CBN Governor, Sanusi Lamido Sanusi
By Crusoe Osagie
The Lagos Chamber of Commerce and Industry (LCCI) has outlined steps to help restore the nation’s financial system stability.
The President, LCCI, Otunba Femi Deru, said the financial sector and the entire economy were going through a challenging time, stressing that the challenges have manifested in the tight credit conditions, high interest rates, dislocations and shocks arising from the recent banking sector reforms, downturn in the stock market and job insecurity in the financial services sector in the country.
Deru, who spoke at a seminar organised by the Financial Services Group of the Chamber, outlined some steps such as the need for Board of Directors and shareholders to strengthen their oversight functions in the banking system and indeed all in public companies.
He stressed that regulatory institution in the financial system need to be urgently overhauled. According to him, some of the rots which were exposed in the financial sector could have been avoided if there was an effective regulatory oversight.
He pointed out that investors in other sectors were also feeling the pinch because the financial sector has critical linkages with other sectors in the country.
“Many investors have serious difficulties in accessing bank facility to fund their businesses and many contractors are also facing the dilemma of how to source funds to execute their projects. All of these have resulted in contractions in the economy, with implications for investments and employment generations,” he added.
“But it is in my view that this is another phase in the development of our financial services sector and the economy and it will pass. But we need to draw appropriate lessons from this experience,” he stressed.
Deru said the first major lessons for the country in all situations, is to strive to uphold the rules and tenets of its professions, saying that although it may difficult in the short run, it pays at the end of the day.
The Chairman, Financial Service Group, Mr. Olusola Soetan, said that the role of AMCON in stabilising the financial sector is critical to the growth of the economy, adding that any form of instability in the sector portends dire consequences for the nation.
He said the major cause of the most recent financial crisis particularly in the banking sector, was the huge volume of non-performing loans, estimated at N2.6 trillion, with the rescued banks alone accounting for over 80 per cent of the total.
He said, aside from the injection of N620 billion into the rescued banks and the guarantee of their inter-bank takings by the CBN, the AMCON has gone further to acquire the toxic assets on the books of these banks through its debt issuance programme, providing the financial accommodation direly needed by these institutions and restoring some degree of stability in the banking system.