The Bankers’ Committee has expressed its readiness to increase lending to key sectors of the economy in 2014 to enhance growth. SIMEON EBULU writes on some steps so far taken by the committee to actualise its plan after a retreat in Calabar, the Cross River State capital.
Nigerian banks have taken a position to boost lending to the nation’s economic sectors next year to sustain the growth trajectory witnessed in the outgoing year and consolidate development gains.
The nation’s deposit money banks took the position under the auspices of the bankers’ committee, following a retreat in Calabar, Cross Rivers State capital recently.
The retreat, which had in attendance, the Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi as its chairman, the deputy governors of the apex bank, the Managing Director of the Nigeria Deposit Insurance Corporation, the chief executive officers of deposit money banks, discount houses and development finance institutions, convened at the alluring tourist city for the 5th time to rob minds and brainstorm on ways to jumpstart the economy.
Nigeria, which is Africa’s most populous nation of more than 160 million people needs $10 billion of infrastructure investment yearly to keep up with rising population and expanding economy, needing funding, Finance Minister Ngozi Okonjo-Iweala said in May this year. Given the nation’s development challenges, banks need to “strategies on a deliberate approach to sustain the momentum into the future,” Aigboje Aig-Imoukhuede, Managing Director of Access Bank and Chairman of the Sub-committee, Economic Development and Sustain-ability of the Bankers’ Committee told his colleagues at the retreat.
The retinue of participants, which also included Governor of Cross River State, Liyel Imoke; Minister of Communication and Technology, Omobola Johnson; Minister of Mines and Steel Development, Musa Mohammed; former Minister of Power, Barth Nnaji as well as financial industry experts from within and outside Nigeria, provided the impulse for the bankers to get to the root of the problems encrusting financial intermediation in Africa’s second biggest country.
Since inauguration of the Bankers’ Committee retreat process in Enugu in 2009, the annual meeting has become a milestone event in the calendar of the financial sector, providing a unique platform for peer collaboration, development review, cultivation of strategies and action plans for sustainable growth of the services and real sectors.
The 2013 retreat, as envisaged, identified progress in the outgoing year, whilst highlighting focal points for 2014 and how the industry would be adequately imbued with capabilities to meet set objectives, the nexus being increased funding of the economy next year and the sustenance of the credit momentum.
Gains of the past year
According to the CBN Governor, Sanusi Lamido Sanusi, the Bankers’ Committee has made significant progress in transforming the Nigerian financial system into an enabler and engine of real sector growth, through its advocacy, intervention and dedicated support.
“The collective decisions and actions of the Bankers’ Committee as an agent of transformation have delivered tangible benefits through increase in lending to micro, small and medium enterprises; advocacy and finance to the power and aviation sectors; increased lending to the agriculture sector and modernisation of the payment system,’’ Sanusi said.
The economy
Africa, may expand 6.75 per cent next year, compared with an estimate of 6.5 per cent in 2013, Okonjo-Iweala said in October. The nation’s rising gross domestic product curve has been attributed to the health of the banking system and the boost in its intermediation role. According to the finance ministry, Nigeria needs annual economic growth of 13 percent to bring down unemployment, now at more than 25 per cent, to single digits by 2020. The implication being that whatever improvement by the banks to revamp the economy needs sustenance.
In the light of the foregoing, the theme for the 2013 bankers’ retreat was “The Bankers’ Committee as an Agent of Transformation: Sustaining the Momentum.”
The bank chiefs reviewed the impact of the strategies and programmes of the outgoing year, over the last four years and articulated specific actions to consolidate and improve on gains made in real sector development, towards a reduction in financial exclusion, the strengthening of monetary policy, modernisation of the payment system and the built up in industry capacity and competency.
According to Sanusi, banks have made significant progress in contribution to economic development and growth. He said the banks in the past year associated with the President Goodluck Jonathan’s economic reform agenda and the objective of growing the economy. To sustain the momentum, the bankers affirmed their commitment to financial deepening of the economy, improving access to finance to reduce the financial exclusion and to make finance work to reverse disturbing levels of unemployment and poverty in the country, Sanusi said. The foregoing were encapsulated in the set of programmes adopted by the banks for the next financial year, through December 2014.
Resolve for higher
intermediation in 2014
According to a communique read on-behalf of the bankers by the Central Bank Governor, the bank chiefs revalidated goals for the incoming year to include increased funding of small and medium enterprises, agriculture, power, telecommunication sectors; the modernisation of Nigeria’s payment systems; the promotion of shared services; reduction in cost of operations; the promotion of an environmentally friendly and financially inclusive banking System and increasing industry competency and Capacity.
“The resolution of the banks were apt as the positions taken by them fully identified with the programmes of the government and needs of the private sector to grow and diversify the economy, especially in boosting production, capacity and employment,” Wale Adebayo, Lagos-based financial analyst said.
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Electric Power Corp., Transnational Corporation of Nigeria and Forte Oil Plc, on August 22 as it seeks to boost power output from current 4,000Mw to meet a target of 20,000mw by 2016. The Managing Director of Transcorp, Obinna Ufudo said at the company’s facts behind the figures presentation on December 10, it plans to boost output of the acquired Ughelli Plant to 1,600 megawatts from 287Mw, over the next three years. It is such an expansion programme with huge prospects for the economy that the banks are warming up to fund in 2014, according to Adebayo. Nigerian-owned companies are boosting their share of the country’s oil output by taking up fields in restive areas of the Oil Delta as Shell Development Company and other international energy producers retreat. Forte Oil Plc is one of the local companies looking to acquire onshore assets and will require the support of the banks next year.
It is a known fact that oil has dominated the Nigerian economy since the 1970s, and now making up 95 per cent of the country’s export earnings and 80 per cent of government revenue. Fortunately, the Jonathan government in its wisdom is promoting a diversification programme that will ensure sustainable growth and development of the economy by emphasising manufacturing and agriculture. The Minister of Agriculture, Akinwumi Adesina, said recently the government plans to increase food supplies by 20 million metric tonnes by 2015. While Nigeria grew enough food to feed itself in the 1960s, it is now the world’s second-largest importer of rice and sub-Saharan Africa’s biggest importer of wheat.
In support of various private and public sector agricultural initiatives, Nigerian banks increased agricultural credit from less than one percent of loan assets some three years ago to about four per cent this year, Sanusi told reporters in Calabar. The move, according to Adebayo, is commendable and signposts the readiness of banks to leapfrog the economy from 2014.
The deposit money banks, according to Sanusi, also took a position to entrench sustainable banking next year by adoption and implementation of agreed sustainable banking principles as they go beyond profits to promote social inclusion and consider environmental principles.
“Our strategies will include institutionalisation of governance for sustainability; advocacy of the corporate bill of rights for the customers and employees of financial institutions; adoption of digital platforms and payments as game changers for financial inclusion; capacity building and effective collaboration with non-financial partners and other external stakeholders.”
The banks also decided to address the gaps in the depth and breadth of products practices and infrastructure of the financial markets, whilst acknowledging that small and medium enterprises, the agriculture and power sectors are absolutely vital to the economy, Sanusi said.
Towards enhanced industry
capacity and efficiency
Resource capability is of course germane to deliver on the objectives marshaled out by the banks. The lenders were not oblivious of the essence of capacity and efficiency to achieve their objectives and set out to sharpen their tools and optimise the use of various factors of production.
“We are committed to competency and capacity building of appropriate knowledge, skills, character, competence and experience to carry out key functions. The industry will adopt high benchmark and standards by which it measures its progress.
Modernisation of the financial service industry infrastructure and payment system is critical to reduce cost of services to the Banking public. We will continue to explore and develop areas of collaboration in shared services and infrastructure to reduce the operating cost structure of the industry,’’ Sanusi said.
Nigeria embarked on banking reforms following a debt crisis in 2008 and 2009 that brought the industry to near collapse. The central bank fired eight chief executives of the country’s 24 banks and created Asset Management Corporation of Nigeria (AMCON) to buy lenders’ bad debts and stabilise the industry. Amcon spent 5.6 trillion naira in 2011 to acquire the non-performing loans, according to Chief Executive Officer Mustafa Chike-Obi. The nation’s banks have since seen improvements in risk management and corporate governance, resulting in increased lending and profitability.
First City Monument Bank obtained $150 million syndicated loan from eight financial institutions this month to enable it meet oil, gas, and general lending purposes. The bank, which originally targeted $100 million increased the size after the deal was oversubscribed, according to a source that declined to named because of the confidentiality of the transaction.
Guaranty Trust Bank raised $400 million five year note last month for general corporate purposes with JPMorgan and Morgan Stanley as bookrunners. Fidelity Bank Plc sold $300 million of five-year bonds to boost its corporate lending, the bank said in statement in May. Overall, banks are raising various forms of equity and debt capital to boost their intermediation role.
Believing that the banks have the capacity to achieve set tasks and are determined to succeed, the bankers, “resolved to monitor the progress of implementation,” Sanusi said, adding that they will also access the impact of their actions, “on Nigeria’s economic development goals and objectives on an ongoing basis.”
With barely few days to new-year, there are hopes that a new generation of banks, well re-capitalised and desperate to make a change, will be able to lift the people and rewrite the story of the economy.
