President Bola Tinubu has called on Nigerian banks to reconsider their approach to risk and take a more active role in stimulating economic growth and improving the living conditions of Nigerians.
The President made the call yesterday while declaring open the 19th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja.
Represented by the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, Tinubu said banks must look beyond record profits and shareholder dividends by increasing their support for productive sectors of the economy.
He said financial institutions had traditionally been assessed based on balance-sheet expansion, profitability and returns to shareholders, but argued that greater attention should now be given to their contribution to the real economy.
According to him, a strong banking sector cannot be sustained when businesses struggle to access affordable credit, manufacturers face difficulties financing expansion, and millions of productive MSMEs remain outside the formal financial system.
Tinubu stressed the need for banks to adopt a broader understanding of risk, noting that the loan considered safest by an individual bank may not necessarily represent the most beneficial use of capital for the wider economy.
The President said Nigeria’s economy had returned to a more stable path, accompanied by rising investor confidence. However, he cautioned that macroeconomic stability alone would not automatically translate into prosperity.
He said the next stage of the government’s reform programme would focus on turning stability into investment, investment into production, production into jobs and economic growth into improved living standards.
Tinubu said Nigeria’s development should not be measured simply by the emergence of larger banks with bigger balance sheets, but by the expansion of a more productive economy.
He added that capital must be directed towards innovative ideas and businesses, while technology should be used to broaden economic opportunities and risks shared more effectively.
The President described the banking and financial services sector as crucial to achieving these objectives and urged financial institutions to fully embrace their role as intermediaries between capital and productive economic activity.
He also said the ongoing bank recapitalisation exercise must produce results beyond stronger financial positions.
According to him, the additional capital should support businesses seeking to expand across Africa and contribute to Nigeria’s ambition of building a $1 trillion economy.
He warned that having larger banks without a corresponding increase in financing for productive economic activity would represent an inadequate outcome.
Macroeconomic Progress Must Improve Nigerians’ Lives — CIBN
Earlier, the President and Chairman of Council of the CIBN, Dr. Dele Alabi, said improvements in Nigeria’s macroeconomic indicators would have limited meaning unless they resulted in lower living costs and better living conditions for citizens.
Alabi said the improvements recorded so far should be regarded as milestones rather than the ultimate objective.
He noted that the real measure of economic progress should include lower living expenses, increased employment, higher real incomes, accessible credit, dependable public services and a reduction in poverty.
He stressed that macroeconomic gains must eventually be reflected at the household and business levels, particularly among small businesses and ordinary Nigerians.
Alabi said the conference was organised to give practical effect to the IMPACT Vision he introduced after assuming office in May this year.
According to him, the next phase of Nigeria’s economic reforms should concentrate on ensuring that macroeconomic stability translates into tangible benefits for businesses and households.
He also highlighted CIBN’s advocacy for the establishment of scalable SME hubs across Nigeria as part of efforts to address the challenges facing micro, small and medium-sized enterprises.
He said MSMEs continue to face difficulties including high operating costs, inadequate infrastructure, limited access to markets, low productivity, skills shortages and slow adoption of digital technology.
Nigeria’s Credit Is Bypassing Job Creators — World Bank
Also speaking at the conference, the Lead Private Sector Development Specialist at the World Bank’s Nigeria Office, Ms. Bertine Kamphuis, said credit in Nigeria was not reaching the businesses with the greatest potential to create jobs.
Representing the World Bank’s Division Director for Nigeria, Dr. Mathew Verghis, Kamphuis urged banks to direct more financing towards sectors capable of generating significant employment, particularly agriculture, manufacturing and MSMEs.
She noted that between three and four million young Nigerians enter the labour market annually, making greater access to productive financing increasingly important.
In a goodwill message, the Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, said the substantial funds raised by banks through the recapitalisation exercise demonstrated the availability of significant domestic capital.
Represented by the Deputy Governor in charge of Policy, Mr. Philip Ikeazor, Cardoso urged banks to deploy the newly available capital towards productive sectors of the economy in order to accelerate growth and improve Nigerians’ living standards.
He also called on state governments to work closely with the CBN and federal fiscal authorities in efforts to control inflation.
Cardoso expressed confidence that with cooperation among stakeholders, Nigeria could achieve single-digit inflation.
