Central Bank of Nigeria, CBN, has said that as at June 30, 2015, a total credit of N14.7 trillion has been granted to the Nigerian economy. CBN Governor, Godwin Emefiele stated this yesterday during the maiden edition of the Bi-Annual Forum for stakeholders of Development Finance Institutions DFIs.
Emefiele who was represented at the occasion by the Deputy Governor, Financial System Stability, Dr Okwu Joseph Nnanna also disclosed that DFIs contributed N760.8 billion representing just five percent of the total credit in the economy. He suggested that the credit contribution must increase significantly if the DFIs are to make the needed impact on the targeted sectors.
Given the sub-optimal performance of the DFIs Emefiele said that CBN has over the years facilitated the establishment of development finance institutions to stimulate and provide affordable long-term credit to the real sector, and that Nigeria has six DFIs currently with various mandates, focusing on providing credit to agricultural, manufacturing, SMEs, exports real estate and mortgage.
According to him, “CBN has in line with its development function introduced several targeted real sector financing and intervention schemes that have had some salutary impact on the economy in three
broad areas, such as Agriculture, MSME and Infrastructure”.
He pointed out that the intervention schemes and programmes include Agriculture Credit Guaranty Scheme Fund, Commercial Agricultural Credit Scheme Power and Airlines Interventions Fund ,PAIF.
Others are Nigerian Incentive-Based Risk Sharing System for
Agricultural Lending, NIRSAL, Anchor Borrowers Programmes, ABP, Nigeria Electricity Market Stabilisation Facility, NEMSF ETC. He explained that some of the programmes are being managed by DFIs such as BoI on behalf of CBN.
Speaking on the challenges facing DFI Emefiele stated that numerous difficulties have beset the institution in recent times that has constrained it from ability to effectively deliver on their mandates.
“Some of these challenges include high levels of non-performing loans owing to ineffective credit appraisal, analysis and recovery effort, mission drift, corporate governance issues, weak risk management, under-capitalisation, political interference and limited use of information technology. He however said that there is need for a paradigm shift if the desired goals must be achieved.
He also said that as part of efforts to resolve these challenges, a key provision of the guideline introduced licensing requirement for all DFIs operating in Nigeria. He however, said that the requirement is in line with global best practices.
Also speaking at the occasion, Deputy Governor, Dr Nnanna said that the current administration appropriately placed emphasis on diversifying the economy by shifting from the dominance and over-reliance on oil as the main source of government revenue to agriculture, manufacturing and mining of solid minerals.
According to him, “indeed it was as if the CBN Act, 2007 foresaw today and was proactive in providing a role both for the Central Bank and by extension Development Finance Institutions in advancing government’s current economic diversification programme.