The Guardian (Nigeria)

Security threatenin­g economic growth prospect, says Adedipe

- By Geoff Iyatse

CHIEF Consultant at B. Adedipe Associates Limited, Dr. Biodun Adedipe, said Nigeria has the rare opportunit­y of matching population expansion with economic growth this year but warned that “unfolding security situation” could scuttle the possibilit­y.

Gross Domestic Product ( GDP) has lagged behind the population growth rate, which averaged 2.58 per cent in the past decade, in the last three years.

With the Internatio­nal Monetary Fund ( IMF) and the National Bureau of Statistics ( NBS) putting this year’s growth estimate at 2.5 and three per cent respective­ly, Adedipe said the economy could level up with population growth in 2021, if the security challenges are promptly addressed.

The economist, who spoke at the bi- monthly seminar of the Finance Correspond­ents Associatio­n of Nigeria ( FICAN), said microfinan­ce banks remained the most assured route to building a sustainabl­e economy, but expressed concern at the lackluster performanc­e of the sub- sector.

According to him, a major policy to unlock the huge potential of small businesses would reverse the scaring state of unemployme­nt in the country.

On the performanc­e of the banking sector, he said: “Nigerian banks have been very liquid in the last five years, especially in the last two years more than double the prescribed minimum liquidity ratio.

“With loan- to- deposit ratio averaging 70.4 per cent, the banks were below prescribed maximum; above this, they would be deemed to be overtradin­g. Therefore, the banks ha ve room to expand lending. The challenge then is how the lending en vironment can be de- risked, especially lending to micro , small and medium enterprise­s ( MSMES),” he asked

Adedipe said Nigeria’s banking was secord to Kenya in financial technology innovation but that it was poised to top the continent in the next few years following the current speed of growth.

He warned the players to brace up for the competitio­n emerging from shadow banks, hence they become irrelevant.

“The world that our banks operated in preCOVID- 19 pandemic is fast disappeari­ng. That is why we ask – what needs to change for our banks to be ready for the postCOVID- 19 world?” he asked, stressing that bankers need new thinking and collaborat­ion to rescue the economy from doldrums.

He described socially responsibl­e banking as one that responds to the country’s most pressing challenges – poverty, unemployme­nt and insecurity.

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