Reaffirming its dedication, the Central Bank of Nigeria vows to back the federal government in achieving a $1tn economy target. Acting Director of Financial Policy and Regulations, Mr John Onoja, speaking on behalf of CBN Governor Dr Olayemi Cardoso at the Afrinvest 2024 Banking Sector Report Launch, expressed the CBN’s commitment to this goal.
The CBN’s efforts include creating a conducive business environment, addressing institutional shortcomings, fostering corporate governance, bolstering regulations, and enforcing prudential guidelines and policies.
Emphasizing the significance of the banking sector recapitalization, Onoja highlighted the benefits such as boosting banks’ capacity to support the economy, expanding lending capabilities, attracting foreign investments, enhancing foreign exchange liquidity, contributing to GDP growth, and promoting improved risk management and credit ratings.
The CBN is collaborating closely with banks to assess their capital plans to ensure the success of the exercise, partnering with institutions like the Nigeria Deposit Insurance Corporation, the Securities and Exchange Commission, NGX, and the National Assembly.
During the event, the Group Managing Director of Afrinvest emphasized the necessity of a holistic approach to achieving a $1tn economy goal.
Commenting on the challenging macroeconomic environment and the looming national strike, Chioke stated, “Effective economic management is feasible with available data, but political leaders must heed it and maintain the required discipline.”
The report concentrates on the banking sector recapitalization mandate, necessitating commercial, merchant, and non-interest banks to elevate their paid-up capital to appropriate levels.
Chioke underscored how this initiative would augment banks’ capacity to serve the broader economy, expand lending capabilities, attract foreign investments, and improve risk management.
However, Chioke underscored that relying solely on the banking sector for economic growth is insufficient. “Nigeria must grow beyond the banking industry to achieve a $1tn economy. All sectors of the economy need to progress in tandem,” he asserted.
He accentuated the imperative of investing in human capital development, drawing parallels with countries like Mexico, Indonesia, and Turkey, which have achieved superior GDP per capita and human capital indices.
“To attain similar growth, Nigeria must invest in its human resources,” added Chioke.
The report highlighted capital shortfalls in the banking sector, with international banks necessitating an extra N2.2tn, national banks requiring N1.6tn, and regional banks seeking N445m.
Chioke stressed the importance of recapitalizing the banking industry while simultaneously focusing on augmenting other sectors like manufacturing, agriculture, and ICT.
“Fostering human capital development is paramount for realizing a $1tn economy,” he concluded.