New CBN credit policy will stimulate economic growth

AN economist, Mr Titus Okuroumu, on Friday expressed optimism that the new Central Bank of Nigeria (CBN) credit policy would consolidate the gains already made in the economy and stimulate growth.

Okuroumu, a former CBN director, said this in an interview with the News Agency of Nigeria (NAN) on Friday in Lagos.

NAN reports that under the new policy, agricultural, manufacturing and the sectors considered as growth and employment stimulating, can now borrow long term as much as N10 billion at consolidated nine per cent interest rate.

The new credit policy, called Guidelines for Accessing Real Sector Support Facility (RSSF) through Cash Reserve Ratio (CRR) and Corporate Bonds, was released by the CBN on Thursday.

The guidelines followed the recommendation of the Monetary Policy Committee (MPC) of the CBN at its 119th meeting held between 23 and 24 July.

The MPC emphasised the need to increase the flow of credit to the real sector of the economy, to consolidate economic recovery.

“The take-off of the new policy will boost the anchor borrower’s scheme of the Federal Government on rice.

“The programme, if adequately funded, will create food security in the economy and ensure that we could be a net exporter of food in the future.

“While the purchasing managers’ index, which measures the economic health of the manufacturing sector, would witness a surge as a result of the funds that would be injected into the system,’’ he explained.

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The economist said the funding incentives idea by the apex bank was good as it could boost the country’s Gross Domestic Product (GDP).

Okuroumu, however, urged the monetary authority to extend the funding incentives to other sectors of the economy in order to create wealth.

“Government should expand the policy to accommodate the mining and tourism sectors to create more employment opportunities,’’ he added.

The economist said this was how other developed economies generated funds to stimulate economic growth.

NAN reports that the new policy marks a big departure from the excruciating interest rate regime of 25 to 30 per cent that was blamed for stifling manufacturing and other ventures in the country.