The Minister of Finance, Budget and National Planning, Mrs Zainab Shamsuna Ahmed, has advised Nigerian banks and other financial institutions to explore Africa’s market expansion enabled by the AfCFTA to capture trade flows and investment through superior customer value proposition.
Stressing the potentials of Nigeria’s market, Ahmed said: “With more than 40 million MSMEs in Nigeria we have the opportunity to leverage the AfCFTA agreement for financial growth.”
Mrs. Ahmed, who is the Alternate Chairman of the National Action Committee on the AfCFTA, gave the advice at the AfCFTA Strategy Workshop Series II on Financial Services and Investment Mobilization themed Leveraging Nigeria’s Financial Services Sector to Maximize the Gains of AfCFTA, a statement signed issued on Thursday by the Secretary of the Committee, Francis Anatogu, said.
Speaking, the Central Bank Governor Godwin Emefiele noted that one of the most important benefits of the AfCFTA to the Nigerian financial sector would be the removal of barriers for the expansion of financial institutions and services to other climes within the continent.
On CBN’s interventions, Mr Emefiele said: “Policy measures such as increasing the loan-to-deposit ratio to 65% from 60%, and reducing MPR 12.5% to 11.5% have been directed at boosting credit to the productive sectors of the economy.”
The CBN boss, who was represented by Dr. Kingsley Obiora, Deputy Governor of Economic Policy Directorate, added that the Bank has introduced the “Investors’ and Exporters’ (I&E) FX window to support the inflow of capital and encourage exports as well as the restriction of access to FOREX for the importation of goods, which can be produced locally.”
In his paper presentation, Mr. Yusuf P. Yila
Director, Development Finance Department of CBN said: “The Bank presently has 36 active intervention programmes and schemes aimed at stimulating finance to the real sector.
Given the breakdown of the interventions, Yila, who was represented by Chinedu Zephaniah, said 3, 076, 641 projects have been financed through 29 interventions amounting to N6 .01 trillion disbursed and N1.34 trillion repaid recently.
Herbert Nwigwe, Chief Executives of Access Bank and Chairman of the Bankers Committee represented by Mr. Chukwuma Ajene, said in response to the market forces under the AfCFTA, banks will have to compete to become top choice for facilitating intra-African payments, hence more regional business offices could spring up
across the continent.
Mr. Yinka Sanni, Group Managing Director (West Africa), Stanbic IBTC Bank opined that with the implementation of the AfCFTA, the financial services industry urgently needs to address challenges of ” short end lending, high interest rates and limited inclusion.”
Dr. Adesola K. Adeduntan Chief Executive Officer, First Bank of Nigeria said Africa’s financial services sector was contending with challenges of a tough operating environment, access to finance, financial infrastructure and talent management.
Dr. Adeduntan, who was represented by Ini Ekong, said despite the headwinds, he was optimistic that: “The AfCFTA agreement will accelerate consumer and business spending. This will lead to increased transaction velocity in the payment space as consumers and businesses leverage technology for their cross-border.”
Mr. Patrick Akinwuntan Group Executive Director, EcoBank Plc said financial services sector would thrive better under the AfCFTA, noting that consolidation, a rising middle class, irresistible force of Fintechs and disruptive innovation and a huge unbanked population are the key trends shaping the African banking sector.
“Competition for market share of intracontinental trade finance deals will lead to the creation of bespoke products, plus tech-led operational efficiency,” he noted.
In her presentation, Mrs Bunmi Kuku, Partner, Business Consulting, Ernst & Young, said opportunities for Nigerian banks exist but they need to be wary of the overarching challenges arising from implementation of AfCFTA.
Mrs Kuku said: “Nigeria is still a ‘cash-and-carry economy with a poor credit culture contributing to the slow pace of economic development.”
According to her, the low consumer credit penetration in Nigeria was mainly driven by mutual suspicion among the borrowers and lenders with stringent conditions put in place when applying for loan from deposit money banks due to perceived high risks.
She added that credit was being restricted to a small segment of the population who are mostly salary earners in selected organizations.
Speaking on importance of risk management and cybersecurity to survival of corporations, Olusegun Zaccheaus, Associate Director, Strategy and Economics at KPMG, said: “Board and executive management are increasingly aware that while they might not be the experts in the subject of cyber risk, they will be held accountable if there is a cyber attack that disrupts business performance.”
Speaking on the role of insurance in international trade, Mr. Olorundare Sunday Thomas, Commissioner For Insurance/CEO, NAICOM, said though AfCFTA runs contrary to provisions of
Nigerian insurance laws and regulations, “yet to attain the desired international competitiveness, there are ongoing reforms to improve the situation.”
Speaking, Mrs. Omotade Odunowo, Chief Executive Officer, Funds and Electronic Transfer Solutions Ltd urged: “Regulatory bodies in Nigeria and other African nations should continue to push for a fusion and better framework that will further help to drive digital transformation with implication for a robust business within the African diaspora.
Mr. Adeniyi Adewale, Executive Director, Commercial Operations, Animal Care, urged the CBN to provide more intervention funds to players in the agricultural value chain as a strategic tool to exiting recession.
Mrs. Oluyemisi Iranloye Chief Executive Officer, Psaltry International, said more than 6,000 farmers have participated in her company’s out grower scheme and the factory has expanded to serve a broad based clientele with cassava derivatives of about 35,000MTPA.
The Workshop which held its Day 1 on 16th December, 2020 also featured presentations by Dr. Mahmud Hassan, Director, Monetary Policy Department, CBN and Mr. Musa I. Jimoh, Director, Payments System Management Department, CBN.