Bankers’ committee says there is no quick fix to forex crisis

Members of the Bankers’ Committee rose from their 326th meeting held on Thursday in Lagos to declare that the foreign exchange (forex) crisis facing the country cannot be resolved overnight.

Speaking on behalf of the committee members, Managing Director, Guaranty Trust Bank Plc, Segun Agbaje, said there is no magic to resolving the forex hitches, except for the country to deepen its import substitution plans.

Manufacturers and other real sector operators have been finding it difficult to access forex  to import their raw materials as crude oil prices plunge.

The bank chief said that growing the local forex base for the country is key, and would ensure that overtime, the country will be able to meet the forex demands of its manufacturers and other real sector operators.

“The way to deal with the supply gap is to develop import substitution. What we have today is backlog that needs to be met. I do not think there is any magic that will be done to meet all their demands except to promote import substitution,” he said.

Agbaje however said the good news is that prices of crude oil have moved from $27 per barrel in January to around $37 to $40 per barrel.

“As a nation, we pray that while we are working on the forex demand, the prices of crude oil also move up. We have to develop import substitution so that at some point, we will be able to meet the type of demand we have,” he said.

Read also: CRIN projects cocoa output will rise to 350,000 tonnes in 2016

CBN Director, Banking Supervision, Mrs Tokunbo Martins, said the rise in the volume of non-performing loans (NPLs) to five per cent average is not unexpected given the level of stress many businesses have faced over low crude oil prices.

She said corporate organisations are not doing much business as they used to do because of economic burst and that has affected debt repayment plan for many of them.

“The NPLs at five per cent is not out of this world. Most importantly, banks are conscious of NPLs and are not lending as much as they used to,” she disclosed.

The NPLs for the 22 deposit money banks as at December 2015 stood at N649 billion, and may rise further.

Martins said Nigerian banks have adequate capital to withstand oil price shocks, but urged the lenders to be prudent and lend wisely.

“We want to assure you that the banking industry remains strong and will continue to carry out its functions effectively,” she said.

Also speaking at the event, Managing Director, Fidelity Bank Plc, Nnamdi Okonkwo, said the cut in CRR from 25 per cent to 20 per cent was meant to channel the excess fund into economic development by lending more to the real sector at single digit interest rate.

He said the fund will be released to banks as soon the CBN concludes the modalities.

“Talking about how soon the funds will be ready, we want to assure you that we know the importance and how urgent it is to lend to the real sector,” he said.

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now