Operators in Nigeria’s financial sector must take steps to significantly reposition it to take full advantage of the vast opportunities that are expected from the African Continental Free Trade Agreement (AfCFTA), President Muhammadu Buhari has said.
The President spoke in a goodwill message he sent sent to the opening of the 15th Annual Banking and Finance conference hosted by the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja on Tuesday.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, delivered the President’s speech at the conference, which had the theme “Repositioning the Financial Services Industry for an Evolving Global Context.”
The President described the theme of the conference as apt, in view of the need to constantly adapt to internationally acceptable best practices to improve the efficiency and effectiveness of the financial sector to its primary role of holding financial assets, financial intermediation and capital formation.
He said the significance of repositioning the sector within an evolving global context cannot be over-emphasized as it stands to benefit from the experiences of other nations in navigating through emerging issues, such as the fall-out from the COVID-19 pandemic and the on-going Russian-Ukraine war which have global implications on financial service delivery in local economies.
The outcome of discussions at the conference, the President said, would enable participants and industry players to gain new knowledge and insights on how to address emerging challenges and optimize the opportunities within the Nigerian financial sector.
While commending the CIBN for the choice of the theme for the conference, the President said he was confident that it would elicit deliberations on policy options toward improving service delivery in the financial services sector within the evolving global context.
“In the new “Glocal” context, the role and significance of the finance industry cannot be overstated in driving economic prosperity. The sector provides opportunities to create SME (small medium exterprise) start-ups, expand existing business interests and create more jobs thereby pushing the local brand overseas to frontier markets.
“Therefore, repositioning the finance services industry involves valuable innovations to ensure global solutions reach local indigenous customers. The recently executed African Continental Free Trade Agreement (AfCFTA) is a typical reference point.
“The deal creates a continent-wide market embracing 55 countries with 1.3 billion people and a combined GDP of $3.4 trillion. Its first phase, which took effect in January, 2021 would gradually eliminate tariffs on 90 percent of goods and reduce barriers to trade in services.
“In repositioning itself, the finance sector would serve not just as an intermediary for lenders and borrowers but in creating a new ecosystem consisting of platforms where ordinary Africans can buy and sell their locally made products despite currency disparity as being practiced on the Pan-African Payment and Settlement System (PAPSS), a brainchild of AFREXIMBank,” the President said.
Other opportunities for the repositioning of the Nigerian financial sector to promote financial inclusion and the diversification of the nation’s economy, the president said, include deepening the market and expanding product offering across the various segments of the industry to adequately finance Nigeria’s infrastructure and business investment needs as well as developing strategies to encourage Insurance penetration in Nigeria.
In addition, it involves leveraging on the growing non-Banking Financial Institutions (NBFIs) in the country to crowd in capital from pension funds and insurance assets through well-structured and risk-mitigated financial instruments to broaden and deepen the country’s financial markets.
“Deploying innovations in Fintech for the extension of financial services to the under-served population as well as expanding the product space by taking advantage of the opportunities provided by other digital trading platforms such as Warehousing, Collateral Management and Crowdfunding,” he added.
The President urged players in the banking sector to help in raising funds to finance the infrastructural needs of the country’s economy through the issuance of revenue bonds, securitizing government assets and adopting other private finance arrangements that would allow private sector to provide services and infrastructure to the public transparently and competitively, thereby allowing for efficiency and improved revenue generation.
Besides, he called for the creation or expansion of inclusive platforms for green investing, access to affordable healthcare as well as Nigeria’s creative industry which has in recent times seen local contents exported to the international market.
He noted that over the past seven years, his administration has, through various initiatives, supported the repositioning of the Nigerian economy within an evolving Glocal Context.
These include government’s support of Nigeria’s creative industry and indigenous Small and Medium-sized businesses as well as the agricultural sector which have enhanced the capacity of indigenous enterprises to compete with their counterparts from other countries.
These efforts, he said, would be sustained and extended to more sectors of the economy, adding that the resolution of global issues within the local context would continue to give impetus for economic prosperity in our local communities.
On socio-economic issues being tackled at local and global levels to create the enabling environment, the President identified climate change, erosion of the people’s purchasing power due to inflation and insecurity as some of the challenges.
On Climate Change, he said long-term greenhouse emissions have resulted in hotter temperatures, more severe rainstorms, increased drought and food security issues, saying government has tackled it by setting plans to significantly reduce greenhouse emissions from the country.
He said more specifically, by 2030 the country has an agenda to eliminate kerosene lighting as well as short-lived pollutants in the oil & gas sector.
On insecurity, the President highlighted the menace of terrorism and banditry plaguing the country over the years, saying the government was committed to securing lives and property within the country and would not relent in ensuring a safe and secure environment for citizens as well as productive activities to thrive.
The rise of inflation and other factors that have eroded the people’s purchasing power, he said, has driven pent-up consumer demand after the pandemic and the Russian invasion of Ukraine.
He said several policies have been introduced to combat inflation, including an increase in Monetary Policy Rates as well as a 30 percent markup on savings rates.
These policies, he pointed out, were geared towards mopping up excessive liquidity in the economy, while encouraging savings and investment.
He assured that government would continue to cushion these adverse effects through its social safety net programmes to make life more meaningful to the people.