Posted by By AMECHI OGBONNA on
The chronic financial intermediation crisis rocking the Nigerian economy, Tuesday pitched bankers and economists against one another as they attempted to evaluate the implications of President Olusegun Obasanjo's economic reform programme.
The chronic financial intermediation crisis rocking the Nigerian economy, Tuesday pitched bankers and economists against one another as they attempted to evaluate the implications of President Olusegun Obasanjo's economic reform programme.
Part of the concern of participants at the seminar titled 'Towards successful implementation of the reform agenda" was the lack of transparency in some aspects of the economic reform programme of the government.
The experts spoke at a one -day annual seminar of the Nigerian Economic Society, held at the Nigerian Institute of International Affairs, Lagos.
Managing director and chief executive of Nigeria International Bank (NIB),
Mr. Emeka Enuma, who spoke on the challenges of banking sector consolidation,argued that though he does not have empirical data to confirm whether the quantum of credit to the real sector has actually increased since the first phase of banking consolidation ended, he listed several internal and external challenges industry operators may be confronted with in the new dispensation.
He argued that bankers ability to manage shareholders expectations with respect to return on assets employed in the business, is a foremost challenge, stressing that this component has become more imperative now that financial institutions are operating with an enhanced capital base, which makes it possible to take greater risk in financing the economy. Bankers, he said are now more financially empowered to go into the market to look for sources of profitable investment that can guarantee the desired shareholders return.
Enuwa expressed optimism that current level of banks capitalization would also enable them meet the challenges of providing better services to customers whose demand for funding is now on the increase.
Among the external challenges facing the sector, according to the banker, is how to extend tenor of loanable funds in a manner that will give the real sector the much needed relief, particularly as rates are expected to crash with competition.
With a larger and deeper financial market, greater competition for deposit and asset, the industry, he argued, would generate enormous synergy to leverage the economy as a whole.
He stated that there are enough opportunities for banks to operate since the market is fairly large now.
Reacting on the propositions of the NIB boss, Prof Joe U.Umo, President of the Nigerian Economic Society wondered how the benefits listed by the banker would be achieved, when the fundamentals of the industry and the general economy have not changed significantly since the beginning of the reform programme.
He expressed regrets that despite assurances by the Central Bank of Nigeria, that it has plugged all loopholes for round tripping, the phenomenon has remained a big problem in the banking industry.
The NES president also expressed fears that rather than pump more funds to the real sector, banks are again re- inventing the old practices that crippled the economy including declaration of jumbo profits, insisting that bankers needed to explain the source of such windfall, when not much is happening in the real sector.
Although a communiqué on the seminar was still being expected at the time of this report, other bankers who commented at the forum also favoured the reform, while economists on their part could not match the results of the programme so far, with the promises given by the Central Bank of Nigeria governor, Prof. Charles Soludo at its inception.