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The Chartered Institute of Bankers of Nigeria (CIBN) has announced its support for the current banking recapitalization exercise, stating that it will enable banks to increase their economic lending.
The President of CIBN, Dr. Ken Opara, declared this during the institute's annual lecture in Lagos, focusing on "Enhancing Access to Credit in the Nigerian Real Economy: The Crucial Significance of Liquidity."
Opara emphasized that the amount of credit allocated to vital sectors such as agriculture, manufacturing, and services is insufficient considering their pivotal role in driving economic expansion. Consequently, he advocated for a greater allocation of credit to these sectors, particularly agriculture.
He welcomed the Recapitalization exercise as a means to achieve this, highlighting that the recent elevation of the Minimum Capital Requirements by the Central Bank of Nigeria will empower banks to extend more credit to productive sectors of the economy.
To counteract the obstacles hindering credit provision to the real sector, Opara proposed that the government should enhance the ease of doing business and invest in infrastructural development, including power, roads, and rail networks.
He also suggested the establishment of industrial centers where companies can coexist and share common infrastructure, as well as harmonizing and reducing various taxes and levies.
He also recommended that banks actively work on de-risking these companies through capacity building programs and advisory services.
Opara further, proposed the creation of Specialized Financial Institutions, such as credit guarantee agencies and risk-sharing institutions, in addition to the existing Bank of Industry (BOI), to further facilitate the expansion of credit, drawing from successful practices in countries like China that have significantly transformed their economies through similar approaches.
