Banks in Nigeria may need to begin to brace up for the future and that will require that they raise their capital base.
There is a target to make Nigeria a one-trillion-dollar economy and the banks will need to be fully ready for this.
As a result, the CBN has announced intentions to boost the capital base of the country’s banks.
The Governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso, hinted on this planned capital base raise. He spoke at a bankers’ dinner over the weekend.
According to him, the banking system had been stable, but banks in Nigeria were not fully capitalised. He says they lack the capacity to fulfill the needs of a $1-trillion economy, which the current administration is aiming at.
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“Will Nigerian banks have sufficient capital relative to the finance system’s needs in servicing a one-trillion-dollar economy in the near future?
“In my opinion, the answer is no, unless we take action,” he said.
“Therefore, we must make tough decisions regarding capital adequacy. As a first step, the Central Bank will be directing banks to increase their capital.”
Cardoso Harped On The Importance Of Technology
The CBN boss also stressed the importance of technology in delivering financial services and enhancing financial inclusion.
Also, he spoke on financial institutions that have breached their licenses regarding the use of technology to facilitate payment.
According to Cardoso, the apex bank has observed that some institutions were operating outside the approved activities.
“Any intentional or unintended non-compliance will be subject to sanctions, as operators have the responsibility to ensure that they are licensed for the activity they undertake,” he said.
“As we conduct a comprehensive review of the licensing framework for payment services, we will engage in extensive consultations to engage a new regulatory and compliance framework that is suitable for the technology-driven payment services sector.”
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43 Restricted Items
Recently, the CBN unbanned a list of 43 items that were hitherto banned.
On this issue, the CBN boss had this to say.
“During the period when the 43 items were restricted, there was a 51% increase in trade evasion by importers accessing the foreign exchange market resulting in a revue drop of approximately $1.4 billion annually between 2015 and 2019,” he said.
