The Central Bank of Nigeria, CBN has reassured of its commitment towards sustainability goals.
The CBN gave the assurance at the 2023 Nigeria Sustainability Summit, themed: “Crisis-Resilient and New Nigerian Economy,” held at the Access Towers, Oniru, Victoria Island, Lagos.
While answering questions as a panellist at the Summit, the Special Guest of Honour, the governor of the CBN, Dr. Yemi Cardoso, who was represented by the apex bank’s director, financial policy and regulation, Haruna Mustapha said that sustainability issues for them at the Central Bank is a strategic imperative.
“Back in 2012, the CBN led a charge, in terms of the statement of commitment to those 9 sustainable banking principles and we’ve been implementing those ever since. More recently, we’re looking to take things to a much higher level by incorporating climate related considerations in those principles.”
He said that the CBN is also keying into the global efforts towards a cleaner energy and net zero commitment to evolve a better future not only for this generation but also for the future generation
Mustapha, also responded to questions surrounding the statement by Cardoso at the Chartered Institute of Bankers of Nigeria (CIBN) dinner that the CBN will be directing banks to increase their capital.
He said that the directive by the then CBN governor, Charles Soludo in 2005 to raise bank’s capital from 2 billion to 25 billion was key to sustaining the banking industry during the global financial crisis.
“Let’s go back in time, 2005, when the then CBN governor, announced the increase in minimum paid capital from 2 billion to 25 billion, at that time, the reason was that Nigerian banks needed to be strengthened to play on the global stage”.
“It was if the CBN governor then saw tomorrow because just two, three years down the road, the global financial crisis hit and but for that proactive move, the second round effects of that crisis would have wiped off a number of banks and that would have had consequences on the stability of the Nigerian banking system.”
Mustapha said that banks increasing their capital base will help to cushion and absorb unexpected losses.
“In the face of macroeconomics that we currently face, we can all relate to what is happening now, again tightening it with the traditional function of capital to cushion unexpected losses and also to support the aspirations of the current government to build a 1 trillion dollar economy and by the way, is one that is rooted in sustainable principles, what do we do? There is a need to take a second look at the existing capital regime,” he added.
The director, financial policy and regulation, then said that recently, a number of policies were ruled out that had an impact on the banking system.
“I’ll just mention two. 1. the removal of fuel subsidy and 2. The recent FX implications. Currently, because of the impact of some of these policies, we’ve seen banks reaching some of the key metrics such as single….for instance, because it is a function of capital.
You couldn’t fund a transaction without us looking at your exposure to a single borrower. These are some of the protective guidelines that we put in place to check banks.”
“In 2005, at that time, 25 billion Naira was equivalent to about 200 million dollars. Today, with all the gathering clouds, with the risks in the horizon, 25 billion Naira today is at best about 25 million dollars. Now put that in the context of risks and then the capacity to build a 1 trillion dollar economy, and also for banks to support their operations.”
Access Holdings PLC, parent company of Access Bank PLC, hosted the Nigeria Sustainability Summit 2023, in collaboration with the European Organisation for Sustainable Development (EOSD), and with Financial Nigeria International Limited as the organising partner.
The Nigeria Sustainability Summit 2023 had the aim of kick-starting the shift from low-value and crisis-prone economy, and fostering high-value, socially-inclusive, green, and climate-friendly economic development of Nigeria through a sustainability-driven corporate sector.
Olusola Akintonde
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