₦airaland Forum

O

apoti:
The banks are part of the problem of this Nigerian economy. The role of a commercial bank is to accept deposits and provide loans for businesses, farmers and manufacturers to ensure economic and social stability and sustainable growth of the economy.

But the commercial banks in Nigeria only collect deposits and will rather lend money to politicians and big men rather than the SMEs.

As a former bank employee the management will put your a55 under fire and interrogate you like a murder suspect in police custody for bringing proposals from SMEs, but will pat you on the back if it was a politician or a well known rich man.

Until the CBN sets targets or do something drastic for the commercial banks to lend responsibly people that can boost the economy locally, nothing will change.

Commercial banks are profit making ventures.

The fg should use bank of industry and bank of agriculture if they are serious.

so many unintelligent comments im reading here!!some pple only know how 2 shout Apc,Pdp and Buhari name up and down!!and funny enough....their brain de very empty!and they wont learn.

God's intervention is highly needed ,there are so many economic saboteours in the country called Nigeria .God,pls for the sake of saints among us hear our crying

It is so easy and very "convenient" to lay all the blame at the doorstep of banks.

While I am not exonerating the banks, what concrete steps have been made to deepen the real sector and make the business environment conducive i.e. ease of doing business in the country,critical infrastructure, accurate databases etc?

idupaul see the reason why i support the full implementation of TSA and say the full implementation of TSA is not part of the recession?

Banks were getting free money from the government and rather than lend to SME's and manufacturers they were using it to trade forex and bonds.


If the banks are not going to use Government money to help the citizens, then government shouldn't give them any money.

Banks?
Ahh!!! I thought GEJ demolished the country beyond repairs.

This episode of MPR, CRR and lending rate is interesting considering the dimensions of the Minister of Finance and CBN government.

The position of the minister and contrary action of the CBN government and MPR committee is a classical display of separation of powers. This is the beauty of democracy and the more reason we may need to rethink the idea of blaming Kemi Adeosun for every negative or wrong fiscal and monetary policy implemented by the federal government.

However, it also indicates the failure of consultations between the ministry of finance and CBN government, by extension as well, the MPR committee. There is a huge disconnect between the FG/ministry of finance and the CBN government. Though we know the MPR committee is mainly constituted by commercial bank management executives who are primarily capitalists, profits driven and selfish; the collective interest of the nation is secondary objective to the commercial banks management.

Going forward, the government should ensure the following:
CBN governor, at the expiration of his tenure, is replaced by intellectually sound economists and finance expert with excellent leadership qualities; a person who has the interest of the nation as primary objective.

Stimulate the economy by injecting funds especially on capital projects. Identify the sectors of the economy that has the potential to create employment and wealth in short and long term, inject funds specially to stimulate and empower industries in those sectors.

Never consider the idea of increasing or reducing tax rates, instead focus on taxation drive to capture more eligible tax payers. You will be shocked at the level of tax evasion and avoidance perpetuated in this country.

Empower major revenue generation agencies of the government. Empower the agencies, improve and expand the capacity and human capital required to drive the agencies. Review the welfare and remuneration packages of the agencies to encourage the staff to shun corruption and graft practices and motivate the staff to deliver on the madantes and targets of the agencies. Deploy improved technology and computerization to improve efficiency. Identity the loop holes and avenues of government funds diversion in the system of those agencies and block the avenues and holes. The major agencies are NPA, NCS, FIRS and NIMASA.

Do more in the area of consultation with relevant agencies, bodies, government arms, CBN and private sector industries. Educate the public on efforts to improve the economy and the need for collective responsibility to achieve economic stability, growth and development.

This is my piece of advice for now.

henrydadon:
cbn and their incompetent leadership

i miss the good old days of soludo

Ignorant. The 'good old' day of soludo created the loopholes banks are exploiting today.

Wallade:
This episode of MPR, CRR and lending rate is interesting considering the dimensions of the Minister of Finance and CBN government.

The position of the minister and contrary action of the CBN government and MPR committee is a classical display of separation of powers. This is the beauty of democracy and the more reason we may need to rethink the idea of blaming Kemi Adeosun for every negative or wrong fiscal and monetary policy implemented by the federal government.

However, it also indicates the failure of consultations between the ministry of finance and CBN government, by extension as well, the MPR committee. There is a huge disconnect between the FG/ministry of finance and the CBN government. Though we know the MPR committee is mainly constituted by commercial bank management executives who are primarily capitalists, profits driven and selfish; the collective interest of the nation is secondary objective to the commercial banks management.

Going forward, the government should ensure the following:
CBN governor, at the expiration of his tenure, is replaced by intellectually sound economists and finance expert with excellent leadership qualities; a person who has the interest of the nation as primary objective.

Stimulate the economy by injecting funds especially on capital projects. Identify the sectors of the economy that has the potential to create employment and wealth in short and long term, inject funds specially to stimulate and empower industries in those sectors.

Never consider the idea of increasing or reducing tax rates, instead focus on taxation drive to capture more eligible tax payers. You will be shocked at the level of tax evasion and avoidance perpetuated in this country.

Empower major revenue generation agencies of the government. Empower the agencies, improve and expand the capacity and human capital required to drive the agencies. Review the welfare and remuneration packages of the agencies to encourage the staff to shun corruption and graft practices and motivate the staff to deliver on the madantes and targets of the agencies. Deploy improved technology and computerization to improve efficiency. Identity the loop holes and avenues of government funds diversion in the system of those agencies and block the avenues and holes. The major agencies are NPA, NCS, FIRS and NIMASA.

Do more in the area of consultation with relevant agencies, bodies, government arms, CBN and private sector industries. Educate the public on efforts to improve the economy and the need for collective responsibility to achieve economic stability, growth and development.

This is my piece of advice for now.

Accurate point.

Dottore:
So many economic theories, so. Many economic policies. All trial and error by square pegs in round holes. Look at the way Kemi Adeosun and Emefiele were contradicting themselves in the presidential meeting.
I don't know who amongst them is worse incompetent.

You will appear more intelligent shutting up than writting trash. The many theories are to be tried till we arrive at a reasonable fit. That is how countries like the usa Greece UK Spain Italy tried till they got their fix. Spain is still at it if you care to know so I don't see why you chose to kill yourself over Nigeria going the same way.

Put Simply: Kemi Adeosun's talk about growth vs inflation and her pressure on CBN's MPC to reduce interest rate may be ill informed. Nigeria's recession is a product of imported inflation due to the fall in naira's value.
Local manufacturers who deepend heavily on raw materials souced abroad are facing higher production cost which they are finding difficult or impossible to transfer to the final consumers who aren't doing better financially.
Kemi's reduction of interest rate would only put more naira in circulation that would crowd the FX market and further worsen the exchange rate situation and create more imported inflation and further recession.
On the other hand, the CBN's increase in interest rate would make the Nigerian finacial market more attractive to foreign lenders and investors and thereby create demand for the naira and reduce exchange rate. Most importantly it would discourage local speculators from hoarding the dollar.

Adaowerri111:
How did we get here in the first place

The hurried implementation of the Treasury Single Account (TSA) policy is partly responsible.
The FG withdrew money from the commercial banks (where such money could be used to facilitate economic activity and also earn interest) and placed the funds with the CBN where such money would add no value to the economy and without earning any interest.

How does the FG expect the banks to lend to riskier sectors like manufacturing when the FG itself has pulled out its resources? The CBN should lend directly to the manufacturers and farmers.
The TSA may be a good idea for the purpose of accounting for the FG funds in the hands of MDAs, but the funds should not be locked up in the CBN forever. It does not make economic sense.

mikeapollo:
The hurried implementation of the Treasury Single Account (TSA) policy is partly responsible.
The FG withdrew money from the commercial banks (where such money could be used to facilitate economic activity and also earn interest) and placed the funds with the CBN where such money would add no value to the economy and without earning any interest.

How does the FG expect the banks to lend to riskier sectors like manufacturing when the FG itself has pulled out its resources? The CBN should lend directly to the manufacturers and farmers.
The TSA may be a good idea for the purpose of accounting for the FG funds in the hands of MDAs, but the funds should not be locked up in the CBN forever. It does not make economic sense.

While I support that the so called TSA money should be returned to the banks now that consolidation & proper documentation has been achieved, these same monies have been with the banks all these while they did nothing tangible with it. All they do is take it back to the same CBN to invest in government securities or give it out to importers for quick turnaround of 90, 120 day tenors.

The truth is that there are just about one or two major reasons why banks shy away from real sector lending, and the government is never going to address these issues in the foreseeable future because our politicians and civil servants are more preoccupied with theft and embezzlement of Nigeria's resources than the task of moving this country forward.

The few honest ones are simply overwhelmed trying to stay afloat in the sea of corruption that passes for Nigeria's civil service cum political space.

The major reason is the poor access to land rights which happen to be the major & best form of collateral required to secure bank funding.
Close on the heels of this comes our corrupt legal system populated by incredibly dishonest judges, policemen and other officials. Loan defaulters run into the courts and play hide & seek for decades after successfully defrauding the banks via diversion of borrowed funds. The Ben Bruce brothers' recent case is a prime example

disloman:
God bless you.Some people also will suffer cos I know that the govt knew those who are holding the country down.

That is to tell you that they are deceiving themselves

CBN should do what is needful by reducing the MPR in order to stimulate the economy which is in a contrationary state.

apoti:
The banks are part of the problem of this Nigerian economy. The role of a commercial bank is to accept deposits and provide loans for businesses, farmers and manufacturers to ensure economic and social stability and sustainable growth of the economy.

But the commercial banks in Nigeria only collect deposits and will rather lend money to politicians and big men rather than the SMEs.

As a former bank employee the management will put your a55 under fire and interrogate you like a murder suspect in police custody for bringing proposals from SMEs, but will pat you on the back if it was a politician or a well known rich man.

Until the CBN sets targets or do something drastic for the commercial banks to lend responsibly people that can boost the economy locally, nothing will change.

And them say make people no provide financial help to one another .

[quote author=hrykanu231 post=49542856]If commercial banks are not lending to manufactures and those in the agricultural sector, why not pump money through Bank of Industry and Agricultural Dev Bank?
thank you my brother. what is the responsibility of BOA and other set up institutions. Money is pump to mortgage bank but the FGN is still planning house for all.

apoti:
The banks are part of the problem of this Nigerian economy. The role of a commercial bank is to accept deposits and provide loans for businesses, farmers and manufacturers to ensure economic and social stability and sustainable growth of the economy.

But the commercial banks in Nigeria only collect deposits and will rather lend money to politicians and big men rather than the SMEs.

As a former bank employee the management will put your a55 under fire and interrogate you like a murder suspect in police custody for bringing proposals from SMEs, but will pat you on the back if it was a politician or a well known rich man.

Until the CBN sets targets or do something drastic for the commercial banks to lend responsibly people that can boost the economy locally, nothing will change.

They are the REAL problem.

yns4real:
Lenders prefer traders to manufacturers, farmers

MPC retains tight monetary measures

Highlights of MPC meeting

•Monetary Policy Rate (MPR) 14%
•Cash Reserve Ration (CRR) 22.5%
•Liquidity Ratio 30%
•Asymmentric Window +200 -500

ADVOCATES of lower interest rates lost their battle yesterday.

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) failed to bring down rates, but tightened measures because banks:


*have refused to lend to the agriculture and manufacturing sectors, despite the injection of N1trillion into the economy;
*are lending to traders who pump the cash into foreign exchange trading, thereby increasing the unusual pressure on the naira, which exchanged for N325 and N425 to the dollar in the official and parrallel markets yesterday; and
*attempts to inject more cash without corresponding increase in industrial capacity will worsen inflation.


The MPC of the Central Bank of Nigeria (CBN) shocked pundits by retaining all the monetary policy instruments at their current levels.

Addressing journalists at the end of the MPC meeting in Abuja, CBN Governor Godwin Emefiele said “the Committee assessed the relevant risks and concluded that the economy continues to face elevated risks on both price and output fronts”.

Emefiele said: “Given its primary mandate and considering the limitations of its instruments with respect to output and conscious of the need to allow this and other measures, like the foreign exchange market reforms, to work through fully, the Committee decided to retain the MPR at 14.00 per cent; the CRR at 22.5 per cent; the Liquidity Ratio at 30.00 per cent; and the Asymmetric Window at +200 and -500 basis points around the MPR.”

Defending the MPC’s decision, Emefiele said it decided to tighten measures because banks were not lending money to agriculture and manufacturing, but instead were funneling credit to traders who used the money to demand for foreign exchange.

Emefiele said: “There was a time when the MPC took a decision not only to reduce the monetary rate but also the cash reserve. These were intended to lower rates and encourage spending by the private sector. After we did that, because we did not see the impact on the private sector, we further reduced the CRR from 30.5% to 25%; N1 trillion was injected into the economy through the banks to loan this money but rather than loan this money those credits went to traders who used them to demand for foreign exchange, thereby putting pressure on the foreign exchange market.”

The CBN governor went on: “Thereafter, we reduced CRR to its current 22.5%, that is about N300billion to N500 billion but we said we were not going to allow the banks to have the cash until they send proposals to the CBN for primary agric projects, real manufacturing projects and other types of projects that will support industrial capacity and manufacturing output. I must confess that the proposals that we received were mainly for the purpose of refinancing the liquidity of the banks and thought that that was not what we wanted. That is the reason we have been circumspect about releasing some of those liquidity.”

Very few banks, he said, “have submitted proposals for agric and new manufacturing projects that we will be considering in due course.”

Emefiele explained that “if we lower interest rate, what that will do is make it possible for the fiscal authorities to borrow at a lower rate. If they borrow at a lower rate to stimulate the spending, yes it will stimulate the demand for goods. When you stimulate spending by proving cash or money without taking action to boost industrial capacity, what will happen is that there will be too much money chasing too few goods, which will worsen the current inflationary situation we are in right now.”

The option the apex bank wants to adopt “is that while the fiscal is going ahead to spend, what we want to do is to say, ‘maintain the rates where they are’, since we want to maintain a fairly tight situation and since the tightening, we have seen inflow of FX of above $1 billion between July and now.

“These were used to procure raw materials. This will lead to price of goods moderating and growth of industrial and manufacturing capacity. We want to match the demand so that it does not lead to further inflationary pressure,” Emefiele said.

On the efforts of both fiscal and monetary authorities to synchronise their actions, Emefiele said: “We are working together to achieve what we want to achieve so that we don’t hurt the economy.”

The CBN governor added that “the Committee acknowledged the weak macroeconomic performance and the challenges confronting the economy, but noted that the MPC had consistently called attention to the implications of the absence of robust fiscal policy to complement monetary policy in the past. The Committee also recognised that monetary policy had been substantially burdened since 2009 and had been stretched.”

Against this background, members, he said, “reemphasized the need to prioritise the use of monetary policy instruments in dealing essentially with stability issues around key prices (consumer prices and exchange rate) as prerequisites for growth”.

Emefiele said that “the MPC noted that stagflation is indeed a very difficult economic condition with no quick fixes: having been imposed by supply shocks as well as fiscal and current account (twin) deficits. Consequently, the policy framework must be reengineered urgently to provide a lever for reversing the negative growth trend. While the imperative for ensuring financial system stability remains, the MPC reiterated the fact that monetary policy alone cannot move the economy out of stagflation.”

Emefiele said: “The MPC considered the numerous analysis and calls for rates reduction but came to the conclusion that the greatest challenge to the economy today remains incomplete fiscal reforms which raise costs, risks and uncertainty”.

“The calls came mainly from the belief that reducing interest rates will spur credit growth, not only in the private sector but also by the public sector, which will help provide liquidity to stimulate consumption and investment spending.”

The Committee, the CBN boss added, “was of the view that in the past, the MPC had cut rates; but found that rather than deploy the available liquidity to provide credit to agriculture and manufacturing sectors, the rate cuts provided opportunities for lending to traders who deployed the same liquidity in putting pressure on the foreign exchange market which had limited supply, thus pushing up the exchange rate.”

On providing opportunity to the public sector to borrow at lower rates to boost consumption and investment spending, the Committee agreed that while it was expected to stimulate growth through aggressive spending, doing so without corresponding efforts to boost industrial output by taking actions to deepen foreign exchange supply for raw materials will not help reduce unemployment nor would it boost industrial capacities.

“The Committee was also of the view that consumer demand for goods, which will be boosted through increased spending, may indeed be chasing too few goods which may further exacerbate the already heightened inflationary conditions. The urgency of a monetary-fiscal policy retreat along with trade and budgetary policy,to design a comprehensive intervention mechanism is long overdue,” he said.

The CBN, Emefiele noted, “has since 2009 expanded its balance sheet to bail out the financial system and support growth initiatives in the economy”. ”While stimulating economic growth and creating a congenial investment climate always is and remains essentially the realm of fiscal policy; monetary policy in all cases only comes in to support sound fiscal policy. Nevertheless, the CBN has and shall continue to deploy its development finance interventions to complement the overall effort of fiscal policy towards reinvigorating the economy. The interest rate decisions of the CBN are, therefore, anchored on sound judgment, fundamentals and compelling arguments for such policy interventions.”

The Committee also feels that there was the need to continue to encourage the inflow of foreign capital into the economy by continuing to put in place incentives to gain the confidence of players in this segment of the foreign exchange market. Consequently, the Committee considers that loosening monetary policy now is not advisable as real interest rates are negative, pressure exists on the foreign exchange market while inflation is trending upwards.

The Committee noted the positive response of the deposit money banks (DMBs) to the CBN’s call for increased credit to the private sector between July and August. As the growth in the monetary aggregates spiked above their provisional benchmarks, headline inflation continued its upward trajectory in August 2016, and now close to twice the size of the upper limit of the policy reference band.

“Supply side factors, including energy and utility prices, transportation and input costs, have continued to add to consumer price pressures. Members emphasised that improved fiscal activities, especially, the active implementation of the 2016 budget, and payment of salaries by states and local governments, will go a long way in contributing to economic recovery. In the same direction, the Committee urged the fiscal authorities to consider tax incentives as a stimulus on both supply and demand sides of economic activities,” Emefiele said.

On the outlook for the future, the CBN governor stated that “the data available to the Committee and forecasts of key variables suggest that the outlook for inflation in the medium term appears benign. First, month-on-month inflation has since May 2016 turned the curve; second, harvests have started to kick-in for most agricultural produce and should contribute to dampening consumer prices in the months ahead; and third, the current stance of monetary policy is expected to continue to help lock-in expectations of inflation which, has started to improve with the gradual return of stability in the foreign exchange market.”

In this light, the MPC believes that as inflows improve, the naira exchange rate should further stabilise. Overall, the major pressure points remain the challenges in the oil sector (production and prices), output contraction, and other financial system vulnerabilities as well as foreign exchange shortage.

Reacting to the MPC ‘s decision, analysts have conflicting views on the development. Dr Ogho Okiti President/CEO of Time Economics Limited noted that “cutting the MPR could do more to erode the credibility of the CBN with regards to the conduct of monetary policy. Such action, in our opinion will help worsen the already growing negative real interest rate and could further discourage the return of foreign investors – something the CBN has worked so hard to avoid. Moreover, the pursuit of an expansionary monetary policy in order to support growth, in the face of rising inflation and currency depreciations could prove to be counter-productive, particularly in the absence of complementary fiscal policy reforms.”

Mr Basil Odilim Enwegbara, an Abuja development economist, aligned with the fiscal authorities by arguing that “a country deep in recession caused mostly by high cost of doing business with one of highest MPRs and CRR among peer economies, has its MPC members behaving as if the economic is in high growth mode, calls for sober reflection. What it tells us is that the 2007 CBN Act forced on the country’s President is a great fraud that should be stopped. I strongly believe that we have come to the point in our monetary policy stance when the amendment of the CBN Act of 2007 is now urgent. The goal of the amendment is for the Commander-in-Chief of Nigeria’s economy, President Buhari who was elected by millions of Nigerians to better the lives and improve the overall economy should be the one to have the final say about the country’s MPR, CRR and forex policy. Mr President should call members of MPC to a close door meeting and demand their immediate resignation. In the meantime he should appoint an acting team to be working directly with him until a new team is put in place.”




http://thenationonlineng.net/banks-derail-cbns-n1tr-battle-boost-economy/

which kind kun3 is 9jeria?they dnt want 2 grew d economy they want 2 reap where they did not sow.

martineinstein:
i pity all these banks.they should be ready for serious purnishment and merge when nigeria is outta recession

Anything that comes to them is well deserved!
Those bankers are more criminally minded than even the politicians themselves.

mikeapollo:
The hurried implementation of the Treasury Single Account (TSA) policy is partly responsible.
The FG withdrew money from the commercial banks (where such money could be used to facilitate economic activity and also earn interest) and placed the funds with the CBN where such money would add no value to the economy and without earning any interest.

How does the FG expect the banks to lend to riskier sectors like manufacturing when the FG itself has pulled out its resources? The CBN should lend directly to the manufacturers and farmers.
The TSA may be a good idea for the purpose of accounting for the FG funds in the hands of MDAs, but the funds should not be locked up in the CBN forever. It does not make economic sense.

Pls b objective has d banks been lending money 2 d real sectors all these yrs govt.money is with them,all they do is loot d money & declare bankruptcy,real sectors risky dnt they hav collaterals?politicians not risky?

Those bankers are more criminally minded than the politicians themselves! bunch of brain retards

henrydadon:
cbn and their incompetent leadership
i miss the good old days of soludo

soludo cause this shiit we are in!

jusRadical:
Commercial banks are profit making ventures.

The fg should use bank of industry and bank of agriculture if they are serious.

Our 1st problem is corruption,start pumping moneis 2 BOI,agric banks an see "dasukis moves there 2 reck havocks.

All the monies should go to BOI let know who will be the next looter.

you will keep making the wrong mistakes and taking the wrong steps

this is the way God punishes an extremely religious but very ungodly country.

I believe we all can see that Nigerian DMB deposit money banks are our real problem, CBN, SMES, EFCC all others are saying it

quiverfull:
The banks are the main saboteurs of our economy. And their main grouse is the implementation of the TSA policy. Bastards!

Thank you, they were after high interest rates

The simplistic no brain but fashionable approach is to find someone to blame - whether it is GEJ or PMB. The smart thinking is learning to live with current realities and prosper through them.

But I guess that's too much thinking.

All you guys blaming banks should just stop it!
Are they there for charity?
It's crazy, the things we hear from this govt.
Imagine, the cbn gov whining about banks under his control. Is he mad?!
I can't get a loan without agreeing to stringent conditions, but a bank can flout cbn instructions?
Mr man, if you no sabi d work why not honorably resign and keep your good name?
Did you discuss with state govts to only do business with banks that support msmes in their states, are boi, boa and microfinance banks defunct?
Did tuc, man or naccima refuse to work with you on how to fund the real sector?
Just gerarahere men!

hrykanu231:
If commercial banks are not lending to manufactures and those in the agricultural sector, why not pump money through Bank of Industry and Agricultural Dev Bank?