The Federal Government is seeking the partnership of the banking sector in its efforts to revamp the ailing economy occasioned by the outbreak of the coronavirus pandemic.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, made the appeal in an address on behalf of President Muhammadu Buhari at the 13th Annual Banking and Finance Conference, organized by the Chartered Institute of Bankers (CIBN) held in Abuja on Tuesday.
She said, “today, as bankers and fund managers, you stand in that position to partner with government in its efforts to diversify the economy and reposition the Country for a sustainable future.
“Therefore, you must redouble your efforts, to mobilize domestic resources and attract foreign investment to create quality job opportunities for our teeming youths and lift people out of poverty”.
The minister pointed out that with the current partial lifting of the lockdown measures, there are positive indications that some businesses would return to pre-pandemic levels.
She however noted that the uncertainty over the duration and intensity of the pandemic, as well as its impact on the economy may continue to be a cause for concern.
Ahmed recalled that in the wake of the pandemic, the government in concert with regulatory authorities had stepped forward with various liquidity, monetary, prudential and supervisory measures in the form of interest rate cuts, higher structural and durable liquidity, moratorium on debt servicing and forbearances on asset provisioning.
“This framework is a well thought-out decision taken in consultation with stakeholders and is aimed at striking a balance between protecting the interest of depositors and maintaining financial stability on one hand, and preserving the economic value of viable businesses by providing durable relief to businesses, as well as individuals affected by the COVID-19 pandemic, on the other.
“We expect efficient and diligent implementation of the restructuring measures by banks, keeping the above objectives in mind. While the moratorium on loans was a temporary solution in the context of the lockdown; the restructuring framework is expected to give durable relief to borrowers facing COVID-19 related distress.
“It is expected that, post COVID-19, the financial sector should return to normal functioning without relying on the regulatory relaxations and other measures as the new norm.
“Just like boosting immunity of the population is the key to tackling pandemics, the key to long term financial stability would be to foster tangible improvement in the resilience of banks to withstand exogenous shocks like the current pandemic.
“Accordingly, the core of resilient banks is made up of good governance, effective risk management and compliance culture. This is not to say that Nigerian banks do not have sound governance and risk management systems in place. There is always scope for improvement and these are the areas which need greater attention going forward”, Ahmed noted.
The minister who stated that the banking sector has a responsible role to play not only as a facilitator of growth of the economy but also to improve its profitability, congratulated the bankers for organizing this year’s event, despite the ravaging COVID-19 pandemic.
She urged them to apply the decisions reached at the end of the conference, with the theme, “Facilitating a Sustainable Future: The Role of Banking and Finance”, to reinforce the ethics of the banking profession for greater performance.
In his remarks, the Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, reiterated the important role the banking community can play in restoring stability to sectors significantly impacted by the virus, while also supporting investments in key sectors of the economy that could have a multiplier effect on growth.
He stated that prior to the onset of the corona virus in Nigeria, the Nigerian economy had been on a positive growth trajectory, as the country had witnessed 12 consecutive quarters of positive growth following the 2016 – 2017 recession, along with significant foreign capital inflows due to improved fundamentals of the economy.
According the Governor, GDP growth for 2019 stood at 2.29 percent, supported by strong growth of 2.55 percent in the 4th quarter of 2019, and capital inflows of $3.8bn in the same quarter.
He however noted that the onset of the COVID-19 pandemic in the 1st half of 2020, and the measures put in place to contain the spread of the virus, caused a significant shock to our economy.
“The downturn in economic activity which was particularly significant in the 2nd quarter of the year, was driven by a series of external factors in addition to the lockdown measures imposed, in order to curtail the spread of the virus.
“Although the lockdown had a significant effect on economic activity, it had to be done in order to prevent an uncontrolled spread of the virus, while efforts were being made to improve the capacity of our healthcare institutions to deal with a potential surge in cases.
“Consequently, the Nigerian economy contracted by 6.1 percent in the 2nd quarter of 2020, down from a positive growth of 1.87 percent recorded in the 1st quarter of 2020. While these results were not positive, it was well below the forecast of many analysts, who had projected a steeper contraction of 7.4 percent.
“It was also better than contractions witnessed in other advanced and emerging market countries, such as Great Britain (-20 percent), India (-24 percent) and South Africa (-51 percent) in the 2nd quarter of 2020. The less than expected downturn in the economy was due to collaborative efforts between the monetary and fiscal authorities”, Emefiele added.