Sanusi identifies power, infrastructure as constraints to banks lending to SMEs




The prevailing power crisis and dearth of infrastructure in the country have been identified as major challenges to banks lending to small and medium scale enterprises in the country. Consequently, the development is impacting negatively on the banking sector reforms.


Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria (CBN), made the disclosure at the weekend in Asaba at the first distinguished lecture with the theme: ‘The Economy in Perspective: Consolidating the Gains of the Banking Sector Reforms’, organised by ‘The Knowledge Centre, Onicha-Ugbo’. “The problem that we have is how to get the bank to lend to small and medium scale enterprises. The banking sector reforms and monetary policies can only keep the economy this far.


“The banking constraints on economic growth in Nigeria are not monetary. In my view there are five binding constraints. One is the constraint of critical infrastructure. If you give the banks the money and tell them to lend to the manufacturers…they need power, security, transport infrastructure. If you don’t have that, the banks will not find a viable manufacturing industry to lend to”. Sanusi quarreled with the much touted Vision 2020 and proffered a short term agenda of Vision 2012, which should specifically tackle the power challenge and progress to Vision 2014, when another key economic sector would be squarely addressed.


“The power problem will need to be addressed. The solution is to implement the legislation on power reform. I love the Vision 20:2020, but my fear is that power situation needs to be addressed. Our ambition is to generate 6,000 megawatts of electricity. How many industries can it carry? South Africa with just 40 million people generates over 40,000 megawatts. You need to create an environment.


“We have to transform the environment. This is the only country in the world where over 70 percent of the power is privately generated. I have no doubt that if the national grid was to collapse, manufacturers will still be in business. Everyone who has power supply depends on generators.Nigerians pay N7 for power if it is available and N45 if not available. So why not increase the tariff to N22 and make it available? I have this opinion at every occasion. The industrial revolution started in England with the discovery of electricity. We need to have an investment climate and environment. The petroleum sector has to be deregulated. We have spent over N1.2 trillion on fuel subsidy in the last three years”, he stressed.


Again, Sanusi Lamido Sanusi on Sunday said that except Nigerian banks improve on capacity, assets qualities, risk management and corporate governance their performance will continue to remain lower than expected in global financial ratings.Sanusi spoke to reporters at the Presidential Lounge of Murtala Muhammed Airport, Ikeja, Lagos, at the weekend.






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