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Sunday, January 23, 2022

Nigerian Economy Will Bounce Back Strongly In The Near Term – Ahmed

Amidst the uncertainty created by the COVID-19 pandemic, the government is confident that the Nigerian economy will bounce back strongly within the near term, with the right policy responses to the multidimensional crises, according to Mrs. Zainab Ahmed, the Honourable Minister of Finance, Budget and National Planning.


In her address on behalf of the Special Guest of Honour, President Muhammadu Buhari, at the 13th Annual Banking And Finance Conference held in Abuja, themed ‘Facilitating a Sustainable Future: The Role of Banking and Finance’, she said: “Since we cannot simply wait for things to get better on their own, we have to formulate appropriate policies and implement them steadfastly in order to address the challenges head on.”

 She stated that: “So far, the federal government has implemented a wide range of fiscal, prudential and monetary measures that squarely address four key necessities: Ensuring sufficient liquidity, in part to support government programs for saving lives and livelihoods; maintain stability of the financial system; ensuring continued delivery of financial services to the public; and shore up confidence and cushion economic activity.”  She noted that the banking system, which is a critical component of the financial sector, is not immune against the potential impact of the current economic situation as banks have to restructure potentially bad loans in every sector of the economy.

It would be recalled that in response to the current health and economic crisis occasioned by the COVID-19 pandemic, the federal government had rolled out both fiscal and monetary stimulus packages in the form of domestic interventions. As part of the concerted effort aimed at bridging the transition to a post COVID -19 era, the federal government in July launched a 12-months’ economic sustainability plan with a stimulus package of N2.3 trillion.

“This amount is being funded by N500billion from Special Accounts, N1.11 trillion of Central Bank of Nigeria (CBN) structured lending and N302.9billion from other funding sources. This was against the backdrop of the recent design of the 2020-2023 Medium Term Expenditure Framework/Fiscal Strategy Paper as well as the ongoing work on the medium to long term development plans that hold the potential of putting the country on a more sustainable economic trajectory for the next 30 years,” she said.

On implementation framework, the Honourable Minister said “The present administration recognises that a strengthened implementation framework is needed to achieve the objectives of the medium to long term plans, hence the need to put in place a process of broad-based dialogue with all stakeholders.  The framework is meant to accommodate changing economic realities, drive the economy on the path of accelerated growth and also serve as a reference point for economic planning, while the Fiscal Strategy Paper, highlights the macroeconomic objectives of the Government over the period 2021-2023 and the policy measures to be implemented to achieve them.”

Speaking on likely partnership between the government and fund managers, Ahmed said: “Today, as bankers and fund managers, you stand in that position to partner with government in its efforts to diversify the economy and reposition the country for a sustainable future. Therefore, you must redouble your efforts, to mobilise domestic resources and attract foreign investment to create quality job opportunities for our teeming youths and lift people out of poverty. 

Nigerian Economy Will Bounce Back Strongly In The Near Term - Ahmed

With the current partial lifting of the lockdown measures, there are positive indications that some businesses are getting back to pre-pandemic levels. However, the uncertainty over the duration and intensity of the pandemic, as well as its impact on the economy continues to be a cause for concern.

In the wake of the pandemic, the government in concert with regulatory authorities had stepped forward with various liquidity, monetary, prudential and supervisory measures in the form of interest rate cuts, higher structural and durable liquidity, moratorium on debt servicing and forbearances on asset provisioning.

Mrs. Ahmed also stated: “This framework is a well thought-out decision taken in consultation with stakeholders and is aimed at striking a balance between protecting the interest of depositors and maintaining financial stability on one hand, and preserving the economic value of viable businesses by providing durable relief to businesses, as well as individuals affected by the COVID-19 pandemic, on the other. We expect efficient and diligent implementation of the restructuring measures by banks, keeping the above objectives in mind.

While the moratorium on loans was a temporary solution in the context of the lockdown, the restructuring framework is expected to give durable relief to borrowers facing COVID-19-related distress. It is expected that, post COVID-19, the financial sector should return to normal functioning without relying on the regulatory relaxations and other measures as the new norm.

According to her, “Just like boosting immunity of the population is the key to tackling pandemics, the key to long term financial stability would be to foster tangible improvement in the resilience of banks to withstand exogenous shocks like the current pandemic. Accordingly, the core of resilient banks is made up of good governance, effective risk management and compliance culture. This is not to say that Nigerian banks do not have sound governance and risk management systems in place. There is always scope for improvement and these are the areas which need greater attention going forward. The banking sector has a responsible role to play not only as a facilitator of growth of the economy but also to improve its profitability.      

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Yunusa Tanko Abdullahi
S.A Media and Communications to the Honourable Minister of Finance, Budget and National Planning


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