Banks’ chief executive officers have called for further devaluation of the naira
and restoration of liquidity to the foreign exchange market.

Key players in the banking and oil and gas sectors have also raised the alarm
over the “disappearing” flow of funds into the banking sector as well as
another round of fuel scarcity in the country.

The concerns were expressed on Thursday in Lagos at a conference, where
the Chief Executive Officers of First Bank of Nigeria Limited, Zenith Bank Plc,
UBA Plc, Mobil Oil Nigeria Plc, Seplat Petroleum Development Company Plc
and Oando Plc were panellists.
It was at the CEO roundtable organised by Bloomberg and the Nigerian Stock
Exchange.

The Group Managing Director/CEO, First Bank of Nigeria Limited, Mr. Bisi
Onasanya, said the banks could not support the naira at the present artificial
level of less than N200 in the official market, calling for further devaluation of
the currency.

He said, “It is not sustainable, and the longer we continue to hold unto this,
the more we send signals to the international market that we are not serious
as a country.

“There has to be some adjustment in the present level of the naira. There has
to be a re-opening of the market for activities to continue in the market
otherwise, the economy will be at a standstill.”

The Group Managing Director/CEO of UBA Group, Mr. Phillips Oduoza, who
was represented by the bank’s Executive Director, Treasury and International
Business, Mr. Femi Olalokun, also indicated that there should be a little bit of
adjustment in the currency given the current situation, stressing the need to
diversify the economy, broaden the base of income and restore liquidity in the
foreign-exchange market.

“I think we need to increase the rate of interest for funds to come in,” he
said.

The First Bank boss also said the Nigerian economy was contracting owing to
the decline in oil revenue, which account for about 85 per cent of foreign
exchange and from which the totality of the country’s import bills are
financed.

Noting the decline in the country’s Gross Domestic Product to 3.8 per cent in
the first quarter of this year, he said, “This has signalled that the economy is
contrasting and mainly as a result of dwindling government revenues.
“So, you can’t take the banking sector out of that equation. I believe very
strongly that this will impact deposits in the market, the volume of deposits in
the market and the rate at which funds can come into the system.

“Savings rate will slow down. Funds that come into the purses of various
states today are barely enough to meet their overheads; 18 states today are
defaulting in the payment of salaries. So what does that tell you? The flow of
funds into the banking sector that used to help in accretion of deposits to fund
the real sector of the economy has slowed down, if not disappeared.”

Onasanya said he was not surprised that the Central Bank of Nigeria decided
to average out the cash reserve requirement between the public and private
sector deposits, because in reality, public sector deposits had disappeared
from the market.

“The reality is that we have a contracting economy; we have an opportunity,
however, to see this as a process to start looking within and rebuilding the
Nigerian economy from the basis,” he said.

On his part, the Group Managing Director/CEO, Zenith Bank Plc, Mr. Peter
Amangbo, said, “The major challenge we are facing now is having the
availability of this foreign exchange to foot the country’s import bills.

“When you have challenges like this, what you find is that the issue of
confidence comes in. People are scared, and the next thing you see is panic.
Almost everybody has rushed out; everybody wants to buy foreign exchange,
and you see quite a lot of backlog that we have in the system now.”

On their part, oil industry players, including the Chairman and Managing
Director of Mobil Oil Nigeria Plc, Mr. Adetunji Oyebanji; Chief Executive Officer
of Seplat, Mr. Austin Avuru; and Group Chief Executive, Oando Plc, Mr.
Adewale Tinubu, all stressed the need to deregulate the downstream sector of
the industry.

Avuru, however, warned that fuel scarcity might resurface in the next three
weeks if the government did not have enough money to pay for subsidy.
“We have a little respite now because some people that owe government some
money are bringing in ships. In another three weeks, we will be back to
scarcity because we simply do not have the money to pay this subsidy and
therefore no banks will give these people money.”

www.punchng.com/news/bank-ceos-call-for-further-naira-devaluation/

This call for further devaluation by the banks seems very disappointing. What do we buy from the US, UK, EU etc that are so important, that we cannot find local alternatives? Also, what do we sell, to these foreign countries, other than the crude oil that we want to reduce the prices further to sell more? How much less do we want the oil price to fall before we see beyond our eyes? Are the banks trying to make the economy unworkable for this Government? You want to sell oil concession, are you devaluing to enable you sell to your foreign friends cheaply? Unless Nigeria has other exports than crude oil, please let the CBN bring back a higher value for our Naira.

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Orunto:
This call for further devaluation by the banks seems very disappointing. What do we buy from the US, UK, EU etc that are so important, that we cannot find local alternatives? Also, what do we sell, to these foreign countries, other than the crude oil that we want to reduce the prices further to sell more? How much less do we want the oil price to fall before we see beyond our eyes? Are the banks trying to make the economy unworkable for this Government? You want to sell oil concession, are you devaluing to enable you sell to your foreign friends cheaply? Unless Nigeria has other exports than crude oil, please let the CBN bring back a higher value for our Naira.

With our current consumption pattern how long do u think we can protect the Naira without depleting our reserves significantly and further worsening our economic position? There has to be a trade -off protect the naira at the risk of further reduction in our reserves or allow a devaluation to preserve and if probably grow our reserves as our BOP situation improves.