By Tony Obiechina, Abuja

The Governor of the Central Bank of Nigeria (CBN) Mr Godwin Emefiele, on Monday 24th July, 2019 unfolded the policy direction of his new five-year tenure which will terminate in 2024.

Addressing a World Press Conference at the CBN corporate headquarters in  Abuja, the governor promised to facilitate access to financial services to 95 per cent eligible Nigerians as well as “continue to work to safeguard the stability of our financial system, while supporting the development of a payment system infrastructure that will improve access to credit for all eligible Nigerians”.

“Over the next five years, this will be the task for the Central Bank of Nigeria under my leadership, and we intend to do our very best to achieve these objectives”, he had assured.

Although Emefiele acknowledged that much was still left to be achieved from a similar agenda set in July 5, 2014, when he was first appointed, he said he was confident the bank will meet the expectations of Nigerians in the next five years.

Reviewing the achievements and challenges of the CBN in his first tenure, the governor pointed out that “with increased consultation and cooperation with the fiscal authorities and other interest groups, the agenda will be realised”.

In driving this vision, Emefiele expects that the bank under his management for the next five years, will work closely with the fiscal authorities to target a double digit growth; bring down inflation to single digit; and accelerate the rate of employment”.

“Put succinctly, our priorities at the CBN over the next five years are the following; First, preserve domestic macroeconomic and financial stability; Second, foster the development of a robust payments system infrastructure that will increase access to finance for all Nigerians thereby raising the financial inclusion rate in the country; Third, continue to work with the

Deposit Money Banks to improve access to credit for not only small holder farmers and MSMEs but also consumer credit and mortgage facilities for bank customers. Our intervention support shall also be extended to our youth population who possess entrepreneurship skills in the creative industry,” he had said.

Even as the governor promised to encourage the Deposit Money Banks to direct more focus in supporting the education sector, grow the country’s external reserves, and support efforts at diversifying the economy through CBN intervention programmes in the agriculture and manufacturing sectors, the apex bank may have concluded plans to raise the banks’ minimum capital base from the present N25 billion to over N200 billion.

“In the next five years, we intend to pursue a programme of recapitalising the banking Industry to position Nigerian banks among the top 500 in the world.

“Banks will therefore be required to maintain higher levels of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system,” he said.

On macro-economic stability, he said over the next five years, emphasis would be on supporting improved gross domestics product (GDP) growth and greater private sector investment.

According to him, the CBN intends to leverage monetary policy tools in supporting a low inflation environment, while seeking to maintain stability in our exchange rate.

He said decisions by the Monetary Policy Committee on inflation and interest rates will be dependent on insights generated from data on key economic variables.

He also said the CBN would also strive to continue to sustain a positive interest rate regime and that monetary policy measures, will be geared towards containing inflationary pressure and supporting improved productivity in the agricultural and manufacturing sectors.

To bring down the cost of food items, which have considerable weight in the Consumer Price Index basket, Mr Emefiele said the bank will work with other interest groups towards that objective.

“Our ultimate objective is to anchor the public’s inflation expectation at single digits in the medium to long run. We believe a low and stable inflationary environment is essential to the growth of our economy because it will help support long term planning by individuals and businesses,” he assured.

On Exchange Rate Stability, Mr Emefiele said the bank will continue to operate a managed float exchange rate regime, to reduce the impact the continuous volatility in the exchange rate could have on the country’s economy.

He the CBN will support measures to increase and diversify Nigeria’s exports base and ultimately help in shoring up the country’s foreign reserves.

Nigeria, he said, remains committed to a free trade regime that is mutually beneficial; but, particularly aimed at supporting our domestic industries and creating jobs on a mass scale for Nigerians.

Consequently, he said, the CBN intends to aggressively implement its N500 billion financial support facility to boost the growth of the non-oil exports and improve non-oil export earnings.

To achieve Financial System Stability, Mr Emefiele said a resilient and stable financial system was imperative for continued growth of the country’s economy given the intermediation role of financial institutions, to support the needs of individuals and businesses.

“In the next five years, we intend to pursue a programme of recapitalising the banking Industry to position Nigerian banks among the top 500 in the world.

“Banks will therefore be required to maintain higher levels of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system,” he said.

Reacting to the development. the Chairman, Charteted Institute of Bankers (CIBN), Abuja Chapter, Prof Uche Uwsleke said Ememefie’s five year policy thrust “is a good development with a lot of positive impact on the economy”.

 In an interview with Daily Asset on Tuesday, Uwaleke, professor of Capital Market said, “The recapitalization of banks will strengthen financial system stability and put our banks in a stronger position to finance big projects needed for development as well as play in the global scene”.

“The planned introduction of a Trade monitoring system that reduces the length of time it takes to process export documents from one week to one day will surely boost exports. 

“Also commendable is the plan to scale up the Anchor Borrower Programme and target for massive funding support 10 commodities that consume a lot of foreign exchange to import. 

“This will help conserve Forex, grow external reserves, reduce food prices and possibly create job opportunities. The plan to build a robust payment infrastructure including  through promoting payment service banks, shared agent networks, mobile money will go a long way in helping to achieve the target of 95 percent financial inclusion by the year 2024. 

“Similarly, the boost in the Collateral Registry where over N400 billion worth of assets have been registered as well as the NISRAL microfinance bank will no doubt improve access to finance by micro and small businesses. 

“The major risk I see in the pursuit of price and monetary stability which is the core function of the CBN is the volatility in crude oil price given our dependence on the sector. The CBN is therefore advised to have a plan B in its five year plan. 

“It is also vital to get the cooperation of the fiscal authorities especially when it comes to the task of achieving double digit growth because on this very score, the CBN cannot clap with one hand”, he argued.

On capitalization, the university don’t however advised the CBN to raise the banks’ capital base to N100 billion, up from N25 billion. 

“The N25 billion is already eroded when you look at our exchange rate. It is better to have 10 healthy banks than 20 that will be giving CBN headache. The tier two banks are also the most exposed banks to NPLs. The big five, are not giving CBN much problem like the others”, he argued.

“Bigger banks can easily bankroll larger businesses. So,  if we are one of the 500 banks in the world, we can play comfortably in the international league. Bigger banks have better corporate governance and monitoring by CBN is much easier. Fewer stronger banks will invest in the right technology to deliver better services”, Uwaleke further pointed out.

In his reaction, CIBN President, Dr Uche Olowu, said there was no need for panic among bankers as  the Nigeria financial system remains stable stressing that the whole idea of recapitalisation was to continue to sustain that stability in order to expand the scope of banks to do bigger businesses.

Olowu however advised the boards of the banks to go back to the drawing board and restrategise ahead of the CBN’s impending reapitalisation, assuring that the system will take care of itself with adequate planning.