CBN AND THE ANCHOR BORROWERS’ PROGRAMME

  • Mar 04, 2020
  • RIMAN News

In its economic update for Nigeria released in the last quarter of 2019 with the theme, “Jumpstarting Inclusive Growth: Unlocking the Productive Potential of Nigeria’s People and Resource Endowment”, the World Bank had recommended that curbing the use of quasi-fiscal operations by the Central Bank of Nigeria (CBN) would both alleviate distortions in the allocation of credit and improve policy predictability.

According to the bank, “the CBN has attempted to directly increase its flow of credit to targeted sectors through development finance operations, with the aim to overcome the shallowness of the commercial bank credit market. Many of these operations are agricultural development schemes intended to support small rural enterprises and smallholder farmers.

Regardless of their merits as development policies, financing these interventions through the CBN rather than the federal budget reduces the transparency of fiscal policy and the effectiveness of monetary policy.”

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