Olowu: FG’s Focus Should Be on Attracting FDIs

The President, Chartered Institute of Bankers of Nigeria, Dr. Uche Olowu, in this interview, says notwithstanding the challenges the economy faced last year, 2020 will be a better year as the impact of investments in infrastructure begins to materialise,

How will you say the Nigerian economy performed in 2019?

The year 2019 was turbulent. But if you look at the antecedent of what happened in the previous years, the ship has been steadied. That is the best way to describe 2019. Unemployment is still very high. The exchange rate has been stable and that is because the central bank has done yeoman’s job by defending the naira and in keeping it steady; and monetary policy has been very stable. In terms of interest rate, we are almost talking about singledigit interest rate and we are getting there. And then of course, the oil price has done Nigeria good because volatility has not been there, so we could plan. Also, in terms of infrastructure, we are still getting more investment in that space but the impact has not really shown. So, on the economy, depending on where you are looking at it from, I believe it is an economy that has now steadied. But, the impact has not really been felt on the people and citizens because there are still complaints and there is poverty in the land. And we have not been able to create enough jobs. But, the basic building blocks are there and we hope that 2020 would hold a brighter prospect. And the expected bright prospect can be attributed to the fact that we have changed the budgetary calendar which is now from January to December. So, we expect that execution would be faster. On corruption, the fight has been there, but that fight is humungous. People are always looking at government, but even in the smaller facets of life where there is transaction between people, there is still corruption all over the whole place. So, we need do a lot of value re-orientation if we have to, because corruption has eaten so deep into the society. And whatever policies you come up with, that cancer would always try to limit the good. Yes ‘big fish’ have been jailed like past governors and that is sending the right signal to the people in government and for those who are to come. This is because, if you have been made a steward in charge of people’s resources, you have to be very faithful and not divert the resources. In terms of attracting investment, because no government whether it is America or China, which are success stories develop with foreign investment inflow. So, foreign direct investment (FDI) is very important and that we did not see much last year. And that is also because we need to tweak our policies to be more attractive to foreign investors. And my advice to the government would be to create that confidence for FDIs to come. Portfolio investors are hot money and that cannot develop this country. We must try as much as possible to ensure that we create that confidence in the mind of investors. There had been one or two policy summersaults here and there, but thank God we are beginning to see some semblance of focus in terms of tackling the problem. So, overall, 2019, I would say the ship has been steadied; we are not yet there because the common man is still suffering quite a lot. But we expect that 2020 would be better because we have to keep hope alive.

And for the banking sector?

For the banking sector that I represent, I can say the regulator, the Central Bank of Nigeria (CBN), has come out with policies that tried to ensure financial stability. Basically, in terms of the monetary policy, I would like to commend the regulator for maintaining price stability which is very critical. We have also seen exchange rate stability. Yes, it may come at a cost, but the most important thing is that businesses can now plan which has created certainty in the economy. And then, you have seen that the non-performing loans (NPLs) have significantly come down, and that is because we the players, regulators and even our institute have come together to say we need to change credit behavior in this country and that is very critical. Banks have cleaned their books and accretion on NPLs have come down; and of course, we are trying to deepen the financial market. In the area of financial inclusion which is very critical to the economy, the CBN, deposit money banks and the Chartered Institute of Bankers of Nigeria (CIBN) introduced a special purpose vehicle called the Shared Agent Network Expansion Facility (SANEF). SANEF is a vehicle that was introduced to deepen financial inclusion. I believe we have crossed 60 per cent and we need to do more in that area. Overall, the banking sector has supported the economy very well. In fact, I am almost tempted to say that if the fiscal policy had done as much as the monetary policy side of the economy, we would have been a lot better. But we believe that in 2020, there would be improvement. Our financial system is now very stable and we have also tried to train the skilled workforce that would intermediate on the economy. In the banking space, 2019 wasn’t a bad year for us because of the earlier stability I have alluded to as a result of the activities of the regulators. The regulator has increased the loan-to-deposit (LDR). That was designed to give the desired oxygen in the real sector and down the line, you would see various small and medium scale enterprises (SMEs) accessing credit without much difficulties and that is the way to go if we want to grow the economy. So, the banking sector on its own is trying to drive the economy and has done very well.

However, as we having fintechs, we need to beef up some investment in cyber security, which is a major one we are pushing to address.

Overall, I would score the banking sector 75 per cent, even though there is room for improvement and we are beginning to see a banking sector that is passionate and is focused on driving this economy.

Still on the banking sector, the CBN recently reduced most of the charges. How do you think this would affect their performance going forward?

I must commend the CBN because as you know, as journalists you would have been hearing about series of complaints on excess charges, which was against the cashless policy, and other policies of the central bank. So, what the central bank did showed that they have listening ears and that they are also aware of those who bear the burden, especially those at the lower rank of ladder and that you don’t need to over burden them with charges. The reduction in bank charges was designed to encourage