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Banking sector positions to explore untapped area in economy

No doubt, tough times are beckoning, but the Nigerian banks are not perturbed as they are positioning to explore the untapped areas of the economy.

One of the unexploited markets that banks are delving into is the creative industry. In October 5, 2019, President Mohammadu Buhari gave his go ahead for the reconstruction of the National Theater, Iganmu Lagos into a world class convention center , for the development of creative sector in diverse areas including entertainment, movie, music, fashion and ICT.

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Under the new arrangement, the national asset built in 1976 for the purpose of celebrating the Festival of Arts and Culture, FESTAC, will be in control of the Bankers Committee and the Central Bank of Nigeria (CBN).

“The banking industry is now open to creative minds that are ready to explore untapped areas in the economy,” said Uche Olowu, president and chairman of council, Chartered Institute of Bankers of Nigeria (CIBN).

According to him, the issue of Non-Performing Loans (NPLs) has been taken care of at the top level in the industry as there is no hiding place for serial loan defaulters.

The non-performing loans ratio dropped dramatically from 9.4 percent in August 2019 to 6.6 percent in October 2019 which is now very close to the regulatory benchmark of a 5 percent maximum.

“This has somewhat increased the confidence in the banking system despite the October 2019 marginal drop in the capital adequacy ratio to 15.3 percent from the August 2019 level of 15.8 percent. The growth in total assets by October 2019 when compared to earlier months and largely driven by growth in credit is quite remarkable as it also suggests that credit conditions especially for small and medium enterprises have responded to new Central Bank regulatory policies especially the loan to deposit ratio and the sector targeted quantitative easing measures,” Robert Asogwa, member of the Monetary Policy committee said in his personal statment.

Olowu further stated that Nigeria’s economy would experience a gradual growth in Gross Domestic Product (GDP) as impact of agric investments begin to materialize.

The banks are determined to make profit amid challenging times of complying with some of the directives the CBN, which seems not be favourable to them.

The CBN on December 20, 2019 released two regulatory guidelines- a revised Guide to Charges by Banks, other financial and non- bank financial institutions, to replace the one issued in May 2017, and Consumer Protection Regulations to implement the principles prescribed in the Consumer Protection Framework issued in November 2016.

Olowu, who spoke at the Finance Correspondents Association of Nigeria (FICAN), 2020 Economic Outlook powered by Polaris Bank Limited, in Lagos, said as soon as the economy is diversified, the country will see higher accretion to the foreign reserves and improved confidence in the economy.

He said opportunities in the agricultural sector should be explored to improve the country’s capacity to export agric products. He said the country has so much to gain by investing in agriculture, which will boost  foreign reserves.

Olowu added that access to credit is also a key factor that will lead to economic growth and development.

The CIBN president also spoke to the Federal Government’s policies in 2019, saying bankers are now deploying  manpower to get highest returns.

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