The federal government is currently at an advanced stage of arrangements aimed at privatizing its Development Financial Institutions (DFIs), including the Bank of Agriculture (BOA) and the Bank of Industry (BOI).
Following this development, the government will then establish a megabank called the Development Bank of Nigeria (DBN), which will source funds internationally and make available to the privatized DFIs, as the country’s oil revenues plunge when it cannot raise taxes due to its citizens’ lowered incomes in a time of economic recession.
The reason for this, BusinessDay learnt, is to make the banks more efficient in their role of development lending to manufacturers, primary producers and agro processors in order to boost their businesses, reduce imports, create jobs and wealth for Nigerians and grow the nation’s economy.
Another factor considered is the creation of an enabling environment for better management of credits granted to individuals and companies so as to ensure re-payment and good returns on monies lent.
Speaking at the ongoing annual conference of NES 22, organized by the Nigerian Economic Summit Group (NESG) in Abuja, Bode Tunde, who is a member of the national economic management team at the presidency in Abuja said “the key issue that is important, which is what the government is actually trying to do is refinance or re-engage our concession lines, get out of that space so that the banks and the CBN and the government financial institutions can see what they can do in terms of encouraging banks assist the development financial institutions to manage the credit.”
According to him that is the challenge of BOI and BOA, managing credit, and this is something in which banks have years of experience.
Nigeria’s economy is now in recession and the government is looking for innovative and sustainable ways to keep it afloat, as oil prices remain low and jobs contract.
On Monday, Vice President Yemi Osinbajo said that the government is soon to commence an agricultural buy back scheme in conjunction with the states and the private sector, where food produce will be bought from farmers and stored in silos nationwide and be released in times of scarcity both as a measure to curb oversupply and ensure fairly stable prices for the farmers.
In order to ensure that the operations of the proposed Development Bank of Nigeria (DBN) remain sustainable, Tunde explained that the government is going to be considering primary lines of credit, these are 20-year, 30-year foreign currency credit lines with very low interest rates.
In his words, “we are not going to be in recession for 30 years, so ultimately, Nigeria is going to start paying these debts back, and you will also find out that as some of those lines close, new lines will open and that is what development financial institutions generally do.”
On the specific arrangement for the megabank’s operations, Tunde said “there is a discussion going on as to when the development bank comes on stream; the BOA, the BOI are going to be consumed, those are ongoing. I can’t speak too much to that because discussions are ongoing.”
He also noted that the DBN, while on stream, could provide lines of credit to BOI or BOA to help them capitalize, or could be a shareholder and provide equity capitalization or lines of credit. http://www.businessdayonline.com/fg-to-privatize-boi-boa/ lalasticlala, dominique, Mynd44 |
