12 August 2017, Sweetcrude, Abuja – The Bankers’ Committee of the Central Bank of Nigeria (CBN) has said the Nigerian economy was steadily pulling out of recession.
The Committee, which gave the review at the end of its 331st meeting in Abuja, said indices on non-oil sector growth in the second quarter of the year showed the economy could recover earlier than expected.
The CBN’s Director of Banking Supervision, Mr. Ahmed Abdullahi, told reporters that the apex bank in particular realized about $4 billion in May from the export and investors’ window it created in the foreign exchange market.
Mr. Abdullahi, who was accompanied to the briefing by the Managing Director of Union Bank, Mr. Emeka Emuwa, said the fund was part of efforts by the banks to join forces with other key interest groups to accelerate the country’s economic recovery.
He said the $4 billion was not only a reflection of the volume of trading through the export and investors’ window, but also the banks effort to rally support towards economic recovery.
“It shows the banks have contributed massively to bring foreign direct investments, FDIs, into the market. We think things will be looking up. We are hopeful things are going in the right direction,” Mr. Abdullahi said.
“Although the numbers are not yet out from the National Bureau of Statistics (NBS) the fact that major non-oil sectors have witnessed positive growth make analysts believe the economy could be out of recession by the second quarter of 2017,” he said.
“We await the number from the NBS. But if one looks at the performance of the capital market and the stability in the foreign exchange market, one would see that a lot of progress has been made in getting the economy out of recession.
Mr. Emuwa said the committee was generally happy with the progress in the economy, saying the positive development was capable of generating a ripple effect on banking and other sectors of the economy.
To further provide access to funding of small-scale agricultural activities, he said the board of the Agriculture and Small and Medium Enterprises Investment Fund was inaugurated, along with a project review committee, to facilitate the disbursement of N26 billion equity fund for agriculture and small businesses in the country.
“Those interested in accessing funds or looking for equity to support their agriculture or small and medium enterprises, SMEs, should approach their banks now and apply to enable them conduct preliminary reviews before passing such requests to the project review committee,” he said.
The board consists of the Managing Directors of Guaranty Trust Bank, Access Bank, First Bank, Zenith and UBA, along with CBN Directors of Banking Supervision and Development Finance.
The project review committee comprise the Managing Directors of FCMB, Unity, and Sterling banks.
The Small and Medium Enterprises Equity Investment scheme is a voluntary initiative of the Bankers’ Committee as a response to the Federal Government’s concerns and policy measures to promote SMEs as vehicles for rapid industrialization, sustainable economic development, poverty alleviation and employment generation.
The scheme requires all commercial banks in the country to provide ten percent of their profit after tax, PAT, for equity investment and promotion of small and medium enterprises.
The provided fund would be invested in small and medium enterprises as the banking industry’s contribution to the Federal Government’s efforts towards stimulating economic growth, developing local technology and generating employment.
The funding to be provided under the scheme will be in the form of equity investment in eligible enterprises.
Indications are that the fund would be used to finance eligible bankable projects to support export of all import substitution products.
Although banks are expected to give out the money to businesses as loans, they would however do so in the form of equity contributions to such companies for a maximum of 10 years.
This means that rather than charge interest on such loans, the banks would be entitled to dividends during the period of their investments.