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Security threatening economic growth prospect, says Adedipe

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Managing Director/Chief Executive Officer, eTransact International Plc, Niyi Toluwalope (left); MD/CEO of Wema Bank Plc, Ademola Adebise; Head VAS Banking, Wema Bank; Abimbola Reis; Chief Digital Officer of the bank, Olusegun Adeniyi, during a session at the bank’s headquarters, Lagos… last week.

Chief Consultant at B. Adedipe Associates Limited, Dr. Biodun Adedipe, said Nigeria has the rare opportunity of matching population expansion with economic growth this year but warned that “unfolding security situation” could scuttle the possibility.

Gross Domestic Product (GDP) has lagged behind the population growth rate, which averaged 2.58 per cent in the past decade, in the last three years.

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With the International Monetary Fund (IMF) and the National Bureau of Statistics (NBS) putting this year’s growth estimate at 2.5 and three per cent respectively, Adedipe said the economy could level up with population growth in 2021 if the security challenges are promptly addressed.

The economist, who spoke at the bi-monthly seminar of the Finance Correspondents Association of Nigeria (FICAN), said microfinance banks remained the most assured route to building a sustainable economy, but expressed concern at the lackluster performance of the sub-sector.

According to him, a major policy to unlock the huge potential of small businesses would reverse the scaring state of unemployment in the country.

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On the performance of the banking sector, he said: “Nigerian banks have been very liquid in the last five years, especially in the last two years more than double the prescribed minimum liquidity ratio.

“With loan-to-deposit ratio averaging 70.4 per cent, the banks were below prescribed maximum; above this, they would be deemed to be overtrading. Therefore, the banks have room to expand lending. The challenge then is how the lending environment can be de-risked, especially lending to micro, small and medium enterprises (MSMEs),” he asked

Adedipe said Nigeria’s banking was second to Kenya in financial technology innovation but that it was poised to top the continent in the next few years following the current speed of growth.

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He warned the players to brace up for the competition emerging from shadow banks, hence they become irrelevant.

“The world that our banks operated in a pre-COVID-19 pandemic is fast disappearing. That is why we ask – what needs to change for our banks to be ready for the post-COVID-19 world?” he asked, stressing that bankers need new thinking and collaboration to rescue the economy from doldrums.

He described socially responsible banking as one that responds to the country’s most pressing challenges – poverty, unemployment and insecurity.

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