Nigeria needs $4.5bn to recapitalise special banks

The Federal Government may have succumbed to pressure from international institutions to reform some of the special banks, including the Federal Mortgage Bank, Bank of Industry and Bank of Agriculture for the nation’s economy to reflect the needed reforms.

It is being speculated that the sum of $4.5 billion will be needed for the recapitalisation programme of these banks.

As part of the country’s bid to diversify its mono-oil economy, the Federal Government reportedly submitted a programme, to convince the institutions, especially, the IMF, World Bank and African Development Bank, all in furtherance to Nigeria’s quest for loan facilities.

But reliable government sources said the three multinational agencies gave a number of conditions to be met, among them being diversifying the economy, reviewing Nigeria’s internal revenue generation and above all restructuring the special banks for capital growth and better participation of the private sector.

The government official, who pleaded for anonymity, said government is yet to find the best way of raising the needed fund unless it would allow private sector become part of the ownership of the assets, which is in line with other terms handed in by IMF.

Read also: FOREX: CBN to inject fresh $350m into interbank market

Already the Minister of Power, Works and Housing, Mr. Babatunde Fashola, had on Friday confirmed that a recapitalisation process is being considered for the FMBN Nigeria to the tune of at least $2.6bn.

At the inauguration of the FMBN/Kam Abioye Housing Estate board, Fashola, represented by the Minister of State for Power, Works and Housing, Mr. Mustapha Shehuri, said the need to reposition the bank for efficiency to carry out its mandate under the Federal Government’s National Housing Programme had made the move imperative.

Though he refused to link the recapitalisation programme to the conditions given to Nigeria by the world financial institutions, he stated that the ministry would continue to use its projects to elevate the lifestyles of Nigerians despite the economic realities.

However, spokesperson of BoI, Mrs. Helene Awonife, said management of the bank is there to implement policies of government.

“The BoI is a Federal Government institution, which has been revisiting all its programmes in line with government policies. The decision to recapitalise it or not is beyond us here. But we will be better for it,” she said.

On whether BoI management is aware of IMF/WB/AfDB conditionalities of loan facilities to Nigeria, based on recapitalizing the bank, Awonife said the BoI does not relate directly with international organisations as regards restructuring of the bank.

When contacted on the matter, CBN Head, Corporate Affairs, Mr. Isaac Okoroafor, said there were many restructuring programmes going in the system of which recapitalisation of some financial institutions is part of.

But he refused to confirm that they are all tied to the loan conditions from the international institutions.

 

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