Echoing his comments at his senate screening last year, the governor of the Central Bank of Nigeria (CBN), Sanusi Lamido, yesterday stressed the need for government to focus efforts on fast-tracking the reforms in the power sector to drive the growth of the nation's economy.
Mr. Lamido, who was answering questions at the end of the two-day 67th meeting of the Money Policy Committee (MPC) in Abuja, said there was need for government to expedite action on macro-reforms in the different sectors, especially power, to unlock the structural bottleneck of production.
Opening up the economy
"The real provider of labour would be the manufacturing sector," he said. "The real challenge for government is how to make the sector a major economic growth driver by providing power and other infrastructure for it to begin to produce, to help the economy move from 7 percent to double digit growth."
He disclosed that the CBN has already met with government to present a proposal on what needs to be done to create an environment for banks to channel resources into the real sector of the economy, particularly agriculture, power, manufacturing and infrastructure development.
The bank governor said this would not only attract the much-needed private sector/foreign investments, but also open up other sectors of the economy.
Mr. Lamido revealed that provisional data from the National Bureau of Statistics (NBS) indicated that real Gross Domestic Product (GDP) grew by 8.23 per cent in the fourth quarter of 2009, up from 4.50, 7.22 and 7.07 per cent in the first, second, and third quarters, with overall GDP growth for the 2009 was projected at 6.90 percent, which is significantly higher than the 5.98 per cent recorded in 2008.
The non-oil sector, he said, has remained the major driver of growth, complemented by the sharp increase in the growth of the oil sector following the relative peace in the Niger Delta in the second half of the year.
He noted the weak performance of the capital market throughout last year, which showed All-Share Index (ASI) crashing from 31,450.78 in December 2008, to 19, 851.89 (36.88 percent) at end-March 2009; 26,861.55 (14.59 percent) at end-June 2009; 22,065.00 (29.84 percent) at end-September, 2009, and 20,827.17 on end-December, 2009.
Market Capitalisation (MC), which stood at N6.96 trillion in December 2008, he disclosed, declined steadily to N4.989 trillion on end-December, 2009, as a result of the harsh operating environment and the gloomy economic outlook during the year.
He also said it was impracticable for the banks to incur huge salary bills of over N4billion every month against operational liabilities and losses as a result of non-performing loans in excess of N100billion.
"Most of the affected banks were over-staffed," he said. "Oceanic Bank, for instance, had a staff strength of over 19,000. A substantial number of these were recruited for branches that had not been opened, while contracts had already been given by the management, because the company that was supplying staff to the bank was owned by its managing director."
The governor said the focus of the CBN would be to fast-track the process to get the proposed Asset Management Company (AMC) established to solve the ‘toxic asset' problem and provide the capital that would get the affected banks to begin to discharge their functions effectively and put the risk of financial crisis behind, adding that efforts would be made to ensure that the National Assembly gives the approval within the next three weeks immediately it resumes.
On the N620billion life-line extended to the eight recapitalised banks by the CBN, Mr. Sanusi re-iterated that the money was to ensure that depositors did not lose their investments. "The money was provided to ensure that when depositors go to get their money, the banks did not run out of cash," he said.
The bank's deputy governor in charge of financial system stability, Kingsley Moghalu, attributed the difficulties depositors face in accessing their money in micro finance banks to the ongoing review of the operational concept of micro-finance market in the country, particularly on an appropriate supervision model.
He said the CBN would be ready to take appropriate regulatory actions in specific cases of non-performance, to assist depositors get their monies