blacksta:

Stimulating an economy that does not trickle down to the masses. Banks dont lend and if they do lend is with stringent conditions

blacksta:

Stimulating an economy that does not trickle down to the masses.  Banks dont lend and if they do lend is with stringent conditions

blacksta:

Stimulating an economy that does not trickle down to the masses.  Banks dont lend and if they do lend is with stringent conditions

biina:

Generally, effective stimulation would trickle down to the masses via job creation, and not through the bank lending you money. More relevant in this case is the proposed financial support for the power sector, which should result in improved power supply and thus improved productivity in the economy, and, increased standard of living for everyone.

biina:

Generally, effective stimulation would trickle down to the masses via job creation, and not through the bank lending you money. More relevant in this case is the proposed financial support for the power sector, which should result in improved power supply and thus improved productivity in the economy, and, increased standard of living for everyone.

blacksta:

I guess you have you have answered the question  - with the above  - Stimulating the economy without it benefiting small medium business is complete waste of time. Money should be diverted somewhere else.  I suspect the so cold funds will be used to bolster deplted customer deposits by the so called useless banks

4 Play:

If the banks are undercapitalised, they shouldn't and won't increase lending.

blacksta:

I guess you have you have answered the question  - with the above  - Stimulating the economy without it benefiting small medium business is complete waste of time. Money should be diverted somewhere else.  I suspect the so cold funds will be used to bolster deplted customer deposits by the so called useless banks

Fhemmmy:

Lol

Fhemmmy:

The lending has never gone to the right people

biina:

why?

Fhemmmy:

Ask the Nigerian govt and their people

RoadStar:

What is the impact of the $2bn late last year by FG.
Was there any impact assessment.
Now CBN is about to spend more.

CBN should try and stem the mass sack in the banking sector before trying to induce jobs in other sectors

Maybe re-open the EDW(Soludos approach) but with another name (Sanusi approach)

biina:

The $2bn was from the excess crude oil account and was disbursed to the FG and states accounts to ensure funding of capital projects and avoid recession. CBN did not 'spend', money.

freezy:

Ok, but what was the impact? Any impact assessment report? I'm not sure I can pinpoint any particular effect other than the worsening fuel crisis which is directly making life difficult in all areas for everyone.

biina:

The same impact you get when the different levels of govt get their monthly allocations i.e. they have funds to meet their obligations. The government simply paid themselves a 13th month salary. To evaluate how well they met their obligations or how much it affected their local economy, you would have to assess it on a state by state basis. The funds were not meant for the private sector nor were they fuel subsidies.

RoadStar:

So why should this one be different ?
Sanusi of all people should know that the present inability of banks to lend to the wider economy is not due to unfriendly/tight fiscal policies.
it is due to the huge dent to confidence experienced in the banking sector as a result of the banking crisis.
He is being deceptive by tweaking around interest rates.

I still feel Sanusi should have toned town all that razmataz that had to do with the banking crisis.
He should have focused on fixing the problem without exacerbating it to that extent he did.

biina:

because they are different things. In the prior case, the CBN disbursed money from the excess crude oil account to stop the illiquidity in the economy from grinding governemnt to a halt by giving them money (that is theirs) to spend on their obligation, where in the current case the CBN is reducing its deposit interest rates so to discourage the banks from keeping money with the CBN and encourage them to lend t both governemnt and the private sector. CBN is not giving anyone money.
Sanusi fired the corrupt executives, input neede capital to shore up the banks, appointed interim management to oversee the banks (that are now essentially running on tax payers money) and tried to help the banks recover some of the bad debts by publicly pursuing the debtors (a move that made a significant number of those debtors reconcile their accounts)

It was the sacked executives and some misguided Nigerians that were spreading doom and gloom, and claiming an hidden agenda (that is yet to materialize) that caused most of the downtown. The stock market decline had begun before Sanusi took office, but some people would rather blame him for it.

RoadStar:

To cut the long story short.

In your own opinion
Which is the biggest culprit to why you think banks are not lending ?
Is it the impact of the crisis or is it the interest rates.

If the 2billion government stimulation did not bear much fruit.
Do you think the banks in their present state can make a difference.

In my opinion
I think that sanusis actions (wheter in good fate or not) has negatively impacted the banking sector.
I also think it will take years to come outta this mess and and reap the fruits of sanusis actions (If it bears any fruits).

On a more serious note the government should look at alternative options to stimulate the economy asides  these banks.
Because for now the banks are in a perpetual crisis, more complex than just adjusting interest rates.

RoadStar:

@biina
You seem to be overzealous in your job of trying to justify Sanusis actions.

That is not what I am interested in at the moment.
I am just trying to asses the present situation with the banks and and how it affecets economy.

In you own judgement a banking sector which had a credit line facility from CBN shut down (Justifiable or not).
Numerous previously established international credit lines closed. Many investors have pullled out.
Alleinated many of the major players in the sector.(Mind you every banking sector has them)
Many have had their management dismissed and replaced with new and external management.
The general values of these banks have plummeted due to the crash in their share values.
Trying to recover loans, adjusting to the new operating conditions under Sanusis CBN.
Many are still downsizing.
As I am typing out right now a lot of these banks are still sacking workers.
basically, all the banks are still undergoing some form of restructuring, many have been asked by even sanusi himself to raise their capital base. (Asides the 8 bailed out banks)

And in your own opinion, interest rates have an equal effect with all the above.
Well I beg to differ .

You even dismissed the situation by saying that "The worst is over, and the troubled banks should be weaned by September."(In Sanusis words of course) Do you think the crisis affected just the 8 banks bailed out ?
Do you really think its gonna be that easy 

If Sanusi was quick in exposing the rot and the inadequacies of the banking sector and is still doing it till at least last week with another speach.
It will be deceitful and of very poor judgement if he is now trying to play down or hide the effects.
By pretending that the banks are in a normal state as if the whole thing is just about some errant CEOs.

If this is how Sanusi sees the whole crisis, then this is a huge miscalculation on his part.
He might have just presided over the biggest government induced crisis in Nigerias banking history.