Bamidele Famoofo
In a bid for Nigeria to achieve the target of $1trillion economy as declared by President Bola Tinubu, commercial banks must focus on lending to the economy, which is the main reason why they are in existence.
Oliver Alawuba, group managing director and chief executive officer, United Bank for Africa Plc, who made this disclosure, warned that trading should be the least business of banks.
Alawuba who is doyen of bank CEOs in Nigeria, said infrastructure, manufacturing and agriculture are three critical sectors which Nigerian banks must give priority, if the nation must achieve the lofty goal of growing its economy to $1trillion.
He made these assertions during a paper presentation titled: ” Banking Recapitalization Towards a One-Trillion Dollar Economy” on Monday in Abuja.
The GMD/CEO of UBA was speaking to Financial Correspondents and Business Editors at the 36th edition of the seminar organised by the Central Bank of Nigeria.
Alawuba applauded the move by the CBN for banks to recapitalise to be able to withstand the current shocks in the global financial industry. His words: “It was a very good move which aligns the monetary and fiscal policies. It’s about a vision for the economy. It’s not because banks are having issues.”
He however warned that the current rate of economic growth in Nigeria won’t get it close to the $1trillion economy, if nothing drastic is done to change the narratives.
“At the current growth rate, Nigeria’s GDP will be about $260bn by 2029. This current rate won’t allow the target to come into fruition as the gap will be around $740bn.
“A double digit growth of 10 percent and above will make it possible and it’s achievable. The economy must be critically transformed to achieve a $1trn economy. East African and some West African countries are achieving 7 percent growth at the moment, ” he said.
Alawuba listed some hurdles which must be surmounted to achieve a $1trillion GDP to include infrastructure deficit, regulatory and policy inconsistencies, low financial inclusion rate and insecurity amongst others.
Alawuba noted that a successful recapitalization will boost the asset base of banks which will enhance there ability increase lending to the economy and contribute more to GDP growth
