Nigerian banks underdeveloping the nation -By Jerry Jaiyesimi
A cursory investigation of the Nigerian economy reveals diverging fortunes for the finance sector led by banks and the real sector led by manufacturing. With the decline in manufacturing, now at 9% of gross domestic product from a height of 20% in the early 1980s, pundits would expect banks’ fortunes to decline with the belief that the real sector, manufacturing et al, sustains banks at least for developing economies. Such logic has been turned on its head. In regions of the country, while manufacturing has disappeared, bank branches have increased. Meanwhile, the Central Bank of Nigeria has assumed the role of retail banks by directly funding all types of sectors from farming to power generation and aviation. These banks had ignored government-sponsored funds, like SME FUND and AGRICFUND, sequestered for intervening in these sectors. These funds had been set aside from profits of banks to encourage them to finance the real sectors. This they refused to do leaving the apex bank to fill the gap and is being done in an inefficient manner.
Nigerian banks underdeveloping the nation -By Jerry Jaiyesimi
A cursory investigation of the Nigerian economy reveals diverging fortunes for the finance sector led by banks and the real sector led by manufacturing. With the decline in manufacturing, now at 9% of gross domestic product from a height of 20% in the early 1980s, pundits would expect banks’ fortunes to decline with the belief that the real sector, manufacturing et al, sustains banks at least for developing economies. Such logic has been turned on its head. In regions of the country, while manufacturing has disappeared, bank branches have increased. Meanwhile, the Central Bank of Nigeria has assumed the role of retail banks by directly funding all types of sectors from farming to power generation and aviation. These banks had ignored government-sponsored funds, like SME FUND and AGRICFUND, sequestered for intervening in these sectors. These funds had been set aside from profits of banks to encourage them to finance the real sectors. This they refused to do leaving the apex bank to fill the gap and is being done in an inefficient manner.