The Central Bank of Nigeria has reiterated its unwavering commitment to bolstering the federal government’s strategic objective of attaining a $1 trillion economy.
During the launch of the Afrinvest 2024 Banking Sector
Report, Mr. John Onoja, the Acting Director of Financial Policy and
Regulations, who was representing the CBN Governor, Dr. Olayemi Cardoso, made a
statement, “We are glad that the present administration has set this target,
and we are committed to supporting it.”
The Central Bank of Nigeria (CBN) has been actively engaged
in fostering a conducive environment for both businesses and individuals. This
involves addressing institutional shortcomings, revitalizing corporate
governance, enhancing regulatory frameworks, and enforcing prudential
guidelines and policies.
Onoja emphasized the significance of the banking sector
recapitalization process, stating.
“This exercise will enhance the capacity of banks to serve
the larger economy, increase lending capacity, attract foreign investments,
improve foreign exchange liquidity, contribute to GDP growth, and promote
better risk management and credit ratings.”
He mentioned that the Central Bank of Nigeria is actively
collaborating with banks to assess their capital plans and facilitate a
seamless exercise. This collaboration involves various institutions, including
the Nigeria Deposit Insurance Corporation, the Securities and Exchange
Commission, the Nigerian Exchange Group, and the National Assembly.
At the event, the Group Managing Director of Afrinvest
emphasized the necessity of a holistic strategy to attain a $1 trillion
economy.
“The macroeconomic environment is challenging, with a
potential national strike looming,” Chioke said.
“However, the data is available to run the economy
effectively, but politicians must pay attention to it and have the discipline
to be humble,” he added.
The report centers around the recapitalization of the
banking sector, mandating all commercial, merchant, and non-interest banks to
augment their paid-up capital to appropriate levels.
Chioke underscored that this initiative will augment the
banking sector’s ability to cater to the broader economy, expand lending
capabilities, entice foreign investments, and foster improved risk management
practices.
Nonetheless, he acknowledged that the banking sector alone
cannot be the sole driver of economic growth.
“To achieve a $1tn economy, Nigeria needs to grow beyond the
banking sector. Every aspect of the economy must grow alongside it,” he said.
He emphasized the significance of investing in human capital
development, drawing attention to the successful examples of Mexico, Indonesia,
and Turkey. These countries have demonstrated remarkable progress in elevating
their GDP per capita and human capital indices.
“Nigeria needs to invest in its people to achieve similar
growth,” Chioke said.
The report has pointed out the insufficiency of capital in
the banking sector, with international banks requiring an additional N2.2tn,
national banks needing N1.6tn, and regional banks requiring N445m.
Chioke emphasized the critical nature of recapitalizing the
banking sector, while also stressing the importance of developing other sectors
such as manufacturing, agriculture, and ICT.
“We must prioritise human capital development to achieve a
$1tn economy,” he said.