By Ademola Alawiye

Tuesday, 23 Nov 2010

Deposit Money Banks, under the umbrella of the Bankers‘Committee, have resolved to provide funding to critical sectors of the economy.

This is to ensure sustained economic development in the country by floating development bonds.

This resolution was made at the Bankers‘Committee National Retreat, held recently in Enugu.

The retreat, titled, ”The Role of the Nigerian Financial System in Economic Development,” was chaired by the Governor, Central Bank of Nigeria, Mr. Lamido Sanusi.

According to a statement obtained by our correspondent on Monday, the banks plan to float development bonds to finance infrastructure in critical areas such as power, agriculture, transportation and small and medium scale enterprises in the country.

Besides floating bonds, the CBN and the Chief Executive Officers of the DMBs in a communiqué issued after the retreat also resolved to revitalise the investment function of banks. This would be done with focus on packaging structured infrastructure finance deals as well as investing in targeted capacity building for investment bankers, the statement said.

It added that there was an agreement to develop guidelines on asset allocation and investment of pension funds, propose a reduction in charges for establishing companies to the Corporate Affairs Commission to encourage local entrepreneurship and improve public and private sector capacity for infrastructure concessions.

On the significance of the initiative, Sanusi and the banks‘ CEOs collectively emphasised the critical role financial institutions played in national development. They noted that unfortunately, the current structure of lending to the Nigerian economy was such that the bulk of aggregate credit was channelled mainly to financial market operators and oil traders to the neglect of key aspects of the real economy such as power, agriculture, transportation and SMEs.

The committee also requested the CBN governor to seek Federal Government‘s approval for the required legislation and regulatory changes concerning its economic revitalisation activities. Sanusi was also urged to present recommendations on the financial sector intervention to the National Executive Council and the Federal Executive Council for effective collaboration among the major parties.

Addressing participants at the retreat, the CBN governor, reviewed the rapid credit growth rate in the banking sector post-consolidation which reached a peak in 2007/2008.

He noted that credit was not channelled to the real sector but concentrated on the stock market and oil and gas sector.

Sanusi said that the banking sector was affected by a number of factors since consolidation, which included lack of focus on economic and macro-prudential management, major failures in corporate governance and lack of investor and consumer sophistication. Others, according to him, are inadequate disclosure and transparency, uneven supervision and enforcement and structural and institutional weaknesses in the business environment.

The retreat was attended by international and local experts on project finance and infrastructure development, senior government officials, aside from the CBN governor, his deputies and all the CEOs of DMBs, development banks and discount houses.

Source: Punch