The states on Tuesday got the Federal Government’s nod to take more loans from banks.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said state governments have also been given the opportunity “to use their verifiable Internally Generated Revenue (IGR) as the basis for obtaining loan facilities from financial institutions for the purpose of infrastructural development.”
The minister spoke at the 14th Annual Banking and Finance Conference organised by the Chartered Institute of Bankers of Nigeria (CIBN).
Mrs. Ahmed said the “Federal Government has restored the Debt Sustainability Ratio of States to 40 per cent in order to allow state governments explore other sources of funds from the private sector, commercial banks and the capital market for developmental purposes”.
The Debt Sustainability Ratio of States was reduced last year from 40 percent to 20 percent as part of the measures to limit the financial exposure of States.
To unlock the potential for the economic transformation of Nigeria, Mrs. Ahmed stated that the Federal Government intends to provide electricity to 5 million households in off-grid underserved communities.
Also, “1.5 million Nigerians are to acquire low-cost houses under the Social Housing Programme while hundreds of thousands of MSMEs will benefit from the MSMEs Survival Fund” she said.
The poor and vulnerable members of the population the minister said “are also benefitting from the Cash Transfer Scheme through a wholly technology -based approach called the Rapid Response Register (RRR)”.
Following government’s recent policy calling for the mandatory use of a unique national identity number to access banking services, Mrs. Ahmed said “identity management would be better managed to reduce the incidence of cyber-related financial fraud and promote the delivery of financial services”.
To the banks and other financial institutions, the finance minister appealed to them “to ensure financial system stability through effective management of such critical parameters as the interest rate, foreign exchange rate, inflation as well as sectoral allocation of credit to the private sector”.
Mrs. Ahmed noted that it is also crucial that the progress being made in the fight against insecurity is sustained to ensure that the economic potential of all parts of the country are harnessed and that foreign direct investment flows are substantially increased.
Central Bank of Nigeria (CBN) Governor Godwin Emefiele, said Nigeria is set to join a very small elite group of countries operating an international financial hub.
The international financial centre will take in September 2022, when the Central Bank of Nigeria (CBN) will be establishing The Nigerian International Financial Centre (NIFC).
Emefiele said that “the NIFC will act as an international gateway for Capital and investments, driven by technology and payment system infrastructure”.
According to him, the NIFC will take advantage of our existing laws such as the BOFIA 2020, NEPZA and other CBN regulations to create a fully global investment and financial hub where monies, ideas, and technology will move freely without hindrance.
This new financial hub he said, “will curate local and international banks to make them global champions”.
When operational, “the NIFC will be a 24/7 Financial Centre that will complement London, New York and Singapore financial centers and enable an acceleration of our home grown initiatives”.
NIFC will complement such as initiatives as the Infracorp plc, the N15 trillion infrastructure fund which we will be launching in October 2021, the National Theatre creative hubs for youths as well as the E-naira project which will also debut in October 2021.
Emefiele also stated that the apex bank’s efforts to strengthen Loan to Deposit ratio policy has resulted in a significant rise in loans provided by financial institutions to banking customers.
According to him, “loans granted to the private sector rose by N3 trillion between July 2020 and July 2021 because of continued implementation of our LDR policy”.
With regards to the GDP growth recorded recently, Emefiele attributed the growth to the “continued implementation of our interventions in the agricultural and manufacturing sectors; improved availability of COVID-19 vaccines, recovery in crude oil prices, along with a significant pick-up in economic activities have led to a surge in GDP output as our economy grew by 5.1 percent in the 2nd quarter of 2021, up from 0.51 percent in the 1st quarter of 2021”.
