Nigerian startups with significant exposure to the failed Silicon Valley Bank in United States have been advised to slow down on expansion plans.
Speaking during the Seventh Chartered Institute of Bankers of Nigeria (CIBN) Advocacy Dialogue Series in Lagos, a Professor of Accounting and Financial Development, Lead City University, Ibadan, Godwin Oyedokun, said there was the need to take steps to mitigate the negative effects on the startups that could be occasioned by severe liquidity challenges.
He explained that in the absence of a bailout to cushion the effect of SVB’s collapse on the country’s tech ecosystem (which by all indications is unlikely), our startups with significant exposure need to take steps to mitigate the negative effects that could be occasioned by severe liquidity challenges.
He said these could be operational, including affecting payroll and supplies, slowing down expansion plans, and in extreme cases credit defaults.
“The experience of many countries indicates that regulation and supervision are essential for a sound, stable and healthy financial system and that the need for the supervision of the banking sector becomes greater as the number and variety of financial institutions increase,” he said.
Oyedokun said supervision entails not only the enforcement of rules and regulations, but also exercising judgment concerning the soundness of a financial institution’s assets, capital adequacy, operational performance, corporate governance and management.
“The fulcrum of its financial stability roles rests on the effective regulation and supervision of the banking sector,” he said.
On his part, CIBN President/Chairman of Council, Ken Opara, said the event’s theme: “Failure of Silicon Valley Bank in USA: Global Impact and Lessons for the Nigerian Financial System” was timely.
He expressed CIBN’s readiness to partner and collaborate with financial sector regulators, operators and other relevant agencies to ensure that the banking system in Nigeria remains safe, sound and stable.
He said the programme was meant to enable Nigeria financial sector operators and stakeholders to gain insights specifically on an overview of the Silicon Valley Bank collapse and its implications in the Nigerian and global contexts.
He said the event also enabled stakeholders to look at the risks involved in the Silicon Valley Bank failure and appraise the management of same with the aim of improving risk and compliance functions in the Nigerian financial system; and how to mitigate such occurrence and ensure safety, soundness and stability in the banking industry in Nigeria among others.
The keynote Speakers for the event, Dr. Blaise Ijebor, Director, Risk Management Department, Central Bank of Nigeria, CBN and Mr. Mustapha M. Ibrahim, Executive Director, Operations , Nigeria Deposit Insurance Corporation, NDIC as well as panelists who shared their wealth of knowledge and experience.
The event was jointly organised in collaboration with the Association of Enterprise Risk Management Professionals(AERMP) aimed at critically examining the failure of Silicon Valley Bank (SVB) which happened on March 10, 2023.