The Chartered Institute of Bankers of Nigeria (CIBN) has voiced its support for the ongoing bank recapitalization exercise, highlighting its potential to boost lending to the nation’s real sector. Dr. Ken Opara, CIBN President, delivered this message during the institute’s annual lecture in Lagos titled “Improving Availability of Credit in the Nigerian Real Economy: The Critical Importance of Liquidity.”
Dr. Opara emphasized the limited credit available to crucial sectors like agriculture, manufacturing, and services, despite their significance in driving economic growth. He advocated for increased credit allocation to these sectors, particularly agriculture.
“We propose considering offering more credit to these key sectors, particularly agriculture,” Dr. Opara stated. “In this light, the recapitalization exercise is a welcome development. The Central Bank of Nigeria’s recently announced upward revision of minimum capital requirements will further empower banks to extend more credit to the economy’s productive sectors.”
To address challenges hindering real sector credit access, Dr. Opara proposed several solutions:
- Government Initiatives: Improve ease of doing business, invest in infrastructure development (power, roads, rail), and establish industrial centers for shared infrastructure.
- Taxation: Harmonize and reduce various taxes and levies, consolidating them into a single hub.
- Banking Sector: Implement deliberate de-risking strategies for real sector companies through capacity building programs and advisory services.
- Specialized Financial Institutions: Create additional institutions alongside the Bank of Industry (BOI), such as credit guarantee agencies and risk-sharing institutions, to deepen credit access, mirroring practices in countries like China that achieved significant economic transformation through such methods.
By implementing these recommendations, the CIBN believes the recapitalization exercise can be leveraged to unlock greater credit availability for Nigeria’s real sector, fostering economic growth and development.
