The Central Bank of Nigeria (CBN) has reiterated readiness to support the Federal Government’s plan to achieve a $1tn economy.
Acting Director of Financial Policy and Regulations, John Onoja, stated this at the Afrinvest 2024 Banking Sector Report Launch on Thursday while representing the CBN Governor, Dr Olayemi Cardoso.
“We are glad that the present administration has set this target, and we are committed to supporting it,” he said.
“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 added.
The apex bank has been working towards creating an enabling environment for businesses and individuals, tackling institutional deficiencies, restoring corporate governance, strengthening regulations, and implementing prudential guidelines and policies.
He disclosed that the CBN was working closely with banks to review their capital plans, ensure a successful exercise and collaborate with institutions like the Nigeria Deposit Insurance Corporation, the Securities and Exchange Commission, NGX, and the National Assembly.
Afrinvest’s Group Managing Director, Ike Chioke expressed the need for a comprehensive approach that would guarantee a $1tn economy.
“The macroeconomic environment is challenging, with a potential national strike looming,” he said.
“However, data are available to run the economy effectively, but politicians must pay attention to it and have the discipline to be humble,” he added.
The report focuses on the banking sector recapitalisation, which requires all commercial, merchant, and non-interest banks to increase their paid-up capital to suitable levels.
Chioke also stressed that the exercise would enhance banks’ capacity to serve the larger economy, increase lending capacity, attract foreign investments, and promote better risk management.
He noted that the banking sector alone could not drive 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 highlighted the need for human capital development, citing the example of Mexico, Indonesia, and Turkey, which have achieved higher GDP per capita and human capital indices.
“Nigeria needs to invest in its people to achieve similar growth,” Chioke said.
The report identified capital gaps in the banking sector, with international banks requiring an additional N2.2tn, national banks needing N1.6tn, and regional banks requiring N445m.
He noted that recapitalising the banking sector is crucial, but it’s equally important to develop other sectors like manufacturing, agriculture, and ICT.
“We must prioritise human capital development to achieve a $1tn economy,” he said further.
