Central Bank of Nigeria (CBN) has noted that the survival of the financial system rests squarely on the shoulders of Corporate Treasurers.
Recognising this, the apex bank urges Corporate Treasurers to collectively fine-tune the effectiveness of the monetary policy transmission mechanism to ensure increased financial intermediation.
A keen financial mind and an understanding of an organisation’s day-to-day business demands are key to the role of a corporate treasurer. A corporate treasurer plays an important role in improving or maintaining the financial health and success of a business.
Sarah Alade, deputy governor, economic policy, CBN, noted these at the maiden breakfast meeting of the Association of Corporate Treasurers of Nigeria (ACTN) held in Lagos, last week, with the theme “The Economic Outlook for 2017 and its impact on the Corporate Sector.”
“As treasurers, you are in a vintage position to know where the shoes pinches and you can collectively address the nuances in the system. The weather ahead is not so friendly, but dogged determination by your good selves would help ride the stormy headwinds,” Alade, who was represented by Moses Tule, director, monetary policy, CBN, said. “As Treasurers, you all know that stability is a key business objective.”
She noted that achieving appropriate macro-economic policies had continued to be a great challenge to the monetary authorities, saying, “The monetary authorities are currently faced with very difficult choices in the trade off between tackling inflation, supporting growth and exchange rate stability.”
The ACTN was launched on December 12, 2012, to foster the interests of corporate treasurers of the buy-side and non-bank sell-side of the Nigerian financial markets by providing the platform for policy advocacy, discussions on issues of mutual interest, education/enlightenment and standards development of the corporate treasury function.
The breakfast meeting had panel session on currency, funding and liquidity management. Speaking during the panel session, Akin Dawodu, CEO, Citi Bank Nigeria, one of the discussants at the panel session, said, “2017 is really just another year. Corporate treasurers must be concerned about the liquidity situation of their institutions. That is an important factor they must all be concerned about. For Medium to Small sized corporates, they should expect to see liquidity challenges within a tight monetary policy environment. They have to keep a focus on liquidity of their corporates.”
Also speaking, Bola Onadele.Koko, MD/CEO, FMDQ OTC Securities Exchange, urged corporate treasurers to always articulate their problems and think of solutions to them from the bankers and investment bankers. “In 2017, private company bond rules will be published by FMDQ. This will enable the private companies tap from the debt capital market,” Onadele.Koko said.
On the outlook for 2017, Onadele.Koko noted: “If this government continues and maintains status quo, I don’t think this planet should be as cosy as we expect in 2017. For us to close the widening foreign exchange gap there has to be liquidity at the interbank market. That gap will not shrink as long as the interbank market is not liquid. ”
Zeal Akaraiwe, CEO, Graeme Blaque Advisory, said, “The challenge in the FX market, a sub-sect of the economy, has not been addressed. Regulators are crowding out the corporate sector from assessing fund. As long as this continues, we cannot produce as a nation, and when we don’t produce as a nation a lot of people will continue to lose jobs. We need to focus on the productive sector of the economy.”
Another discussant, Yinka Edu, partner, Udo Udoma & Belo-Osagie, noted, “liquidity is a big issue and will continue to be a big issue in 2017.”
According to Edu, the widening disparity between official FX rate and that of the parallel market is having a huge effect on investments.
According to the CBN deputy governor, “the macroeconomic environment in 2017, given the imperative to finance growth and take the economy out of recession, would be quite challenging for monetary policy. We foresee strong fiscal injections arising from increased fiscal activity leading to pressure on the exchange rate and upward price trends against the environment of global financial repression in the advanced markets.”
She further added that Corporate Treasurers hold the key to financial stability in 2017 “through professionalism and out of the box unusual professional financial engineering through reinvesting and harnessing our positive energies and ingenuities.” The CBN expects its intervention to remain squarely measured, but largely tilted towards price stability conducive to growth.
At the meeting, the apex bank drew the attention of participants to “the seeming disconnect between monetary policy and the real economy.” “Dwindling credit to private sector in spite of the liquidity surfeit in the banking system remains a puzzle contrary to conventional wisdom. The headwinds I see tells me that only when you act together would you survive the tsunami.
‘Thus, while transparency, professionalism, corporate governance and ethics draw you closer to each other, destructive cut-throat competition and oligopolistic dominance sure prepares a nesting place for failure of our banking institutions as was the case in our recent past,” Alade said.
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