consideration the fact that the corona pandemic has a direct effect on everyone and this is a reaction that makes a statement of solidarity and compassion.
“Definitely measures are expected and their decision to reduce interest rates will ensure that `businesses remain alive’ and people are kept in employment, aiding a smoother market flow considering the current climate.
“The CBN intervention hedges against an economic collapse; the more businesses that survive this unpredicted global economic downturn, the better for Nigeria.’’
Dr Boniface Chizea, the Managing Director of BIC Consulting Services, a healthcare industry, commended the apex bank for being proactive.
“I think that those reactions are to be applauded by everybody; it shows that the apex bank is proactive, not waiting for crisis to happen.
“I can recall in 2008, Nigeria was also among the few economies that did not feel the impact of recession. I say thanks to such proactive measures,” Chizea said.