Emefiele Unveils 5yrs Agenda, Eyes Banks’ Recapitalisation

BY COBHAM NSA, ABUJA – Nigeria’s Banking industry needs urgent recapitalization if it must compete on the global stage among the top 500 financial institutions.

Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emediele, said a new lease of life for the sector becomes imperative because the 2004 recapitalisation by former CBN Governor, Professor Chukwuma Soludo has weakened substantially.

He said current trends worldwide demand that Nigerian Deposit Money Banks (DMBs) must maintain higher level of capital and liquid assets to reduce the impact of an economic crisis on the financial system

Speaking at a media briefing to unveil his second tenure five-year agenda in Abuja, Emefiele said: “In the next five years, we intend to pursue a program of recapitalising the Banking Industry so as to position Nigerian banks among the top 500 in the world. Banks will therefore be required to maintain higher level of capital, as well as, liquid assets in order to reduce the impact of an economic crisis on the financial system.”

“What we are trying to say is that the capitalisation has weakened quite substantially and there is need for us to say it is time for us to recapitalise Nigerian banks again”, he said.

According to him, besides banks’ recapitalisation, other integral part of the agenda include: Strengthening Micro, Small and Medium Enterprises (MSMEs); Preserving domestic macroeconomic and financial stability; and fostering robust payments system infrastructure that will increase access to finance for Nigerians.

He said the new policy road map is focused on strategic pursuit and delivery on programmes that will reposition and strengthen Nigeria’s banking industry to perform among the best globally.

Applauding the last recapitalisation by Prof Soludo that moved banks’ capitalisation from N2 billion to N25 billion, Emefiele said; “I must commend that effort because it resulted in positioning Nigerian banks, not only in Africa, but to become among top banks in the world, in terms of capitalisation.

“It also increased helped the strengthen the banks to take on large transactions and those are the things they badly needed. Today, when you relate N25 billion in 2001 exchange rate, which was about N100/$1, N25 billion was about $200 million.

“Today if you relate N25 billion at N360/$1 , you can see that it substantially lower than $75 million.”

He however explained that the new policy thrust would be discussed at the Committee of Governors’ Meeting, with the proposed recapitalization framework to be unfolded publicly thereafter.

The governor said the next five years would see the apex bank partnering closely with the fiscal authorities to ensure a stable macro-economic stability, double-digit growth, single-digit inflation and greater access to finance for businesses.

“Working closely with our fiscal authorities, we pledge to target a double digit growth by the next five years and at the CBN, we commit to working assiduously to bringing down inflation to single digit; while accelerating the rate of employment, Emefiele said.

For him, the apex bank’s priorities over the next 5 years would also include developing a robust payments system infrastructure that will increase access to finance for all Nigerians as well as raise financial inclusion rate in the country.

Similarly, there are plans to effectively collaborate with the Deposit Money Banks to improve access to credit for not only small holder farmers and MSMEs but also Consumer credit and mortgage facilities for bank customers.

In his words; “Our intervention support shall also be extended to our youth population who possess entrepreneurship skills in the creative industry.”

Also on the table is CBN’s resolve to promote measures aimed at increasing and diversifying Nigeria’s exports base and ultimately help in shoring up the nation’s reserves, especially through facility support for domestic industries to create jobs on a mass scale for Nigerians.

“We intend to aggressively implement our N500bn facility aimed at supporting the growth of our non-oil exports, which will help to improve non-oil export earnings.”

Emefiele further stated that the CBN “Will launch a Trade Monitoring System (TRMS) in October 2019, which is an automated system that will reduce the length of time required to process export documents from 1 week to 1 day. This measure will help support our efforts at improving our non-oil exports of goods and services.

“We will also work with our counterparts in the fiscal arm in supporting improved FDI flows to various sectors such as agriculture, manufacturing, insurance and infrastructure. These measures while supporting improved inflows into the country, will help to stabilise our exchange rate and build our external reserves.”

On foreign exchange management, Emefiele said the apex bank will not relent in operating a managed-float exchange rate regime to minimize the impact of continuous volatility in the exchange rate on Nigeria’s economy.

He pledged CBN’s backing for aggressive embroilment of prospective banking customers in the informal sector onto the BVN system towards moving the current enrolment of 38 million unique banking customers to about 100 million over the next five (5) years.

The CBN boss, who promised that the consumer credit programme would be pursued more vigorously, including mortgage at nine (9) per cent interest, said good news is also coming the way of operators in the livestock and diary sector to boost productivity growth through the provision of improved seedlings among other inputs.

He said CBN’s planned intervention will facilitate access to finance for rural farmers in the agricultural sector, across 10 different commodities namely: Rice, Poultry, Fish, Livestock/dairy, Maize, Cassava, Cocoa, Tomato, Cotton and Oil-palm.

“Our choice of these 10 crops is driven by the amount spent on the importation of these items into the country, and the over 10 million jobs that could be created over the next 5 years if efforts are made to expand cultivation and processing of these items in Nigeria.

“So far, we have held series of engagements with importers and producers of these products. Most of them have committed that they would install or expand their production capacities in Nigeria.

“We believe these measures will help to boost not only our domestic outputs but also improve our annual non-oil exports receipts from $2 billion in 2018 to $12 billion by 2023”, the CBN boss assured.