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CBN unveils policy to save Naira for further devaluation

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In a bid to boost liquidity in the private sector, the Central Bank of Nigeria (CBN) on Monday unveiled a new financial instrument called “The 100 for 100 PPP.”

The PPP- Policy on Production and Productivity was designed to increase private sector funding, boost productivity, encourage exports, reduce current massive imports, and ultimately help Naira from further depreciation.

The CBN Governor, Godwin Emefiele, who announced this at the launch of the CBN digital currency, the eNaira, said the new policy would go public on November 1.

However, he was silent on the total amount targeted with the new financial instrument.

Emefiele said: “Today, in addition to all policies and actions of the CBN to support the economy, especially through the trying times of COVID-19, the apex bank is announcing a new financial instrument titled: ‘The 100 for 100 PPP – Policy on Production and Productivity,’ which will be anchored in our Development Finance Department under my direct supervision.

He said the CBN would advertise, screen, and financially support 100 targeted private sector companies in 100 days, beginning from November 1.

READ ALSO: CBN releases N200m worth of eNaira to banks

He added: “The purpose of this instrument is to take further steps to reverse our over-reliance on imports.”

Africa’s largest economy depends largely on imports and obviously, rising dollar demand has put pressure on the naira as foreign exchange earnings thin and reserves struggle.

The reserves have managed to exceed $40 billion in several months, helped by proceeds of a recent Eurobond issuance.

“We believe that if we target and support the right companies and projects, we will see a significant, measurable, and verifiable increase in local production and productivity, reduction in certain imports, increase in non-oil exports, and improvements in the FX-generating capacity of the economy,” the CBN governor stated.

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