* Cenbank holds main interest rate at 13.5%
* Cenbank to review loan-to-deposit ratio of banks from Sept. 30
* Emefiele says cenbank to (Adds details, quotes)
spends about $1.3 billion yearly on the importation of dairy products
85 percent of Nigeria’s 19.5 million cattle are owned and managed by smallholder
By Chijioke Ohuocha
ABUJA, July 23 – Nigeria’s central bank is to begin monthly reviews of bank loan-to-deposit ratios as part of a bid to increase lending and stimulate growth in Africa’s biggest economy, its governor said on Tuesday.
Godwin Emefiele announced the move at a news conference in the capital, Abuja, after telling reporters rate setters voted unanimously to hold the main interest rate at 13.5% because key macroeconomic indicators were “trending in the right direction”.
Most analysts polled by Reuters had predicted no change, though they said the central bank would probably ease in September.
Nigeria, which is Africa’s top oil producer, emerged from its first recession in 25 years in 2017. Higher oil prices and recent debt sales have helped it accrue billions of dollars in foreign reserves but growth remains fragile with gross domestic product growing just over 2% in the first quarter of 2019.
Emefiele, who earlier this year became the first Nigerian central bank governor to be given a second term since a return to democracy in 1999, has worked to force banks to boost lending.
On Tuesday he outlined plans for regular reviews aimed at ensuring more money is lent to Nigeria’s private sector.
“After 30 September we are going to begin a month-by-month monitoring and then prescription of loan deposit ratio for the banks,” Emefiele told journalists.
In the last few weeks, the central bank has capped interest-bearing deposits at the central bank. It has also told banks they must lend more or face higher cash reserve requirements and barred banks from buying bills for their own accounts at an open market auction.
In his first term, Emefiele presided over a raft of policies aimed at stimulating growth in the agricultural sector to boost non-oil growth. Those policies included the 2015 banning of access to foreign exchange for 41 items that the bank felt could be produced in Nigeria.
The central bank governor on Tuesday said the bank would ban access to foreign exchange to import milk, though he did not say when that restriction would come into force.
“We believe that milk is one of those products that can be produced in Nigeria today,” said Emefiele.
“Today the import of milk annually stands at $1.2 billion to $1.5 billion dollars. That is a very high import product into the country,” he said.
As Nigeria spends about $1.3 billion yearly on the importation of dairy products such as milk, yogurt, cheese and other milk derivatives despite her potential to rake in an estimate of N3.6 trillion ($10 billion) annually from exports of the products, according to Aisha Abubakar, minister of state for industry, trade and investment
Speaking at a stakeholders committee on the development of policy framework to boost the dairy industry, the minister said the dairy industry has huge potentials in terms of massive job creation and the generation of N300 billion monthly for the country, noting that the domestic consumption of dairy products was bound to increase further with Nigeria’s growing population.
She said the committee was inaugurated as part of efforts to diversify the economy and increase local production in sectors where Nigeria has comparative and competitive advantages.
She said the objectives and policy framework of the committee are to attract and achieve local participation in dairy business; ensure the local content development of dairy; encourage joint venture opportunities across strategic segments of the dairy business and provide financial relief to boost local growth through the participation of women and youths in the sector.
Abubakar lamented that 85 percent of Nigeria’s 19.5 million cattle are owned and managed by smallholder, subsistent and nomadic herdsmen, leaving the remaining 15 percent in the hands of medium and large-scale farmers in managed pastures.
Members of the committee were drawn from the federal ministry of industry, trade, and investment; federal ministry of agriculture and rural development; Raw Materials, Research and Development Council and the National Animal Production Research Institute.
Emefiele reiterated the bank’s goal to cut annual inflation, which stood at 11.22% in June, to single digits.
And he said the bank was “not going to be in a hurry to moderate or bring down” the benchmark interest rate.
The central bank’s decision to leave the benchmark rate at 13.5% on Tuesday was consistent with its move to hold the rate at its previous meeting in May. That meeting followed a surprise cut of 50 basis points in March.
Emefiele at the time said the rate cut was part of an attempt to stimulate growth and signal a “new direction”.