CBN, banks, OPS mull new partnership for more funding

CBN,Banks, OPS mull new partnership for more funding

 

The Central Bank of Nigeria (CBN), Banks and Organised Private Sector (OPS) has agreed to work together to create a more effective financing structure that ensures increased accessibility to funding by the real sector.

While the details of the renewed collaboration would be worked on overtime by a consultative committee drawn from stakeholders, and experts across the divides yesterday agreed on an enduring dialogue to enhance funding and monitoring of the impact on the real sector.

This was part of highlights at the first National Stakeholders Conference organised yesterday in Lagos by the  Association of Corporate Affairs Managers of Banks (ACAMB), in partnership with the Chartered  Institute of Bankers of Nigeria (CIBN) and support from banks.

The theme of the conference was: ‘Promoting synergy between the banking industry and the organised private sector’.

Deputy Director, Financial System Stability Directorate, Central Bank of Nigeria (CBN), Mr Eboagwu Ezulu, said the many funding interventions of the apex bank were aimed at boosting the real sector as a driver of national economic  growth.

He said the apex Bank runs an open door policy and it is ever willing to further collaborate with key stakeholders in addressing the issue of effective funding of the OPS.

While admitting that there appeared to be a disconnect, Ezulu, who represented Director of Banking Supervision at the apex bank, said stakeholders groups like members of the OPS can provide additional feedback to the apex bank to track funding disbursements and their effects.

President, Chartered Institute of Bankers of Nigeria (CIBN), Dr Ken Opara underscored the importance of effective collaboration between banking sector and the OPS.

According to him, banking sector is the engine of any economic development and a foundation for sustainable economic growth and stability.

National President, Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Ide John Udeagbala said an efficient financial system breeds a vibrant economy that promotes sustainable inclusive economic growth and development across all sectors.

According to him, fostering synergy between the banking industry and the OPS ensure the promotion of a ‘collective voice’ and increased influence on policy formulation for the private sector, as well as, increased accessibility to vital resources, especially in the areas of funding.

Udeagbala, who was represented by Arc. Ayo Osunloye, said the OPS acknowledged the role the banks play in ensuring the protection of the industry from issues that may affect their sustainability, such as over explosure to non-performing loans and subsequent collapse.

However, he stated that active collaborative efforts between the banking industry and the OPS would help manage and possibly reduce such risks, while also  ensuring that private sector customers become  more organised in their business operations.

“As the Nigerian banking sector struggles with market, operational, reform and regulatory challenges in a bid to ensure sustainability as profit-making entities; the private sector groans with the perceived difficulty in access to finance.

“it is safe to conclude that the more active and synergistic the relationship between banking and private sector, the more we are collectively able to develop and grow the national economy for sustainable Nigeria,” Udeagbala said.

Director General,  Nigeria Employers’ Consultative Forum (NECA), Adewale Oyerinde said the industry-banking relationship in the country has lost steam  as underlined  by  the  declining quantum of loan extended to the productive  sector over the  years.

According to him,  reports from the CBN Statistical Bulletin  showed that the share of    commercial loan to the manufacturing sector  to the aggregate loan to the economy averaged 0.1 per cent  from 2017 to 2021.

Oyerinde, who was represented by Mr Wale Smart, maintained that the development in no doubt limits manufacturing activities in the country in terms of  investment and  production.

“The industrial and the banking sectors are critical components of any economy. The industry needs the banking sector credits to improve investment and production while the bank needs the rental income and equity subscription from the industry to maintain financial stability.

“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,” Oyerinde said.

He said the current low performance of the industrials sector, particularly manufacturing is due to the limited funds available which does not allow for significant investment and expansion in productive activities.

Therefore, he urged banks to intensify efforts towards addressing the gap in banking sector lending to the industry to restore and improve the mutual interdependence of the two sectors in achieving the separate objectives while contributing significantly to national growth.

President, Manufacturers Association of Nigeria (MAN), Engr Mansur Ahmed called for structured long-term loans supportive of the real sector operations.

He called on the apex bank to increase foreign exchange allocation to the real sector by restoring the priority window and dedicated access for manufacturers.

He added that there is need for a more consultative approach in structuring, disbursing and monitoring funding interventions.

Director General, National Association of Small Scale Industrialists (NASSI), Mr Ifeanyi Oputa also stressed the need for transparency and improved governance of funding interventions.

President of ACAMB, Rasheed Bolarinwa said the Nigerian banking industry has been the most misunderstood sector of the economy by its critical stakeholders over the years which has resulted in avoidable ‘confidence crisis’ with the organised private sector (OPS).

He said despite series of efforts made by industry leadership to address and resolve the prolonged mistrust, there exists a widening  communication gap between these two key stakeholders, thus signaling the need for a rethink of strategy towards achieving an enduring synergy.

‘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 redistributing 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 nexus; a link between the two at all time if any economy is to develop and grow,” he said.