The Central Bank of Nigeria, CBN, has called on countries and their financial systems to be prepared and ready to utilise opportunities created by financial globalisation through appropriate policy support and actions.
The CBN stated that globalisation has broken the limits of financial flows, and investors have inadvertently taken full advantage of the opportunities, saying that the global financial system and architecture had since before the new administration of Donald Trump in the United States of America, assumed a new dimension.
This is according to the Acting Director, Corporate Communications Department, CBN, Mrs Hakama Sidi Ali, while representing the Deputy Governor, Corporate Services of the Central Bank of Nigeria, Ms. Emem Usoro in her Keynote Address at the 36th Seminar for Finance Correspondents and Business Editors, with the theme, “Playing the Global Game: Banking Recapitalization Towards a One-Trillion Dollar Economy”.
Usoro stated that the Nigerian banking system must grow, expand and deepen through deliberate policy efforts in order to play critical roles in powering and financing the economy.
She said, ‘The current global system has manifested even more dynamic paradigms, with intense globalisation and guided protectionism, with countries favouring trade wars and retaliations. However, it brings to the fore the readiness and preparedness of our dear country and banking system to build a more sophisticated, vibrant economy.’
‘I think that if the current protectionist development approach by the US and other big economies continues to pervade the global system, we should particularly pay significant attention to bank recapitalisation to ensure that our banks are strong, resilient and stable enough to carry out financial intermediation, and the much-needed financing of development projects and programmes.’
Speaking on the ongoing efforts by the Nigerian government to build a one trillion-dollar economy by the end of 2030, Usoro said it requires careful planning, robust and clear policy direction, dutiful implementation, and averred commitment from stakeholders that would galvazise the various sectors of the economy.
‘’The push for a new paradigm towards the recapitalisation of banks to power a one trillion-dollar economy would no doubt improve the strength and health of the financial system, deepen financial intermediation and promote healthier competition as well as usher in a robust payment architecture that would strengthen our payment system, she said.
Speaking on the theme of the seminar from the regulatory perspective, the Director, Banking Supervision Department, CBN, Dr. Olubukola Akinwunmi, said the theme speaks directly to the country’s evolving financial system and the role of sound, stable and well capitaliszed banking sector in achieving national economic ambitions.
He said that as Nigeria moves towards a $1trn economy, the capacity of banks to support this growth trajectory becomes essential, hence the importance of the recapitalisation policy by the CBN.
Akinwunmi said that ‘’since the last recapitalisation exercise in 2005, changes such as the rebasing of the GDP combination, rebasing of the inflation figures, structural changes such as the non-oil sector pulling their weight and contributing meaningfully to the economy, the dominance of the oil sector, as well as currency devaluation, have contributed to diminishing the real values of the banking capital and revealed structural challenges that could jeoparzise the financial system stability.’’
He said, ‘’This new phase of recapitalisation is to ensure that banks are better equipped to support large volumes of lending, absorb shocks and finance strategic sectors that would drive economic growth.
The new capital requirement aims to address certain risks and challenges of the financing large scale national projects that are vital for meeting the nation’s economic targets.’’
For his part, the Managing Director of UBA who is also the Doyen of Bank’s MD’s, Mr Oliver Alawuba, who spoke on the industry perspective, said that the recapitalisation exercise was a very good move by the CBN as it was the first time seeing an alignment of the monetary policies to the fiscal policies and the vision of the government.
He said the exercise was not about banks having issues but rather about the vision of the economy and aligning the banking sector to play its role to the emerging economy that has been envisioned by the government.
‘’The banking recapitalization initiative represents a landmark policy shift aimed at aligning Nigeria’s financial system with its ambitious economic goals.
This strategic initiative is central to achieving the country’s vision of a $1 trillion economy by 2030, positioning banks not just for compliance but as true economic enablers,’’ he said.
Victoria Ibanga
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