Lamido Sanusi
The number of banks (24) in the country may shrink to 21 or 20 after the reforms, the Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi, said yesterday.
He also admitted that fighting inflation is likely to be a challenge this year, saying it might tighten policy again if the government does little to tackle the country’s public finances.
The CBN Governor also said Nigeria’s targeted exchange rate of about N150 to the dollar is sustainable in the short to medium term, “and the CBN will use its foreign reverses to prop up the currency if its weekens.”
The country’s reserves declined by 16 per cent to $33.5 billion in twelve months to May 6, according to CBN figures.
He admitted: “We drew down reserves to maintain stability of the currency,” Sanusi said. “Its not really a disaster, we’re not in a desperate situation.”
Sanusi, however, said growth could hit seven percent this year if power and other reforms are effected.
“Seven per cent was always around the (growth) range we had forecast. It’s consistent with historical trend. We do think that if we get power reforms off the ground …we can go beyond seven percent.” The number of banks is likely to fall to around 20-21 from 24 currently, following the completion of banking reforms, Sanusi told Reuters.
Nigeria had recorded a Gross Domestic (GDP) growth of 10.3 per cent, 10.6 per cent, 5.4 per cent, 6.2 per cent, seven per cent, 6 per cent, seven per cent and 7.85 per cent in 2003, 2004, 2005, 2006, 2007, 2008, 2009 and 2010.
The CBN had in 2009 fired the eight bank chief executive officers out of the country’s 24 lenders and used N620billion to bail out the industry.
Out of the eight rescued banks currently recapitalising, four – Union Bank of Nigeria Plc, Intercontinental Bank Plc, Afribank Nigeria Plc and Finbank Plc have signed agreements with some institutions, which are expected to either inject capital, merge or acquire them.
Union Bank had signed a Memorandum of Agreement (MoA) with the African Capital Alliance Consortium (ACA Consortium) – a group of institutional investors led by African Capital Alliance (ACA), a leading independent private equity firm investing in West Africa, which is expected to inject $750 million (about N114 billion) to recapitalise the former.
Afribank Plc had also signed a Memorandum of Understanding (MoU) with a potential core investor, Vine Capital Partners Limited, and Phoenix Acquisition Company Limited.
Intercontinental bank also signed a MoU with Access bank Plc to provide safe harbour for Intercontinental Bank’s N670 billion depositors’ funds.
Also, Finbank and First City Monument Bank Plc last week announced that both institutions sign ed a MoU.
Commenting on the imminent inflationary pressure, Sanusi told Reuters: “Fighting inflation will be a great challenge this year, partly because the subsidies…from petroleum products are not sustainable.
He also said a Lebanese bank had applied to set up a representative office in Nigeria.
Sanusi also told Dow Jones Newswires the government must address its public finances because high salaries for government workers are contributing to inflationary pressures.
Nigeria’s inflation rate rose to 12.8 per cent in March from 11.1 percent in February.
The International Monetary Fund (IMF) in its Regional Economic Outlook for sub- Saharan Africa, had also last week said the CBN and other African central banks’ control over inflation remain threatened as economic growth on the continent recovers and fuel and food prices surge.
The CBN had last February raised its benchmark interest rate (Monetary Policy Rate) by 100 basis point, from 6.5 to 7.5 per cent. That was the second time this year and third time in six months that the banking watchdog raised interest rate – having earlier last September, jacked it up from six per cent to 6.5 per cent.
Author: Chief Editor
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