The Central Bank of Nigeria (CBN) and banks, under the aegis of the Bankers’ Committee, have begun talks with the federal government to finance four major roads across Nigeria.
The move, according to the Bankers’ Committee, would reduce Nigeria’s infrastructural deficit.
The committee, which however, declined to disclose the projects they plan to finance, said yesterday in Lagos that the initiative would be beneficial to Nigerians.
Addressing journalists at the end of the committee’s meeting in Lagos, the Director, Banking Supervision at the apex bank, Mr. Hassan Bello, said: “The government has invited the committee of bankers to also consider the possibility of a Public Private Partnership (PPP) in bridging the infrastructural gap and it is to that extent that the committee considered coming in to see how we can finance about four roads.
“On the structure of the financing, the offer was just made by government and the committee just discussed it and it is too early in the day to discuss how this structure is going to be.
“The committee has already set up a small sub-committee to look at the modalities and also engage the government so as to know the way forward.”
Also speaking on the development, the Managing Director, FSDH Merchant Bank Limited, Mrs. Hamda Ambah, said: “We all agreed that government alone cannot provide all the infrastructure in the country that we in the private sector have to work hand in hand with government to ensure that the infrastructure that this country needs to move ahead is provided.
“With that in mind, what was agreed was that we create a small committee among the CEOs to work with the CBN to identify those roads where we would like to participate and come up with a framework, which we would share with government and once we have an agreement, we would be able to forge ahead.”
Also, Managing Director Jaiz Bank, Mr. Hassan Usman, said the Bankers’ Committee was committed to further enhancing financial inclusion through additional support to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) microfinance bank (MFB) of N2.5 billion.
He said: “The Bankers’ Committee is looking in many ways to support government and the society whether it is increasing the level of credit to the private sector and real sector of the economy or working with NIRSAL and other banks to increase financial Inclusion or specifically intervening in infrastructure.
“These are steps being taken to ensure that government is supported to grow this economy, reduce unemployment and also improve the security of the nation.”
While commenting on the additional funding for NIRSAL MFB, its CEO, Mr. Abubakar Kure, said the committee would aid its expansion.
He said: “In order to accelerate the success of the NISRAL MFB, the Bankers’ Committee support has also increased the paid up capital of the bank from N5 billion to N7.5 billion, with an additional N2.5 billion. What that means is that the paid up capital will enable us to promote expansion of branches across the country.
“The branches will be used as a tool for financial inclusion and economic development.”
The Managing Director, Guaranty Trust Bank Plc, Mr. Segun Agbaje, also explained that the banks were on the verge of meeting the 65 per cent minimum Loan to Deposit Ratio (LDR) target set by the CBN at the end of the first quarter.
Agbaje said the policy led to a massive boost in retail customers for banks and enhanced credit to individuals and companies.
“What is needed to stimulate any economy is lending and credit and so when the LDR was first fixed at 60 per cent we thought it was monumental; but as you can see, it is 65 per cent. I think this is very critical not only to the banking industry, but to Nigerians as a whole.
“From our perspective, this has been one of the most successful things that was done in 2019 when you look at how much credit that was availed in six-month period.
“Consumer credit has grown very well. The corporates who have always have credit have also been availed more credit and for any economy to grow the SMEs and retail segment must be availed with credit and I think the LDR is doing that very well.
“I think most banks are closed to 60 per cent which as the director said, we will push to try to get ourselves the remainder of the five per cent between now and the end of first quarter and maybe latest, by half year.
“We are all just finishing our results for the year end so I don’t have the December 31 figures. But from what I have seen so far today, consumer credit or what we would call retail is about 10 per cent of bank books.
“If you were to take GTBank, our consumer lending is around N150 billion today. I am expecting that you see the year-end figures, you should see retail and consumer credit is about 10 per cent of the loan portfolio of banks since the LDR was introduced.”