In a rare moment of lucidity at the recent 7th Annual Banking and Finance Conference of the Chartered Institute of Bankers (CIBN) held in Abuja, President Goodluck Jonathan struck at the heart of Nigeria’s economic problem: the non-existent support for businesses from the banks. The president said: “In order for this economy to grow, we must find a way for companies to have access to long-term finance…Our commercial banking system has not been able to lend to the real sector at the rate, extent and scope at which they are needed…if inflation is 8.4 per cent, monetary rate is 12 per cent, why is interest rate 20 per cent to an entrepreneur who wants to borrow? That is what is wrong with the economy. That’s why SMEs cannot borrow.”
This could yet be the president’s moment, if he seizes on it and whips the banks into line. Perhaps President Jonathan’s economic spin doctors have finally woken up to reality. They had better get cracking at the banks and force them to support millions of viable businesses, big and small, currently gasping for financial lifelines to survive across the country. For good measure, the Central Bank of Nigeria should withdraw more government funds from commercial banks and force them to create wealth by working in partnership with real sector operators. Banks have become lazy and unhelpful to the economy because of this easy access to government funds. Quite a number of intervention funds for specific sectors of the economy are locked up in the banks or diverted to other use by bankers who set up labyrinthine hurdles in the ways of businesses these funds are meant for.
Banks are at the heart of the modern economy and no nation can hope to grow without their input. The current banking system in Nigeria is not in any way set up to support the economy and cannot transform it in aeons; it needs serious reformations.Source: Leadership