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De facto Government: CBN explains why it will keep funding the economy

The Central Bank of Nigeria provided reasons why it will keep spending on development activies such as its intervemtion funds in the agricultural and energy sectors.

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The Central Bank of Nigeria provided reasons why it will keep spending on development activities such as its intervention funds in the agricultural and energy sectors. The central bank has carried on as a form of de facto government in recent years particularly in the Covid-19 months, funding several developmental activities and sectors in the economy.

The explanation was provided in its monetary policy communique read out by the CBN Governor, Godwin Emefiele following the end of the monetary policy committee meeting held on Tuesday.

According to Mr. Emefiele, it will keep spending because the Federal Government is currently incapable of funding development programs because it is facing revenue shortfalls. The CBN reckoned that the economy is faced with likely stagflation (a combination of an economic recession and high inflationary environment) even as Nigerians still have to deal with an increase in fuel and energy prices. It opined that it had to work harder to combat the pressure the price increases will have on Nigerians.

“The Committee was therefore of the view that to abate the pressure, it had no choice but to pursue an expansionary monetary policy using development finance policy tools, targeted at raising output and aggregate supply to moderate the rate of inflation.

“At present, fiscal policy is constrained and so cannot, on its own lift the economy out of contraction or recession given the paucity offunds arising from weak revenue base, current low crude oil prices, lack of fiscal buffers and high burden of debt services.

“Therefore, monetary policy must continue to provide massive support through its development finance activities to achieve growth in the Nigerian economy. This is the reason MPC will continue to play a dominant role in the achievement of the goals of the Economic Sustainability Program (ESP) through its interventionist role to navigate the country towards a direction that will boost output growth and moderate the level of inflation.”

As part of its plans to inject stimulus into the economy, the central bank committed to a stimulus package of about N1.1 trillion through the government’s Economic Sustainability Plans revealed in June.

CBN to the rescue: Over the last few months the CBN has been at the forefront of leading developmental activities in the country despite overseeing monetary policy and not fiscal policy.

  • The role it is currently playing should be that of the Ministry of Finance, but with government revenue on decline, it believes it has no choice but to come in as a spender of last resort.
  • The CBN through its development finance responsibilities has the powers to fund activities in the economy that it believes will create jobs and reduce the inflation rate.

But more recently, it has been criticized for expanding its balance sheets and playing too big a role in backstopping nearly all major developmental programs of the Buhari administration.

  • The CBN is currently spending trillions funding the agricultural sector
  • It has also set aside hundreds of billions of naira in funding SME’s through NISRAL and partner microfinance banks
  • There is also several targeted private sector spending in the areas of power, healthcare, real estate, entertainment etc.
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VP Osinbajo calls for provision of capital to grow businesses for long term

The Vice President has stated that the banking sector plays a crucial role in promoting increased & inclusive growth in Nigeria.

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There is need to further deepen the provision of capital that will allow businesses to grow over the long term. This was disclosed by Vice President Yemi Osinbajo during the Bankers Committee on Friday.

He commended the DMBs for their patriotic contributions to sustain growth but called for the need to further deepen the provision of capital that would allow businesses to grow over the long term.

“The banking sector plays a crucial role in promoting increased & inclusive growth in Nigeria. I commend #CBN for the forward-looking support for growth-related initiatives, especially under the economic sustainability plan,” he said.

What you should know

  • On Friday, VP Osinbajo had called for crypto regulation, knowing fully well the role crypto plays in the global financial ecosystem, as he opined that such disruption often made room for progress, according to Nairametrics.
  • Osinbajo also advised the SEC, and Central Bank of Nigeria to create a regulatory road map, while fully appreciating the stance of the CBN, Nigerian SEC, and law enforcement agencies on the possible abuses of crypto assets.
  • The vice president further stressed the important role cryptocurrencies would play in the coming years as they would most likely challenge traditional banking, including reserve banking, in ways the world hadn’t yet imagined. He thus stressed the need for Nigeria to be prepared for such a seismic shift.

 

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Sanwo-Olu says construction work on Fourth Mainland Bridge to start end of 2021

Governor Sanwo-Olu has disclosed that the foundation for the proposed 4th Mainland Bridge would be laid before the end of 2021.

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The Lagos State Governor, Mr Babajide Sanwo-Olu, has revealed that the foundation for the proposed Fourth Mainland Bridge would be laid before the end of the year 2021.

The execution of the bridge is geared towards improving the transport infrastructure and movement across the state.

According to a report from the News Agency of Nigeria (NAN), this disclosure was made by Sanwo-Olu during the 16th Executive/Legislative Parley, with the theme: ”A Consensus Agenda for Rebuilding Lagos”, organised by the Office of Civic Engagement.

He pointed out that the promise to construct the Fourth Mainland Bridge is not a political one.

What the Lagos State Governor is saying

Sanwo-Olu during the interactive session said, ”We did not politically promise Fourth Mainland Bridge but we are going to do Fourth Mainland Bridge.

”With your prayers and by the grace of Almighty God, we shall turn the sod and lay the foundation for the building and construction of that Fourth Mainland Bridge before the end of this year.

”We are on course and I am sure that the 37km ring road is on track, which will change the face of transportation and movement in Lagos,” the governor said.

The governor also disclosed that his administration was on course to complete the Blue Line and Red Line rail projects which were started several years back, saying the project will be completed and trains will move on the two rail lines before the end of his administration.

He said, ”It is a commitment that we have given to Lagosians and it is a commitment that we will see will come to fruition because we have finished the financial closure and we are excited about that project.’

Speaking at the event, the Special Adviser, Office Of Civic Engagement, Princess Aderemi Adebowale, said that the executive and legislature would discuss extensively the theme of the retreat, “A Consensus Agenda for Rebuilding Lagos”.

While saying that the discussion in the next 48 hours would help to fast track the rebuilding of the state, Adebowale said that they would delve deeply into issues such as Youth Leadership Role, Grassroots Development: a catalyst for growth, and Role of Social Media in Nation Building, among others.

What you should know

  • It can be recalled that the Lagos State Government has shortlisted 6 companies for the design, development, construction, operation, and maintenance of the Fourth Mainland Bridge.
  • This followed the government’s issuance of a Request for Qualification (RFQ) in February this year. The 6 companies were said to have completed the technical and financial capacity requirements.
  • Lagos State said it will announce the selection of the next stage in due course, even as the RFQ will be given to the pre-qualified bidders.
  • The Fourth Mainland Bridge is a 37.4km freeway subdivided into three sections namely Island Section, Lagoon Section and Mainland Section. It will commence from Abraham Adesanya Roundabout in Lekki through Ajah and Langbasa areas, crossing the Ado Badore Road before arriving at the Lagoon shoreline.
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Lagos to totally close Third Mainland Bridge again ahead of full reopening

Lagos State Government has announced a 24hour closure of the Third Mainland Bridge from midnight Friday, February 26.

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The Lagos State Government has announced that it will shut down the Third Mainland Bridge for 24 hours from midnight Friday, February 26 to midnight Saturday, February 27.

The expected total closure of the bridge is to enable the contractors to move the equipment used for its rehabilitation and maintenance ahead of the full reopening of both the Oworonshoki and Adeniji bound lanes open to traffic.

The disclosure is contained in a statement issued by the Lagos State Commissioner for Transportation on Wednesday, February 24, 2021.

Oladeinde, therefore, advised motorists approaching the Third Mainland bridge from Ogudu, Alapere and Gbagada to use Ikorodu Road, Jibowu and Yaba, as alternative routes, while Iyana Oworoshoki-bound traffic from Lagos-Island, Iddo, Oyingbo, Adekunle and Yaba are to use Herbert Macaulay Way, Jibowu and Ikorodu Road as alternative routes.

The Commissioner assured that traffic management personnel would be deployed along the affected routes to minimize the impact of the shutdown and address any traffic impediments during the closure.

He was also full of commendation for Lagosians for their cooperation during the prolonged repair works of the bridge and assured that the bridge is now safe for use by everybody.

What you should know

  • The Federal Government had on July 24, 2020, announced the partial shutdown of the Third Mainland Bridge for a period of 6 months for another round of rehabilitation works.
  • This was extended by an extra one month due to disruption caused by the #EndSARS protests last year, when the re-opening date moved to February 15, 2021.
  • The Federal Government later announced that the bridge, which was to reopen on February 15 will no longer be opened as work was expected to commence on the casting of the last expansion joint on the bridge before it will be finally reopened.
  • The 11.8km bridge, which was commissioned in 1990 by the then Military President, Ibrahim Babangida, is the longest of the 3 bridges connecting Lagos Island to the Mainland.
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