CIBN Tasks Banks On MSME Financing

The new capital base of Nigerian banks has provided a stronger capital buffer for the industry, but lenders must now deploy the fresh capital more strategically to support micro, small and medium enterprises (MSMEs) and drive economic growth, the Chartered Institute of Bankers of Nigeria (CIBN) has said.

President and chairman of Council, CIBN, Dr Dele Alabi, said the increased capital base of banks should not merely strengthen their balance sheets but also enable them to expand financing to previously underserved segments of the economy.

Alabi speaking ahead of the 19th Annual Banking and Finance Conference of the Institute billed for next month said the recapitalisation exercise had provided banks with the financial capacity to withstand shocks, but stressed that the industry must now focus on how best to deploy the capital in an increasingly changing economic environment.

“Capitalisation provides a buffer. It sort of insulates the balance sheet. But it does not stop there, and I’ve been talking to my colleagues, and I’m happy that all the banks now are important,” he said.

According to him, Nigerian banks traditionally concentrated their lending and investment activities on government securities and large corporate organisations, but the changing economic environment now requires a fundamental shift in strategy.

“Stating that the landscape of banking has changed,” Alabi challenged bank executives to become more innovative in deploying their capital, stressing that capital comes at a significant cost and must generate commensurate economic value.

“Therefore, smart bankers, smart bank CEOs, have to think of a more ingenious way of utilising this capital. Capital is the most expensive source of funds. It’s more expensive than debt”, Alabi stated adding that the industry must therefore ensure that the huge capital recently raised by banks is channelled into productive sectors of the economy, particularly MSMEs.

On the plans for the institute’s 19th Annual Banking and Finance Conference, themed “Building a Resilient Economy in an Era of Disruptions: Strategic Imperatives for the Banking and Financial Services Industry”, the CIBN President said President Bola Ahmed Tinubu, Vice President Kashim Shettima, minister of finance and coordinating minister of the Economy, Taiwo Oyedele, and gCIBNovernor of the Central Bank of Nigeria (CBN),  Olayemi Cardoso, are expected to headline the conference.

The World Bank country director for Nigeria, Matthew Verghis, is also expected to deliver the keynote address. Alabi said the conference would provide an opportunity for stakeholders to examine the challenges and opportunities confronting the financial services industry, including technological disruption, geopolitical uncertainties, cyber security risks, climate-related challenges and evolving customer expectations.