By Godwin Emefiele
Opening Pleasantries — Good afternoon ladies and gentlemen. I am indeed delighted for the honour to address this distinguished gathering. As I heartily welcome everyone present here today to this event, I would like to use this opportunity to acknowledge and appreciate in a very special way the management and staff of The Guardian Newspaper, not just for organising this event, but particularly for the foresight and thoughtfulness at publishing the report on “Financing the Economy”.
As you may know, it is a globally recognised fact that a well-functioning financial system is a sine qua non for economic growth and development. Having been given the privilege to preview the book and task of writing its foreword, I am certain that the exposé contained therein will indeed aid an understanding of the uniqueness of our financial structure and illuminate and fill the lacuna that exists between lenders and borrowers of fund.
Distinguished guests, it is no news that the level of credit in the domestic economy channelled to productive private sector is critically below the levels required to place our economy on the path of balanced, sustainable, and inclusive growths. As I noted in my foreword to the book, given the indispensability of finance, the entire international community — including the United Nations.
Member states, multilateral institutions, civil society groups, and the private sector — have adopted the contemporary concept of financing for development to update the mechanisms and tools of financial flows in order to fund initiatives for economic growth and development. Accordingly, emphasis on financing economic growth and development is distinctively placed on inclusiveness, accessibility, human capital and factor productivity. In most cases, private funding in the form of bank credit is often considered an important determinant of the level of productive investment in an economy.
Like many other emerging and developing countries, Nigeria has got its own peculiarities in the area of financing the economy. In addition to these peculiarities, the sheer size of our economy makes it impossible for neither the public sector nor the private sector to independently satisfy the financing requirements of the economy; hence, the need for an effective public private partnership and for each to play its individual roles. Typically, the aspect of private sector finance as seen by the majority of Nigerians is basically concerned with credit from the banks for enterprise and investment purposes.
In recognition of the importance of financing for economic growth and given its understanding of the implication of risk management in credit allocation, the Central Bank of Nigeria adopted a two prong approach to resolve the insufficient credit flow to the private sector and concomitantly accomplish its development finance function.
The first of the two approaches include a de- risking of bank lending to the private sector through a wide-range of credit guarantee schemes undertaken by the Bank. The second involves direct intervention initiatives in key high impact sectors including agriculture, MSMEs, manufacturing, power, etc. Both approaches, which effectively reflect public private partnerships in financing economic growth, are designed to ensure the constant flow of credit to vital sectors of the Nigerian economy.
