CBN EMEFIELE ON FX, DEBTS, IMPORTS, ETC

🎥 Oct 14, 2021 📺 Frontier Africa Reports ⏱ 5m 👁 102 views

Nigeria's Central Bank Governor, Godwin Emefiele Answers Questions on Sovereign Debt, Imports, FX, Dangote Refinery and more.

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About Godwin Emefiele

Godwin Emefiele, as Governor of the Central Bank of Nigeria (CBN), has been a central figure in the implementation of the naira redesign policy, which aimed to replace old 200, 500, and 1,000 naira notes with new ones by a January 31, 2023 deadline. Emefiele stated that the policy was intended to increase financial inclusion, support security agencies in combating ransom taking, and bring currency in circulation under the CBN's control, noting that as of October 2022, 2.7 trillion naira out of 3.23 trillion in circulation was held outside the banking system. He initially insisted there would be no extension of the deadline, describing 100 days as adequate for depositing old notes, but later announced a 10-day extension to February 10, 2023, after obtaining President Muhammadu Buhari's approval, followed by a grace period to February 17. Emefiele assured Nigerians they would not lose their money, stating that those with legitimately held old notes could exchange them at the CBN, and he warned against hoarding and predatory activities, saying that individuals spraying money at parties would face prosecution. Emefiele also addressed monetary policy, stating that the CBN's Monetary Policy Committee (MPC) raised the Monetary Policy Rate (MPR) by 50 basis points to 18% in March 2023, citing concerns about rising risks and price adjustments ahead of the removal of petroleum subsidies, as well as exchange rate pressure. He described the strategy as a difficult balance between tightening to reduce inflation and avoiding negative impacts on banking system stability. Regarding the banking sector, Emefiele emphasized that no Nigerian bank was exposed to the failed Silicon Valley Bank, and he reiterated that a banking license is a privilege, not a right, and that the CBN would protect depositors over shareholders. He also promoted the RT200 FX program, a bankers' committee initiative aimed at raising $200 billion in non-oil export earnings over three to five years, and highlighted various CBN intervention programs in agriculture, manufacturing, and healthcare, including the disbursement of over 3 trillion naira in loans.

Source: AI-verified profile updated from Godwin Emefiele's recent appearances. Browse all interviews →

Transcript (1 segments)

✨ AI-enhanced transcript with speaker attribution

Godwin Emefiele0:03

We have ensured that all any of our debts due is given utmost priority, particularly foreign debts. It's like first line charge. And the minister talks to me about it and we ensure that wherever we're going to find the dollar, we will pay any of our debts even before we service any obligation. That is a rule. If it is Nigeria's authentic sovereign debt. But when you talk about Azura, Azura is not in our view an authentic sovereign foreign FX debt swaps. Yes, the number still remains a maximum of 15 percent, sometimes goes below 15. But I'm sure you know that it's a moving figure. It's something that our guys in financial markets play with, and all that flow from time to time they will have placed a cup of a cup of 15 percent. Okay. Now on the refinery, let me see that. The Dangote refinery is a major... By the time the refinery gets, begins production by around June later, July next year, it is going to be a major FX saving source for Nigeria. And I'll explain. Nigeria right now, at about what we spend, FX we spend on imported items, importation of petroleum products consumes close to about 30 percent. By the time you take diesel, petrol, aviation fuel, and the rest of them, 30 percent. Dangote refinery will be producing, yes, has a capacity to produce 650,000 barrels per day, or yeah, convert that from crude to refined products. There is a domestic component that is called 455, right? 455,000 barrels. Yeah. Oh, 445,000 barrels. Yeah. Even if out of the 650,000, the 445 or 455 is what is sold to Dangote in naira, it is going to be a major FX savings for Nigeria. Because we believe by the time you want to say something, well, I just, you know, he has to pay back what, 15 billion dollars in bank loans with that Aliko? Yeah, yeah, it's not 15 billion in bank loan, you got it wrong. The total cost of that product is about 17.5 billion dollars, and Dangote's equity in that project is nine billion dollars. So less than nine billion dollars has been contributed by a combination of foreign banks, local banks, and even the Central Bank of Nigeria. So you are looking at a transaction where the leverage is almost one to one, in fact less than one. So I do not, and we think that that is going to be a major silver for foreign exchange for our country, and we think we will export those refined products. If you look at the cost of freight alone, freight alone is a major saving for Nigeria. If we have to go to Europe or other parts of the world to bring in petroleum products, we will be heavily freighted. We will pay heavily even in stocking those products in the high seas before we will float them. You need to go to that site and you will see what is there. It is a project that we just pray somebody like Dangote would live long to see. Nigerians will benefit from it. That project is one of Nigeria's backward integration programs, and we are very proud that it is coming to light. And indeed, we know that refineries that are abroad are already scared because they know the market they will lose because Nigerians would prefer to patronize that than patronize foreign imported refined products. We will save transportation and logistics. Now that is on petroleum product. On the petrochemical, petrochemical is also supposed to be coming online about that same period, June, July next year. That petrochemical plant will be producing 900,000 tons of polyethylene and polypropylene granules. Nigeria's annual consumption of polypropylene and polyethylene granules is less than 200,000 tons. What does that mean? Contribution in import content again, FX content that is closed about five percent of our imports. If you save five percent of your imports, save another 30 percent in petroleum products, and then even fertilizer that is almost under two to three percent, we are moving close to saving about 40 percent foreign exchange import for the country. By that time, you will see what we will be doing in terms of when most people talk about allow the market to float, we'll float the market and then let's see how this currency will depreciate.