Banking sector, OPS seeks synergy to support economic growth
By Chinwendu Obienyi
The The role of the banking sector and the private sector in an economy is very clear in that the banking sector focuses on the formation and accumulation of capital while the private sector acts as the engine of economic growth.
Over the years, the Nigerian banking system has emerged as the most misunderstood sector of the economy by its major stakeholders, resulting in a huge crisis of confidence that is expected to foster economic synergy between banks and the private sector.
Despite a series of efforts by industry leaders to address and resolve the protracted distrust with its economic partners, there is a widening communication gap between these two important players in economic development.
For example, while the Nigerian banking sector grapples with market, operational, reform and regulatory challenges in an effort to ensure sustainability as profit-making entities, the private sector groans over the difficulty perceived access to finance.
This position of the private sector is well captured and articulated in the various national policy documents on MSMEs by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). According to the 2021 policy document, some of the major challenges facing Nigerian businesses are as follows; on average, they have low operational capabilities and huge skills gaps in management, technology and attitudes.
Furthermore, there is a predominance of “necessity” entrepreneurs over “opportunity” entrepreneurs. They face weak infrastructure, especially in terms of electricity, transport and workspace. They also lack a collective voice and have relatively little influence on policy formulation.
The above challenges mean that the promotion of a collective voice and increased influence on policy formulation for the private sector as well as increased access to vital resources, especially finance, are needed.
It also signals the need to rethink the strategy to achieve sustainable synergy between the two development actors.
Speaking at the First National Stakeholder Conference on Synergy between the Nigerian Banking Sector and the Organized Private Sector (OPS) held in Lagos, the President of the Association of Directors of Corporate Affairs of Banks ( ACAMB), Rasheed Bolarinwa, said that the banking sector and the PAHO is supposed to be the main driver of the country’s economy and added that the two must work together if the economy is to develop and grow.
Bolarinwa said, “There is a symbiotic relationship between the two sectors. The more active and synergistic the relationship between the bank and the private sector, the more we are collectively able to develop and grow the national economy for a sustainable Nigeria”.
Also speaking, the National President of the Association of Chambers of Commerce, Industry, Mining and Agriculture (NACCIMA), Ide John Udeagbala said that an efficient financial system breeds a vibrant economy that fosters sustainable and inclusive economic growth and development in all sectors.
According to him, fostering synergy between the banking sector and PAHO ensures the promotion of a “collective voice” and increased influence on policy formulation for the private sector, as well as increased accessibility to vital resources, especially in the areas of financing.
Economic analysts who spoke at the conference on the theme; Promoting synergy between the banking sector and the organized private sector” stated that the link between banks and PAHO has been weakened over the years due to certain political somersaults and the inability of banks to grant loans. loans.
Nigeria Employers’ Consultative Forum (NECA) Managing Director Adewale Oyerinde says the relationship between industry and banks in the country has faltered as underlined by the drop in the amount of loans given to the productive sector. over the years.
According to him, CBN Statistical Bulletin reports showed that the share of commercial lending to the manufacturing sector in overall lending to the economy averaged 0.1 percent from 2017 to 2021.
Oyerinde argued that development, without a doubt, limits manufacturing activities in the country in terms of investment and production.
“The industrial and banking sectors are essential components of any economy. Industry needs credit from the banking sector to improve investment and production, while banking needs rental income and capital subscription from industry to maintain financial stability.
The availability of funds and at a cheaper rate reduces the cost of production, improves the quality of outputs or the efficiency with which inputs are transformed into outputs and contributes to the growth of the private sector in an economy and the multiplier effect will be poverty reduction; increase in per capita income, increase in the country’s competitiveness and by extension, economic growth.
He said the current poor performance of the industrial sector, particularly manufacturing, is due to the limited funds available, which do not allow for significant investment and expansion in productive activities.
However, the CBN Deputy Director of Banking Services, Egboagwu Ezulu, urged PAHO to take advantage of the various CBN interventions to boost production through the BOI, DBN and commercial banks.
Ezulu said offshore FX dumping contributes to FX supply challenges in the country.
“We take the currencies out of this country and dump them overseas when we are told to bring them back because if Nigerians took them home, we wouldn’t be talking about the challenges of FX. There is a challenge and we have to do the right thing.
That’s why the CBN introduced the RT200 to encourage you to bring back the dollar which you say is scarce but in the books of the banks we see billions of dollars that have been exported out of the country and the OPS don’t bring them back. So the question is how to finance the demand for currencies? asked Ezulu.