In Move to Enhance Financial System, Buhari Signs 2020 BOFI Act

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•Regulatory and supervisory framework reinforced
•Credit tribunal emerges to improve loan recovery

Ndubuisi Francis and Omololu Ogunmade in Abuja

In a move aimed at enhancing the reliability and resilience of the Nigerian financial system for sustainable growth and development of its economy, President Muhammadu Buhari yesterday in Abuja assented to the Banks and Other Financial Institutions (BOFI) Bill 2020.
Senior Special Assistant to the President on Media and Publicity, Malam Garba Shehu, in a statement, said the bill which has now become an Act of the National Assembly, repealed the extant Banks and Other Financial Institutions (BOFI) Act of 1991, as amended.

Describing the Act as monumental, Shehu said: “The BOFI Act 2020 updates the enabling law in response to developments and significant evolution in the financial sector over the last two decades. It will increase the appetite of banks and other financial institutions to channel much-needed credit to the real sector to support economic recovery and promote sustainable growth.

“In this respect, it introduces a credit tribunal to improve loan recovery and address the incidence of high non-performing loans within the financial system, which has been a key deterrent to lending by financial institutions.
“Furthermore, it strengthens the regulatory and supervisory framework for the financial industry and provides additional tools for managing failing institutions and systemic distress to preserve financial stability, amongst others.”

He said the Central Bank of Nigeria would hold structured engagements with stakeholders across various sectors of the economy on critical aspects of the Act in the coming months.
“This enactment of the BOFI Act 2020 is a historic and significant achievement, which is indicative of effective and productive collaboration between the executive and legislative arms of government,” he said.

In another development, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has said the 2020 Finance Bill, is aimed at reducing the cost of transportation in the country, which she said had been responsible for rising inflation.

Ahmed, who spoke yesterday at a virtual consultation and stakeholder engagement to discuss the economic and fiscal policy drivers underpinning the Finance Bill 2020, said the average transport fare paid by commuters for bus journeys within a city increased by 12.70 per cent month-on-month and 48.02 per cent year-on-year to N278.88 in August, the latest data from the National Bureau of Statistics showed.

Ahmed said the bill contained “some interesting new proposals,” citing “fiscal relief for mass transit…which is designed to provide support to mass transit by reviewing the Duties regime” as an example.

“We recognise transportation as one of the major cost drivers in the economy. If you look at the rate at which our inflation is going, and you disaggregate the components, you will find that inflation is largely driven by transport cost. So, the essence here is to reduce transportation cost so that businesses will have ease and pass benefits to eventual consumers.”

The nation’s inflation rate rose to 13.71 per cent in September from 13.22 per cent a month earlier, according to the NBS.
Analysts at Financial Derivatives Company Limited, led by foremost economist Bismarck Rewane, said last week that headline inflation was projected to rise to 14.5 per cent in October from 13.71 per cent in September.

“This means that inflation will be rising for the 14th consecutive month. It would also be the highest level in 33 months. Food inflation will be the most affected as it is estimated to climb to 17.05 per cent. Other sub-indices are also expected to move in the same direction,” they said.
The CBN Governor, Mr. Godwin Emefiele, said recently that the rising inflation in the country and the contraction of the economy had created a dilemma for policymaking and foreboded the need to strengthen the productive base of the economy.