By Stanley Opara

Monday, 10 Jan 2011

The governor, Central Bank of Nigeria and chief executive officers of Deposit Money Banks have owned up to the neglect of critical sectors of the economy by the nation‘s financial sector.

At the Bankers Committee meeting held in Enugu, the stakeholders 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.

This, they admitted, had resulted in the neglect of key aspects of the real economy such as power, agriculture, transportation, Small and Medium Enterprises, among others.

Banks operating in the country, according to a statement from the meeting made available to our correspondent on Friday, have resolved on the need to finance critical sectors of the economy for sustainable economic development of the country.

Part of the initiatives highlighted to facilitate the actualisation of the Committee‘s economic revitalisation objective was the need for them to engage state governments to identify key bankable capital projects that could be financed through issuance of development bonds.

The retreat followed to the decision of the apex bank and DMBs at the 296th Bankers Committee meeting to hold a retreat on how to articulate a collaborative approach by the financial services sector to support transformation of the most critical sectors of the economy.

In charting the path forward, Governor Rotimi Amaechi of Rivers State, who delivered a paper titled “Driving Investment to Rivers State: Partnering with the Financial Services Sector,” explained that the critical challenges to the state’s commitment to the real sector development included: access to long term funding, cost of funds required to support infrastructure projects, project management skills and willingness/capacity of financial institutions to support such projects.

According to Amaechi, Rivers State, for instance, is ”currently the highest oil producer in the country but its diversification initiative is not unconnected with the fact that earnings from oil are subjected to the vagaries in the international oil market and the militancy in the Niger Delta which has reduced oil operations and by extension oil revenue in the country generally and in the state in particular.”.

He said among other development programmes, the state was constructing three power stations, seven transmission stations and seven distribution stations, and that the plan was to have 500MW of power available to the state by June 2011.

The governor enumerated the state‘s efforts at good governance, which he said included, “The Quarterly Accountability forum for the State Reserve Funds of about N1bn savings every month amounting to N21bn at present; savings from excess crude (which are currently more than N37bn; Fiscal Responsibility Bill with the state House of Assembly; Open Government Policy (Town hall meetings); and investor-friendly legal and regulatory framework.”

He, however, made reference to the investor- friendly nature of the state and the strength of its financial position which he said were attested to by the state‘s Fitch rating of B+, and the absence of indebtedness to any local or international bank.

Source: Punch