The Central Bank of Nigeria, CBN, yesterday put the total credit extended to all sectors of the nation’s economy as at June 30, 2015, at N14.7 trillion.
The bank charged Development Finance Institutions, DFIs to improve their lending to key sectors with a view to achieving better performance of the economy in the years ahead.
The Governor of the apex banking institution, Mr. Godwin Emefiele, said this during the maiden edition of the Bi-Annual Forum for stakeholders of Development Finance Institutions DFIs. Emefiele, who was represented by the Deputy Governor, Financial System Stability, Dr. Okwu Joseph Nnanna, disclosed that of the N14.7 trillion aggregate credit to the economy, the DFIs contributed only N760.8 billion, representing about five percent of total credit.
Given the sub-optimal performance of the DFIs, Emefiele suggested that the credit contributions of the DFIs must increase significantly if they were to make the needed impact on the targeted sectors.
He hinted further that CBN had over the years facilitated their establishment to stimulate and provide affordable long-term credit to the real sector, adding that currently there are six DFIs various mandates focusing on providing credit to agricultural, manufacturing, SMEs, Exports, Real Estate and Mortgage.
According to him, the apex bank has, in line with its development function, introduced several targeted real sector financing and intervention schemes that have had some salutary impact on the economy in three broad areas of Agriculture, MSME and Infrastructure.
Emefiele listed some of the intervention schemes and programmes to include, the Agriculture Credit Guaranty Scheme Fund (ACGSF), Commercial Agricultural Credit Scheme (CACS) Power and Airlines Interventions Fund (PAIF), Nigerian Incentive- Based Risk Sharing System for Agricultural Lending (NIRSAL), Anchor Borrowers Programmes, (ABP), and Nigeria Electricity Market Stabilisation Facility (NEMSF) , amongst others.
On the challenges facing the DFIs, the CBN Governor pointed out that numerous difficulties had beset the institutions in recent times thereby constraining their capacity to effectively deliver on their mandates.
“Some of these challenges include, high levels of non-performing loans owing to ineffective credit appraisal, analysis and recovery effort, mission drift, corporate governance issues, weak risk management, under- capitalisation, political interference and limited use of information technology”, Emefiele said.
While noting that there is need for a paradigm shift if the desired goals of their establishment must be achieved, the banking expert explained that as part of the apex bank’s efforts to resolve these challenges, a key provision of the guidelines was the introduction licensing requirements for all DFIs operating in the country.
He said that the requirement is in line with global best practices. Emefiele explained further that the current administration appropriately placed emphasis on diversifying the economy by shifting from the dominance and over-reliance on oil as the main source of government revenue to agriculture, manufacturing and mining of solid minerals to improve the economy’s performance. National Mirror
