The Central Bank of Nigeria (CBN) has reiterated its dedication to supporting the federal government’s ambitious goal of transforming the nation’s economy into a $1 trillion powerhouse.
This commitment was highlighted during the launch of the Afrinvest 2024 Banking Sector Report, where Mr. John Onoja, Acting Director of Financial Policy and Regulations at CBN, spoke on behalf of the CBN Governor, Dr. Olayemi Cardoso.
Onoja expressed the CBN’s enthusiasm for the current administration’s economic target, stating, “We are glad that the present administration has set this target, and we are committed to supporting it.”
He detailed the various initiatives the CBN has been implementing to foster a conducive environment for businesses and individuals. These initiatives include addressing institutional deficiencies, restoring corporate governance, strengthening regulations, and enforcing prudential guidelines and policies.
One of the key strategies highlighted by Onoja is the recapitalisation exercise within the banking sector. He explained that this process is crucial for enhancing the capacity of banks to better serve the larger economy.
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“This exercise will increase lending capacity, attract foreign investments, improve foreign exchange liquidity, contribute to GDP growth, and promote better risk management and credit ratings,” Onoja noted.
He emphasized the collaborative efforts between the CBN and banks to review capital plans, ensuring a successful recapitalisation process. The CBN is also working in conjunction with other significant institutions such as the Nigeria Deposit Insurance Corporation, the Securities and Exchange Commission, NGX, and the National Assembly.
During the event, the Group Managing Director of Afrinvest underscored the necessity of a comprehensive approach to achieving the $1 trillion economy target.
The report launched at the event focuses on the recapitalisation of the banking sector, which mandates that all commercial, merchant, and non-interest banks raise their paid-up capital to appropriate levels.
This move, according to Chioke, will bolster the banks’ ability to serve the broader economy, enhance lending capacity, attract foreign investments, and improve risk management practices.
However, Chioke cautioned that the banking sector alone cannot drive economic growth. He stressed the importance of human capital development, drawing parallels with countries like Mexico, Indonesia, and Turkey, which have seen significant improvements in GDP per capita and human capital indices.
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“Recapitalising the banking sector is crucial,” he remarked, “but it’s equally important to develop other sectors such as manufacturing, agriculture, and ICT.”
The CBN’s commitment, coupled with strategic recapitalisation and broad-based economic development, aims to set Nigeria on a path towards achieving its $1 trillion economy goal.
By focusing on creating an enabling environment, strengthening the financial sector, and investing in human capital, Nigeria is poised to make significant strides in economic growth and development.