Promoting synergy between banks and organised private sector

Last week the banking sector the Association of Corporate Affairs Managers of Banks (ACAMB) had an engagement with the Organised Private Sector (OPS) on how to promote a synergy between the two sectors.

The Organized Private Sector of Nigeria is a body that brings together key business management organizations such as MAN, Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Nigerian Association of Small and Medium Enterprises (NASME) and National Association of Small Scale Industrialists (NASSI), to speak for the continuous improvement on the business operating environment in the country.

To the extent that financial intermediaries are crucial to economic growth, there is bound to be a meeting point between OPS (the real sector players), and the banking sector (the fund drivers). From available communication research efforts, there seems to be a mutual misunderstanding between the two sectors, and all efforts to streamline this perceived gap have not been totally successful.

This was the submission of Rasheed Bolarinwa, ACAMB president, who said the conference offers a unique platform for private sector players and the banking community to share perspectives on how the synergy, communication, cooperation and mutual understanding between these two critical segments of the Nigerian economy can be improved.

Some of the issues raised at the conference include the need for rapid access to finance, reducing bureaucracy, risk management in managing banks and businesses across the nation, collaboration, and providing effective support for the manufacturing sector.

Other issues included that relationship between investment and production should not be taken for granted, supporting Small and Medium Enterprises (SMEs), creating an enabling environment for SMEs support, long term loans, foreign exchange availability, providing interest rates that are sustainable, purchase of capital equipment, and joint ventures, among others.

“The banking sector and the OPS are meant to be the main drivers of the Nation’s economy. One galvanises the credit from the surplus side and redistributes it to the deficit size. The other operates principally from the productive side, creating wealth and values. Thus, the two sectors are like two sides of a coin. They are co-joined, and must function together in an economic sense. So, there is a nexus; a link between the two at all times if any economy is to develop and grow,” Bolarinwa said.

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He added that the outlook of the stakeholder conference was essentially to develop a workable road map for the two sectors to synergies for the benefit of the National economy.

Mansur Ahmed, Manufacturers Association of Nigeria (MAN), sought the collaboration of the Central Bank of Nigeria (CBN) and the banking sector on long term loan, and foreign exchange availability, for sustainable economic growth.

Represented by Ambrose Chukwuma Oruche, director, corporate services, MAN, he said availability of fund and at cheaper rate reduces the cost of production, improves the quality of outputs, or the efficiency with which inputs are transformed into outputs and contributes to the growth of private sector in an economy and the multiplier effect will be poverty reduction; increase in per capita income, increase in the competitiveness of the country and by extension, economic growth.

He noted that limited access to credit facilities, especially long-term funding and the high cost of funds has been one of the major hindrances to the growth of the private sector in Nigeria, leading to increase in poverty rate, unemployment, insecurity, and stagnation of the economy.

“There is no doubt that industry needs the bank to increase investment and production while the bank needs the industry for interest payment incomes and equity subscription,” he said.

Ide John Udeagbala, national president, NACCIMA, noted some of the major challenges faced by Nigerian enterprises. He said on average, they have low operating capabilities and huge skill gaps in terms of management, technology, knowledge and attitudes. He added that there is predominance of ‘necessity’ entrepreneurs over ‘opportunity’ entrepreneurs.

“They face weak infrastructure, especially in terms of power, transportation and workspace. They lack a collective voice and have relatively weak influence on policy formulation. They have poor access to vital resources, especially finance.”

“There is a need for the banking sector to further enhance investments by identifying and funding good business opportunities and facilitating the exchange of goods and services as a means of contributing to the growth of the private sector. For this role, you will find a worthy partner in the organized private sector,” Udeagbala said.