The decision, last Thursday by the Bankers’ Committee arm of the Central Bank of Nigeria (CBN), to provide funding for the development of the creative sector of the economy at single-digit interest rate, may have come as another policy shift by the apex bank.
This represents another major intervention, following a slew of others in recent time, after strident calls for credit policy shift to enable banks lend to the private sector. A CBN report recently found out that banking system’s credit to the private sector shrank at close of last year.
Although this can be blamed on many factors, Mr. Ifie Sekibo, the Managing Director of Heritage Bank, said the about-to-be-implemented International Financial Reporting Standard (IFRS) 9, would definitely worsen the already bad situation.“Strangely, it practically takes out the appetite to carry on extra weight where a particular sector is not performing well,” he said.
“If we cast our minds back, until the banks stepped in to begin to deliberately advance funds to certain sectors of the economy, they were in comatose including agriculture.
“So the first point I am trying to push across is for policy revisit on how to deal with certain constraints, which sometimes are regulatory, but how do you legislate beyond the regulation to allow for some headroom to enable growth to take place? As usual, bankers will say ‘give us some forbearance; narrow the Non Performing Loans (NPL) down to where they will be reasonable.’”
Like subtly dancing to that tune, the apex bank through its Director of Banking Supervision Department, Ahmed Abdullahi, said the Bankers’ Committee is implementing programmes aimed at improving access to finance and reduce the level of poverty in the country, adding that the decision to support the creative industry was born out of the committee’s conviction that the sector held the key to job creation, poverty reduction and inclusive growth.
The Managing Director of Access Bank Plc, Herbert Wigwe, said the committee had identified four key focal areas – movie, music, fashion and information technology – under the creative sector to channel more funding at a single-digit interest rate.
He explained that one of the major objectives of the Committee in adopting the initiative was to use the sector to make Nigeria a major tourist destination in the world. He said the banks had agreed that the sector would be given all the needed support both financially and technically to generate jobs, create wealth and stimulate economic growth.
The banks, according to him, would develop the right infrastructure and shared facilities to support the sector, adding that “technology hubs would be developed to support Nigerians who have business ideas to pursue in the IT sector. The music sector would see the banks establishing a music academy to nurture talents for the production of good music.” Wigwe promised that the Bankers Committee would, before the beginning of the second quarter, start implementing the initiatives with collaboration from international institutions. His words: “The Bankers Committee, after a lot of research, identified the creative and IT sector as a critical sector to support social and inclusive growth in Nigeria.
“We’ve basically found out that the sector would generate a significant amount of employment given how Nigerians involved in the creative sector have done well in music and others.” Although the framework of the new initiative is yet to be disclosed, the Agriculture, Small and Medium Enterprises (AGSMEs) fund launched by the apex bank in 2017 was to be disbursed to the beneficiaries at not more than five per cent. “In terms of pricing, the Bankers Committee said it should not be more than five per cent for those who are going to have it. But it would be meant primarily for small businesses. What was agreed was that out of the fund, at least 50 per cent would be set aside for direct SME disbursement.
“The initiative would dwell on improving the productivity of farmers, manufacturers and firms, as well as their access to finance, in order to produce goods and services that can be made in Nigeria, thereby improving job creation and growth for the nation as a whole. “The two sectors, agriculture and the manufacturing sectors, were central to the country’s recovery efforts. They are recognised worldwide as catalysts for rapid growth, job creation and poverty reduction. Agriculture, for example, remains the largest employer of labour in Nigeria and contributes about 24.2 per cent of our GDP,” the CBN Governor, Godwin Emefiele, stated at its launch during the Bankers’ Retreat in Lagos in 2017.
“The objective of AGSME is to catalyse growth in SMEs to ease access to finance; build capacity in the agriculture and SME sectors, create jobs and ultimately to improve prosperity,” said Mrs. Bola Adesola, the former Managing Director of Standard Chartered Bank, last year at Bankers’ Committee meeting in Lagos. AGSME is also a brainchild of the Bankers’ Committee in collaboration with CBN, the highest contributor to the fun. The SUN
Pix: CBN headquarters Abuja
