 |
| Naira and dollar notes |
The chief executive officers have called for further devaluation of the naira and restoration of liquidity to the foreign exchange market.
Key players in the banking and oil and gas sectors have also raised the alarm over the “disappearing” flow of funds into the banking sector as well as another round of fuel scarcity in the country.
The concerns were expressed on Thursday in Lagos at a conference, where the Chief Executive Officers of First Bank of Nigeria Limited, Zenith Bank Plc, UBA Plc, Mobil Oil Nigeria Plc, Seplat Petroleum Development Company Plc and Oando Plc were panellists.
It was at the CEO roundtable organised by Bloomberg and the Nigerian Stock Exchange.
The Group Managing Director/CEO, First Bank of Nigeria Limited, Mr. Bisi Onasanya, said the banks could not support the naira at the present artificial level of less than N200 in the official market, calling for further devaluation of the currency.
He said, “It is not sustainable, and the longer we continue to hold unto this, the more we send signals to the international market that we are not serious as a country.
“There has to be some adjustment in the present level of the naira. There has to be a re-opening of the market for activities to continue in the market otherwise, the economy will be at a standstill.”
The Group Managing Director/CEO of UBA Group, Mr. Phillips Oduoza, who was represented by the bank’s Executive Director, Treasury and International Business, Mr. Femi Olalokun, also indicated that there should be a little bit of adjustment in the currency given the current situation, stressing the need to diversify the economy, broaden the base of income and restore liquidity in the foreign-exchange market.
“I think we need to increase the rate of interest for funds to come in,” he said.
The First Bank boss also said the Nigerian economy was contracting owing to the decline in oil revenue, which account for about 85 per cent of foreign exchange and from which the totality of the country’s import bills are financed.
Noting the decline in the country’s Gross Domestic Product to 3.8 per cent in the first quarter of this year, he said, “This has signalled that the economy is contrasting and mainly as a result of dwindling government revenues.
“So, you can’t take the banking sector out of that equation. I believe very strongly that this will impact deposits in the market, the volume of deposits in the market and the rate at which funds can come into the system.
“Savings rate will slow down. Funds that come into the purses of various states today are barely enough to meet their overheads; 18 states today are defaulting in the payment of salaries. So what does that tell you? The flow of funds into the banking sector that used to help in accretion of deposits to fund the real sector of the economy has slowed down, if not disappeared.”
Onasanya said he was not surprised that the Central Bank of Nigeria decided to average out the cash reserve requirement between the public and private sector deposits, because in reality, public sector deposits had disappeared from the market.
“The reality is that we have a contracting economy; we have an opportunity, however, to see this as a process to start looking within and rebuilding the Nigerian economy from the basis,” he said.
On his part, the Group Managing Director/CEO, Zenith Bank Plc, Mr. Peter Amangbo, said, “The major challenge we are facing now is having the availability of this foreign exchange to foot the country’s import bills.
“When you have challenges like this, what you find is that the issue of confidence comes in. People are scared, and the next thing you see is panic. Almost everybody has rushed out; everybody wants to buy foreign exchange, and you see quite a lot of backlog that we have in the system now.”
On their part, oil industry players, including the Chairman and Managing Director of Mobil Oil Nigeria Plc, Mr. Adetunji Oyebanji; Chief Executive Officer of Seplat, Mr. Austin Avuru; and Group Chief Executive, Oando Plc, Mr. Adewale Tinubu, all stressed the need to deregulate the downstream sector of the industry.
Avuru, however, warned that fuel scarcity might resurface in the next three weeks if the government did not have enough money to pay for subsidy.
“We have a little respite now because some people that owe government some money are bringing in ships. In another three weeks, we will be back to scarcity because we simply do not have the money to pay this subsidy and therefore no banks will give these people money.”
0 comments:
Post a Comment