The Federal Government and the Central Bank of Nigeria (CBN) have urged commercial banks to come up with ideas that will grow the economy.
The appeal was made by Vice President Kashim Shettima at the 2024 Annual Bankers’ Committee/CIBN Retreat held on Friday in Abuja.
Represented by the Special Adviser on Economic Affairs to the President, Dr. Tope Fasua, he said the development of banks should positively correlate with the development of the economy at large, and “the robust profitability that we have seen in that sector should reflect – at least marginally – in the GDP growth numbers posted by the country at large”.
Shettima stated that Nigerian banks must consolidate their role as catalysts for economic growth and development.
“This administration intends to shift from the usual suboptimization that defined the Nigerian economy over the decades. We believe that this economy can be truly outstanding and can justify its prime position on the African continent and even beyond. That is why some of the painful reforms are taking place at this time and Mr President, being the valiant leader that he is, has pressed on in favour of the long-term perspective, in spite of pushbacks.
“We would want to take this opportunity to appeal strongly to the committee to urgently clear up thorny issues in the sector, some of which are impeding the efforts at financial and economic inclusion. Nigerians complain bitterly that they are unable to access even minimal cash when most needed. There seems to have been some moral hazard and adverse selection problem with the involvement of street-side POS merchants. Nigerians complain about high and arbitrary charges and exploitation by rogue agents which we are sure you will be able to tackle, with concerted efforts. We need more initiatives towards the financing of MSMEs, and we urge you to continue to support the efforts of the federal government in the area of consumer credit culture,” he stated.
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Mr. Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN) , asked members of the Bankers’ Committee to consider some key areas that would support the growth of the economy.
He said, “What steps must we take to improve the business environment for all—large corporations, SMEs, and others? How can we better leverage public-private partnerships for infrastructure development? What are the most effective ways to close skill gaps in our workforce? How do we foster an ecosystem that nurtures and supports innovation? And, crucially, how can we reinforce our social contract with the Nigerian people to build a more inclusive economy?”
He highlighted that the CBN is committed to implementing the actionable ideas and strategies that will emerge from the Bankers’ Committee discussions.
The Vice President pointed out that the unification of the Naira has coincided with some weakening in our currency, which in turn has spurred some behavioral adjustments among our people.
“We see that today, Nigerians have cut back in some foreign travels, foreign education has slowed down to the extent that many foreign universities are feeling the pains, but there is now more focus on local educational institution and many world-standard facilities have now debuted in Nigeria.
“The weakening of the naira has also resulted in a spike in exports as the Marshall-Lerner principle in economics has kicked in for Nigeria — that a nation is likely to see increase in exports and gain from currency devaluation if exports are price elastic. Ditto, a weaker currency will discourage imports that are price elastic and may spur local value-addition and production,” he further stated.
He noted that the banking sector is perhaps the most critical ally to the government regarding the pursuit and achievement of the $1 Trillion economy, and Mr. President has maintained that we shall give this a good shot.
“We are not reneging or backtracking from this laudable objective, which may be able to raise our per capital GDP to over $4,000 from current levels of barely $1,000.
“Through the availment of credit facilities to key productive sectors, facilitation and syndication of large ticket loans, and by taking a long-term view in your interactions with the market and that of the economy at large, we believe your efforts will be crucial in achieving a pass mark in this quest.
“Our tax reforms are geared at solving a major problem – and that is to enhance finances so that our public budgets could be larger per capita for the benefit of every Nigerian. Nigerians say many things about our debt level, which is currently at 52% but which may go back down to 30% post-rebasing, but it is evident that public revenues are a bigger issue. Compared with Kenya and South Africa, our revenues tell an unpalatable story about our economy and our attitudes to paying up what is due to government at every level. President Tinubu has resolved that we must do a whole lot better than the past.
“Let me quickly chip in that the National Bureau for Statistics is working on the rebasing of our economy — the GDP and Consumer Price Index. The last effort was over 10 years ago contrary to the recommendation by the World Bank, for economies such as ours to be reevaluated and recalibrated every 5 years. We have every cause to conduct this process given the dynamism of our economy and the improvements in data capture and processing which is enabled by more innovative technologies. Perhaps the results, when announced in January 2025 will give us a spur and a spring to more logically pursue the targeted results,” Shettima stated.
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