Posted by By WALE ALABI and MOSHOOD ADEBAYO, Abeokuta on
President Olusegun Obasanjo yesterday, in Abeokuta, the Ogun State capital, lashed out at commercial banks for not supporting industrial and other investment initiatives in the country even as Nigeria's external reserve hits $29 billion.
President Olusegun Obasanjo yesterday, in Abeokuta, the Ogun State capital, lashed out at commercial banks for not supporting industrial and other investment initiatives in the country even as Nigeria's external reserve hits $29 billion.
President Obasanjo who spoke at the Presidential Retreat on Small and Medium Scale Enterprises (SMEs) and other major industries, described Nigerian banks as trading companies that, "are not engaged in real banking."
According to the president, "most Nigerian banks up till today are not doing banking. They are doing trading. The current consolidation in the banking sector has exposed them."
He disclosed that the due diligence carried out on most of the banks actually exposed them as "nothing but empty shells".
Obasanjo predicted that "at the end of this consolidation, some of unwilling banks would be forced to support serious investment, like manufacturing and industries rather than engage in mere trading because they would have huge funds at their disposal."
The President however, warned entrepreneurs who would want to approach banks for support after the consolidation programme to tidy up their acts so that they can earn the respect, confidence and support of the banks.
President Obasanjo announced that the nation's external reserve has hit an all time high of $29 billion, saying that the country was able to achieve the feat because it now spends less on imports while earning more from exports.
Said he: "These days, we are increasing our export growth in quality and value. That is why our foreign reserve is rising. Besides, we spend less on importation and gain more on exportation."
The president also made known the intention of the Federal Government to harmonise the two competing exchange rates before the end of the first quarter next year. The two exchange rates are the parallel and the official market rates. In this regard, the president advised the Central Bank of Nigeria (CBN) to monitor exchange rates all over the world on per minutes basis to achieve the merger.
On high interest rate, the president said there would be considerable reduction after the banks' recapitalisation.
"By the time we finish the harmonisation of banks, interest rate will come down. Someone told me that he got a loan for 10 per cent and I am looking for a time I will get a loan for eight per cent."
"I mean that, single digit. I still maintain that if we want to drive this economy, interest to the productive sector should not be more than one digit. I also believe that while interest for industry may be as high as nine per cent, the one for agriculture should be about six per cent," the president said.
Obasanjo lamented that many SMEs were not aware of many financial opportunities available for the productive sector and canvassed an enlightenment programme that would bring the opportunities to their doorsteps.