CBN’s 100 for 100 policy laudable, but not all-encompassing —analysts

A herd of finance and economic analysts drawn from Lagos-based investment banking and research firm, Afrinvest (West) Africa Limited have applauded the recent financing scheme policy designed by the Central Bank of Nigeria (CBN) to 100 high-impact companies and projects every 100 days.

The analysts, however, pointed out that more needs to be done, and recommended that the fiscal authority complement the efforts by the CBN in addressing the inherent risks affecting businesses.

Last week, there was interest in the “100 for 100” Policy on Production and Productivity (PPP) of the CBN.

Specifically, the 100 for 100 PPP is a financing scheme designed to provide targeted funding (in Naira) under existing CBN’s intervention programmes to 100 high-impact companies and projects every 100 days.

The instrument would also provide complete forex funding for new machinery.

According to Afrinvest research, the selection criteria limits the instrument to only new projects and would not cover any refinance of existing facilities.

Furthermore, participating companies and eligible projects must source over 50.0 per cent of raw materials and at least 80.0per cent of jobs locally.

“We laud the timeliness of this initiative as it could help support some of the businesses that are reeling in difficulty in the Nigerian business environment.

“Over the last half-decade, our analysis shows that the industrial base has weakened at a faster pace than the broader economy, hampering the country’s potential to leverage a solid manufacturing base to structurally transform and improve productivity-driven activities,” the analysts observed in a note to clients.

They believed further, that channelling of efforts to enhance the productive capacity of the economy would reverse the negative trend of high unemployment rate (33.3 per cent in Q1:2021), boost output, and reduce import bills.

However, “we note that the headwinds confronting businesses in the country extend beyond funding. We opine that the harsh business environment induced by policy inconsistencies, high insecurity, poor infrastructure, multiple taxation and overregulation, threaten the prospect of any meaningful take off in terms of productivity in the short-to-medium term.

“We therefore recommend that the fiscal authority complement the efforts by the CBN in addressing the inherent risks affecting businesses,” the note read in part.