BY EDMOND ODOK – Going by the pronouncements from the Central Bank of Nigeria (CBN) Governor, Dr Olayemi Cardoso, Deposit Money Banks (DMBs) in the country have a tough job at hand to raise their capital base towards meeting the need for a $1 trillion economy projection of the President Bola Ahmed Tinubu-led administration.
According to Cardoso, the Apex Bank would soon be announcing a new capital base for banks to make them viable and competitive as well-capitalised players in the nation’s economic space.
In his first public speech at the 58th Annual Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), 2023 Bankers Dinner, on Friday night, Cardoso said though there has been stability in the sector, DMBs in the country were not adequately solvent and positioned to play big time in what the present government aims to achieve going forward.
Maintaining that some tough decisions must be made to further strengthen the banking sector for effective service delivery, the CBN Governor queried; “Will Nigerian banks have sufficient capital relative to the finance system’s needs in servicing a one trillion dollar economy in the near future? In my opinion, the answer is no, unless we take action.
“Therefore, we must make tough decisions regarding capital adequacy. As a first step, the Central Bank will be directing banks to increase their capital.”
Besides emphasising the imperative of deploying technology in delivering financial services as well as enhancing financial inclusion, Cardoso frowned at a situation where most financial institutions continue to breach their licences regarding the use of technology to facilitate payment.
He said it is regrettable that some institutions are operating outside the approved activities and extant rules, warning that; “Any intentional or unintended non-compliance will be subject to sanctions as operators have the responsibility to ensure that they are licenced for the activity they undertake.
“As we conduct a comprehensive review of the licencing framework for payment services, we will engage in extensive consultations to engage a new regulatory and compliance framework that is suitable for the technology-driven payment services sector.”
Making reference to the 43 items that the CBN previously barred from accessing foreign exchange (forex) from the investor’s and exporters’ (I&E) window, the apex Bank Chief said; “During the period when the 43 items were restricted, there is a 51 per cent increase in trade evasion by importers accessing the foreign exchange market resulting in a revenue drop of approximately $1.4 billion annually between 2015 and 2019.”
However, in a subtle jab at Godwin Emefiele’s era, Cardoso said; “Hitherto, the CBN had strayed from its core mandates and was engaged in quasi-fiscal activities that pumped over N10tn into the economy through almost different initiatives in sectors ranging from agriculture, aviation, power, youth and many others. These clearly distracted the bank from achieving its own objectives and took it into areas where it clearly had limited expertise.”
On how issues affecting the apex Bank would be addressed going forward, he said; “Under my leadership, the Central Bank of Nigeria will vigorously address these issues. We will tackle institutional deficiencies, restore corporate governance, strengthen regulations, and implement prudent policies.
“We assure investors and the business community that the economy will experience significant stability in the short-to-medium term as we recalibrate our policy toolkits and implement far-reaching measures.”
