Economic growth: Buhari orders banks to finance SMEs, renewable energy, others

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…says 8 million Nigerians benefiting from  Conditional Cash Transfer

…CBN to launch Nigerian International Financial Centre by 2022

…releases N300bn to 3.1 million smallholder farmers

By Kayode Tokede

President Muhammadu Buhari, among other stakeholders on Tuesday directed Nigerian banks to finance Small and Medium Enterprises (SMEs), renewable energy, new technologies and support the government in infrastructural development in the country.  The two-day conference, an annual event for stakeholders in the banking and finance industry brought together policy makers, regulators, operators, top government functionaries at all levels, captains of industries, managing directors of banks and other financial institutions, among others.

Buhari declared open the conference, while President Paul Kagame of the Republic of Rwanda, gave the keynote address, the first by a Foreign president.

Speaking virtually at the opening ceremony of the 14th Annual Banking and Finance Conference of Chartered Institute of Bankers of Nigeria (CIBN) with a theme: “Economic Recovery, Inclusion & Transformation: The Role of Banking and Finance,” Buhari implored financial institutions to play stronger role in making sure the SMEs were fit for purpose, with support in full implementation of “Agreement.”

According to him, “Indeed financial intermediary could not be any more relevant than at a time like this. We need you, the banks to drive value creation by developing new technologies, scaling payment infrastructure to serve the diversified economies expected to benefit from this Agreement,’’ the President noted.

He said technological innovation was also important in the modern business terrain, noting that most transactions now take place online given the advent of the “Internet of Things.”

“As we continue to progress towards the next frontiers of digitization, we must harness all opportunities while being mindful of the inherent risks.

“For example, the protection of data is now of utmost importance to provide users with more secure access to the online space.”

Buhari said, the COVID-19 pandemic changed everything in the world, from interaction, work, communication to general lifestyle, noting that the epidemic also triggered new opportunities which helped to reshape the economy in the areas of digital transformation, trans-African trade, financial inclusion, security, workforce of the future, pharmaceutical, manufacturing, processing, supply, and logistics.

“As we look beyond the effects of the pandemic to the future, there are bountiful opportunities ahead of us. As you all may know, the African Continental Free Trade Area, of which Nigeria is subscribed, is not only an opportunity for the growth of trade but also the growth of pan-African businesses.

“It portends opportunities for our teeming youth population, the women, the creative industry, the digital economy, the financial services sector, agricultural value chain, commerce, industry, education and indeed every aspect of the economy as Nigerians will have unfettered access to the over 1.3billion consumer market,” he said.

He disclosed that more than eight million individuals from 1.6 million poor and vulnerable households are currently benefiting from the Conditional Cash Transfer programme.

The measures he explained were part of efforts to reduce poverty in the country continue to grow, with 1.6 million poor and vulnerable households, comprising more than expected.

The President said, the National Social Register of poor and vulnerable Nigerians had 32.6 million persons from 7 million poor and vulnerable households identified, imploring bankers to play a stronger role in improving livelihoods.

“From this number, 1.6 million poor and vulnerable households, comprising more than 8 million individuals are currently benefiting from the Conditional Cash Transfer program, which pays a bi-monthly stipend of N10, 000 per household,” he said.

Buhari said the National Social Investment Programme was the biggest in Sub-Sahara Africa and one of the largest in the world.

According to him, “Some of the various initiatives embarked upon to boost agric trade in Nigeria include the Anchor Borrowers Programme through which the Central Bank of Nigeria had made more than 300 billion naira available to over 3.1 million smallholder farmers of 21 different commodities including Rice, Wheat, Maize, Cotton, Cassava, Poultry, Soybeans, Groundnut, Fish, cultivating over 3.8 million hectares of farmland.

“It is on record that 80% of rice consumed in Nigeria is now produced locally.”

The President affirmed that the theme of the conference, “Economic Recovery, Inclusion, and Transformation: The Role of Banking and Finance” was most appropriate, following the global shocks from COVID-19.

“I salute the Institute and the entire banking and finance industry for the commitment towards charting a practical path for economic recovery and transformation of our country, Nigeria, and by extension Africa as epitomized by the theme of your conference.

“I commend the financial services industry for its interventions and contributions towards the promotion of financial inclusion and literacy in our country. And more importantly, the roles played by the banks in fostering economic growth of the country.

“I am confident that the speakers that have been carefully selected to contribute to conference will share insights that will help individuals, businesses and governments at all levels make necessary adjustments and take the right steps towards our collective resolve to position Nigeria as one of the top economies in the world,’’ he added.

”This is cheery news and an indication that the efforts of this administration at repositioning the economy is paying off,’’ he said, urging bankers and financial institutions to leverage on the abundant business opportunities to grow the economy.

In a goodwill message, President Paul Kagame said exploring new technology in the banking sector, with more focus on innovation, will enhance financial inclusion.

“The banking sector can lead the way in integration. Banking is about trust,” he said.

Before the exhibition flag off, Vice President Yemi Osinbajo, said emerging challenges require that banking and finance sector takes on more transformative projects such as housing and renewable energy.

The VP acknowledged that the banking and finance sector has over the years played a significant roles in the nation’s economy development.

According to the Vice President, “it is time for the sector to take on some of the transformative big-ticket items that would fundamentally transform our economy. Such matters include consumer finance but housing finance in particular.”

He noted that a focus on how to finance housing is critical.

While commenting on African Development Bank (AfDB) survey, Prof. Osinbajo said, “the housing sector may support poverty reduction and inclusive growth in two general ways. First, housing construction contributes to economic output, creates employment, and generates a demand for materials and related services. Second, improved housing raises the standard of living of occupants.

“That study (AfDB survey) says for example that the benefits of housing for individuals accrue in large part through better health and sanitation, and of course this improves the overall human capacity of our citizens who are able to own these houses. Housing also generates large multiplier effects in terms of employment and output. Employment is created for both skilled and poorer, unskilled workers.

“The evidence also suggests that there is a symbiotic relationship between housing finance and financial sector development. Housing finance helps to develop the financial sector itself and helps to contribute to economic growth. So, these were the justifications that we also advanced for our mass housing initiative in the Economic Sustainability Plan.”

Challenging the banking sector on participating in the Federal Government’s Mass Housing programme, the VP noted that “the finance sector appears shy or simply has not found the right housing finance model that will work.”

On renewable energy and mitigating the impact of climate change, Prof. Osinbajo said “one of the chief considerations especially for developing countries is how to pay for the massive transition to renewable energy. How do we pay for moving from where we are especially fossil fuel-based power sources to renewable energy? This is a significant challenge but it is also an enormous opportunity.”

Citing the example of the Federal Government’s solar power initiative, Prof. Osinbajo decried the low interest shown by Commercial Banks to catalyze installations or manufacturing for Solar Power Naija programme.

He explained that “the challenge of under-electrification of the rural and poor and it’s associated impacts on our economic well-being and security cannot be overstated. The climate change challenge is a massive one in more ways than we can imagine.

“I would like to encourage the Bankers Committee to refocus on supporting the Solar Power Naija to ensure that in the next few months we can catalyze access to the N140 billion and create 5 million connections that can multiply to eliminating our electricity access deficit and creating jobs.”

While commending the sector for its efforts in improving service delivery over the years, the VP noted that “going forward, the banking and finance sector must take advantage of the new opportunities that are opening up and also adapt to domestic and international developments.

“The rapid changes in the technology sector mean that financial technology companies and payment service companies are now an inescapable part of the banking and financial landscape.”

Prof. Osinbajo also suggested that financial inclusion being critical to the objectives of recovery, inclusion and transformation, should be prioritized “especially in this COVID era, for the poor and more vulnerable sections of society so that they can keep their micro-businesses alive and handle risks and uncertainty.”

In his goodwill message, the Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele   said the measures put in place by the apex bank to prevent economic crisis spilling into a financial crisis in the height of the COVID-19 pandemic had paid-up.

According to him, key indicators in the banking sector continued to reflect that the banking sector remained strong , resilient and healthy.

“To prevent an economic crisis from spilling into a financial crisis the CBN worked to protect the interest of depositors by ensuring that banks made adequate capital provisions to cover for unexpected loses.

“We also enabled banks to restructure their loans granted to individuals and businesses significantly affected by the pandemic.

“Our Banks also demonstrated exceptional resilience by putting in place business continuity plans, alongside deployment of digital channels, which ensured that the provision of financial services to customers was not disrupted by the COVID-19 Pandemic.

“We are delighted that these measures have paid -up; indeed key indicators in the banking sector continued to reflect that our banking sector remains strong , resilient and healthy.

“Capital and liquidity ratio in the banking sector has remained above the prudential limit of 15.5 and 41.3 per cent respectively.

“Our non performing ratio in the banking industry in July 2021, stood at 5.4 per cent, reflecting continued improvement from 6 per cent in Sept. 2020,” Emefiele said.

He added that the banking sector remained well positioned to support the recovery efforts of the monetary and fiscal authorities.

“Clearly, Nigeria’s banks have become not only strong and resilient but have also carved a good niche in the world to consolidate on the growth and resilience of the banks in the last decades”, he added.

The apex bank governor disclosed that in the next 12 months, the CBN would be establishing the Nigerian International Financial Centre (NIFC), that would act as an international gateway for capital and investment, driven by a technology payment system infrastructure.

This new financial hub, according to him, would enable local and international banks become global champions.

“The NIFC will be a 24/7 financial centre that will complement London, New York and Singapore financial centres and enable acceleration of our home grown initiatives such as the infraco Plc, the N15 trillion infrastructural fund, which we hope will be launched in Oct. 2021.

“The NIFC will also complement our initiatives on the Nigeria commodity exchange and the National Arts Theatre creative hub for our youths, as well as our e-naira project, which is also expected to debut in Oct. 2021.

Similarly, “the NIFC will take advantage of our existing laws, such as the BOFIA 2020, and other Central Bank regulations, to create a fully global and investment financial hub where monies, ideas and technology will move freely without any hindrance,” Emefiele said.

The Governor of Lagos State, Mr Babajide Sanwo-Olu, said he expected that after the COVID-19 pandemic, the banking industry would play a transformational role such as what was witnessed seven decades ago by more than 40 countries.

”The theme for this conference is very apt just as the world grapples with a very dangerous coronavirus pandemic. The banking industry, no doubt has played a significant role in the economic recovery that we are seeing today

But, let me take us back to about six to seven decades ago, precisely July 1994, when more than 40 countries assembled at the now historic conference in the U.S to establish the International Monetary Fund and the World Bank, as financial institutions, to help the world at that time and Europe after a second World War.

“These financial institutions were set up to rebuild and to recover from the devastation of that war. Loans were given to countries in Europe and in other parts to rebuild after that war.

“ This is the kind of a transformational role that the Nigerian banking system is expected to play, especially after the COVID-19 pandemic,” he said.

Sanwo-Olu added that recent data from the CBN had indicated that it had disbursed over N400 billion to over 650, 000 households as soft loans, to help them cope with the impact of the pandemic.

This is apart from the combined hundreds of billions that had been dedicated to various sectors, including manufacturing healthcare, aviation, tourism and other critical sectors of the economy.

He commended the apex bank for taking the lead and setting a good example for the entire country, and President Muhammadu Buhari for also setting up a taskforce that worked with all States and helped to address and attack the pandemic.

Earlier, CIBN President, Dr Bayo Olugbemi recognised the fact that the banking industry had more work to do to bring the economy back to good shape.

“You will recall that several initiatives have been implemented by the current administration via its various agencies, including the Central Bank of Nigeria, over the past years to guide the economy back unto the path of recovery.

“Year-on-year, we have gone on a contraction of 6 per cent in GDP growth in the Second Quarter of 2020, to a 5 per cent growth in the second Quarter of 2021.

“While this progress is laudable and worthy of celebration, we recognise that there is more work to be done. There are macro-economic issues which threaten to block the road to prosperity, such as high inflation and unemployment rate.

“ There is also work to be done to ensure we meet targets regarding financial inclusion, infrastructure development, MSME growth and female equality, “ Olugbemi said.