Businesses groan under the impact of banking reforms
Cover Stories May 17, 2010
By Babajide Komolafe, Yinka Kolawole, Godwin Oritse, Franklin Alli, Amaka Agwuegbo & Naomi Uzor
LAGOS—THE business community, weekend, protested the negative effect the ongoing reform of the Central Bank was having on their businesses and the economy in general. A random sample of the apex bank’s reform on the business community conducted by Vanguard showed that almost every aspect of the economy was negatively impacted by the reform.
A cross section of maritime operators, real estate developers, manufacturers as well as financial sector operators lamented that the banking reforms created more problems and had caused the death of several businesses, unemployment and low capacity utilisation.

National President of the Real Estate Developers Association of Nigeria, REDAN, Chief Olabode Afolayan told Vanguard: “The ongoing banking reform is destroying businesses and has created crisis of confidence in the system.

“We had expected that cushioning effects on the economy would have accompanied the reform. The short and long-term effects of such reform ought to have been envisaged. For almost six months, there has been no single transaction in real estates.

“The intervention in the banking industry by CBN has created fear in the minds of people generally and no bank wants to take the risk of giving loans to creditors. Some people actually rely on credit facilities from the banks because there is no economy that grows without the involvement of banks.”

Some property developers who spoke to Vanguard observed that in the first quarter, the economy witnessed severe credit squeeze due to the CBN intervention in banking operations. They noted that this manifested in a slump in the real estate business as funding was not forthcoming for new property development. They also noted that there was a sharp decline in demand for property, especially in areas like Ikoyi, Victoria Island and Lekki, with some of them having had their valuations reduced by as much as 10 per cent.

A facility manager admitted that the banking reforms forced property prices to fall in some areas. He stressed that most of the prices fell due to banks’ debtors selling off their property below valuation prices to enable them settle their debts and thus avoid prosecution by the Economic and Financial Crimes Commission, EFCC.
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8 Responses for “Businesses groan under the impact of banking reforms”
franklin says:
May 17, 2010 at 10:43 amI agree with you Ademola Sanusi never realised that being CBN governor takes more than being a banker, his policies ought to take into consideration the overall impact to the economy. his action has had a more devastating impact to the economy than it has on restructing the banks i would say one thing. quit while you are ahead.
joseph says:
May 17, 2010 at 9:38 amI don’t think it is wisely to blame the central bank for what is happening in the banking industry. Most of the bank executives knew that they have committed financial crime but they failed to admit that. Some of their financial crime they have committed are, intentionally inflate financial statements by not using IFRS correctly, using insider information for their own personal benefits and gains rather than for the benefit of the shareholders and finally they failed to follow the banking ethic. That is what i think the central bank was trying to correct and has a negative effect on the bank contomers.
ADEMOLA says:
May 17, 2010 at 8:11 amSanusi is just a local banker with task to oversee CBN that has international links.Does he ever think that he is in a sensititve position in which his actions and decisions will affect the economy.The practices in banking sector before Sanusi got there is not peculiar to Nigeria alone.It happens every where even in advanced countries although if there is real fraud it has to be properly investigated .he is just looking for later appointment with world bank or IMF.He has succeeded in destroying the economy through various means.He has allowed Nigeria to be less attractive to foreign investors.Many Nigerians working in the banks and companies with various family members depending on them for survival had been sacked.a lot of companies going into administration within months of getting to CBN.I am not writing anything again.The guy has made complete mess of our economy.Why can


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