CBN to support $1tn economy target, says Cardoso

The Central Bank of Nigeria has reaffirmed its commitment to supporting the federal government’s target of achieving a $1tn economy.

Speaking at the Afrinvest 2024 Banking Sector Report Launch, Acting Director of Financial Policy and Regulations, Mr John Onoja, representing CBN Governor, Dr Olayemi Cardoso, stated, “We are glad that the present administration has set this target, and we are committed to supporting it.”

The CBN has been working towards creating an enabling environment for businesses and individuals, tackling institutional deficiencies, restoring corporate governance, strengthening regulations, and implementing prudential guidelines and policies.

Onoja stressed the importance of the banking sector recapitalisation exercise, saying, “This exercise will enhance the capacity of banks to serve the larger economy, increase lending capacity, attract foreign investments, improve foreign exchange liquidity, contribute to GDP growth, and promote better risk management and credit ratings.”

He noted that the CBN is working closely with banks to review their capital plans and ensure a successful exercise, collaborating with institutions like the Nigeria Deposit Insurance Corporation, the Securities and Exchange Commission, NGX, and the National Assembly.

Speaking at the event, the Group Managing Director of Afrinvest highlighted the need for a comprehensive approach to achieving a $1tn economy.

“The macroeconomic environment is challenging, with a potential national strike looming,” Chioke said.
“However, the data is available to run the economy effectively, but politicians must pay attention to it and have the discipline to be humble,” he added.

The report focuses on the banking sector recapitalisation, which requires all commercial, merchant, and non-interest banks to increase their paid-up capital to suitable levels.

Chioke emphasised that this exercise will enhance the capacity of banks to serve the larger economy, increase lending capacity, attract foreign investments, and promote better risk management.

However, he noted that the banking sector alone cannot drive economic growth.

“To achieve a $1tn economy, Nigeria needs to grow beyond the banking sector. Every aspect of the economy must grow alongside it,” he said.

He highlighted the need for human capital development, citing the example of Mexico, Indonesia, and Turkey, which have achieved higher GDP per capita and human capital indices.

“Nigeria needs to invest in its people to achieve similar growth,” Chioke said.

The report identified capital gaps in the banking sector, with international banks requiring an additional N2.2tn, national banks needing N1.6tn, and regional banks requiring N445m.

Chioke stressed that recapitalising the banking sector is crucial, but it’s equally important to develop other sectors like manufacturing, agriculture, and ICT.

“We must prioritise human capital development to achieve a $1tn economy,” he said.