By Adefolarin A. Olamilekan
Economic growths through targeted monetary policies has been a major objective of successive Nigerian government’s deployed by the Central Bank of Nigeria (CBN).
This is apart from the fiscal policies that’s tends to improve government revenue drive as well as focus on the provision of physical infrastructures.
That is belief, is in line with the prevailing economic ideas, that would facilitate and induce the Local Investors and Foreign Director Investors (FDI’s). That would produce the desired growth and shared prosperity for the nation.
In retrospect, after independence the Nigerian state mobilization of local businesses to be more directly involved in promoting economic development and
growth. As always been faced with the challenge of needed domestic resources for investment in the economy.
This however draw attentions to what the banks and their intermediation functions could afford to the economy. In this regards credit facilities to businesses and profitable enterprises.
Just recently, the Governor of the Central Bank of Nigeria Godwin Emiefiele retreated this necessity of the banks in the economy.
According to the sovereign authority Chief “the policy focus of the bank for 2022 is with a pledge to sustain improved access to finance and credit for households and businesses, mobilise investment to boost domestic productivity, enable faster growth of non-oil exports, and support employment generating activities,”
He further added that in this wise “the banking sector will increase access to finance and credit for households in 2022”.
The foregoing point to the facts that Banks as financial intermediaries are expected to provide avenue for people to save incomes not expended
on consumption and obtained credits.
However, the Apex bank governor stressed the need for “all stakeholders to work to build a more resilient economy that would be better able to contain external shocks, while supporting growth and wealth creation in key sectors of our economy.”
He was of the opinion that the major lesson from the COVID-19 pandemic was for a deliberate effort’s to diversify the base of the Nigerian economy.
In addition, he admonished that “the country must do everything’s possible to reduce the importation of goods into the country”.
We commend the CBN governor on his well captured admonition on what the banks planned responsibilities is to the economy in 2022.
Nevertheless, reforms and ideas introduced by the apex bank have propelled the Nigerian banking industry into a critical economic driver of the nation, accounting for 34.2% of the total equities market capitalization of the Nigerian Stock Exchange (NSE) as of 2020.
Significantly, Nigerian banking sector has witnessed increased growth over the years, currently with a total of 23 commercial banks, and an aggregate asset value of N41.9 trillion as at December 2019.
Given, the economic well-being of the country in 2022 will, depend on the strength of the banking sector performance and resilient to the uncertain of global economic environment.
Moreso, the banks contribution to the nation Gross Domestic Product figures (GDP), as financial sector grew by 30 % (real terms) in 2021 despite the economy slow pace.
The banking sector critical role in mobilizing savings from the surplus core economic at the same time, direct same to the deficit economic units for investment purposes, which in turn brings about economic development to the country.
Expressively, an hindsight into the credit statistics report, showed that the banking sector contributes effectively through functional distribution mechanism injected into various sectors of the economy increased by 40.1% .This in total point to credit access of N5.38 trillion standing at N18.82 trillion within the period of 5 years.
Again it is on record that the number of active bank accounts increased by 35.19million and still counting across the country. And there are indication that before the end of 2022 it may hit the set target of 50million if the usage of online and mobile account opening tools are maximize.
Also worthy of note is the achievement of at least 13 listed Nigerian banks posted an aggregate profit after tax of N439.1 billion, increase of 6.67% even at pandemic era.
One need to appreciate the strategic innovation Nigerian banks deployed in making profit’s in an era global economic stiffness.
Meanwhile, the crux of this piece still draw from the CBN governor disclosure that in 2022,the banks must sustained credit to the economy.
We have no doubt about this, especially with the recent reduction in monetary policy rate by the CBN, from 12.5% to 11.5%. As a means to attract borrowers and open the space for playable loans.
Regrettably, bank’s in Nigeria are worried about non performing loan’s that hampered there margin of net interest income and profit.
Ultimately, the apex bank has oversight role of managing financial institutions. This is in line with achieving macroeconomics goals of price stability, full employment, high economic growth, and internal and external balances.
Sadly, bad debt is worrisome and no one hope to see any Nigerian banks suffer this in 2022.
Though with the proclamation directive that banks will increase credit facilities to businesses and households in 2022. We acknowledge this towards financial stability, and confidence in the system.
The urgency in the banking sector contribution to the economy, has come a long way but with gaps in needs for improvement Because the target for financial inclusiveness stills remains a hurdle to scale through, despite CBN friendly policy, and Nigerians have accepted digital banking system.
What need to be done. From this perspective it Government should urgently address the infrastructural challenges of the country especially
banks’ contribution to economic growth concerning energy availability and power supply.
Secondly, the banks must see critical stakeholders in manufacturing, ICT, and construction and infrastructure sector as first point of credit disbursement will strengthen and stimulate further growth of our economy in 2022 and beyond.
Thirdly an holistic approach should be adopted in tackling non performing loan credits
Lastly, banks should be encouraged to lend more to the household’s withouts discriminations.
