Yar'Adua sure bank reforms will ensure stability
As Nigeria celebrates its 49th independence anniversary today, President Umaru Musa Yar'Adua has said the ongoing banking reform is part of a holistic measure to achieve macro-economic stability and inspire the confidence of the international community.
“The recent reforms embarked upon by the Central Bank of Nigeria (CBN) are part of the holistic measures aimed ultimately at ensuring requisite macroeconomic stability.
“The goal is to have banks and financial institutions that can be effective partners with government in delivering economic growth. By enforcing full disclosure, entrenching sound corporate governance and risk management principles, Nigeria would be on the way to entrenching a financial system that inspires the confidence of the international community,” declared the President.
In the Independence Day broadcast to Nigerians, Yar'Adua expressed optimism about the future of the country.
He said the nation would have to stay focused in spite of the challenges facing it. That is the only way forward, declared the President.
“I will submit that the necessary work of repositioning Nigeria has commenced apace, and the overarching task should be how to remain focused on the twin challenges of enthroning democracy and achieving sustainable development,” he stated.
He said that while the country is still plagued by several issues that have prevented it from blossoming, it does not diminish the sweat and suffering of those that fought to set it free.
“Rather than become another day of self flagellation, today should be a forceful reminder of the promise yet to be fulfilled, of the dream deferred for too long, and of the work that is still outstanding,” he said.
Yar'Adua restated his administration's commitment to confronting head-long the problems facing the country which include the Niger Delta question, poor infrastructure, insecurity, food security, land tenure and wealth creation and human capital development.
He expressed optimism that the investments made in the power sector within the last two years would lead to the achievement of 6000 megawatts by the end of the year.
The government is committed to building and maintaining an efficient road network and transportation system in the country, he disclosed. This would ease the movement of goods and services, he added.
President Yar'Adua spoke on the plans already being carried out by his administration in that regard.
One of the steps, he said, is the commencement of the dredging of the lower River Niger, 43 years after the idea was first mooted.
He disclosed that the project covers 572 km across eight states and that it would ensure all-year round navigation of the lower River Niger when completed.
On railway, the President pointed out efforts to supply new and refurbished locomotives by January next year is being fast-tracked, as rehabilitation of existing rail tracks are expected to be successful.
On the Niger Delta, he said: “Fellow Nigerians, the Niger Delta has, over the years, posed major developmental and environmental challenges to our nation which have adversely affected our national economy.
“The new Ministry of Niger Delta Affairs, in concert with the NDDC, is charting a meaningful cause in reversing the infrastructure and development deficit as a demonstration of our commitment to the holistic resolution of the crisis in the area.
“In consolidating the gains of these initiatives, and with a view to engendering lasting peace in the area, we proclaimed a general amnesty and granted unconditional pardon to all those who had taken up arms as a way of drawing attention to the plight of the people of the Niger Delta.
“Some remarkable progress has been made and it is our hope that all militants would avail themselves of this amnesty which expires on Sunday, 4 October 2009.”
He noted the global economic meltdown that affected the country in no small measure.
However, Nigeria has managed to weather the storm courtesy of the reform programmes embarked upon by the government, he said.
The President pointed out the sharp depreciation of the naira and efforts taken to remedy the situation.
He also expressed concern about the ongoing Academic Staff Union of Universities (ASUU) strike and promised concerted efforts to solve the problem.
He also called on Nigerians to see the challenges facing the country as an opportunity. He called on the country to have an abiding and unshakeable faith.
Meanwhile, CBN Governor Sanusi Lamido Sanusi has denied claims that the recent banking reforms embarked upon by the apex bank had direct impact on the importation of petroleum products in the country particularly by the major private fuel importers.
He also said notwithstanding the N420 billion CBN injected into five banks in the country in August, the banking sector needs more funds to make it stronger.
There have been reports of credit squeeze in the country following the wave of uncertainty resulting from the shake-up in the banking sector coupled with the unease over the result of the audit undertaken for 14 banks by CBN and National Deposit Insurance Corporation (NDIC).
Banks including those not affected in the shake-up that swept five bank chief executives off their jobs have frozen most lines of credit to customers.
THISDAY had reported that all the banks were in recovery mode and as such were not lending new credits.
Worst hit by the credit squeeze are said to be operators in the oil and gas sector, particularly oil marketing firms, compelling them to halt the importation of petroleum products into the country.
But Sanusi said: “Correspon-dent banks have not stopped credit lines and the CBN action has no effect on oil importation.”
The disclosure was contained in the performance report of the economy presented by the CBN governor to the Federal Executive Council (FEC) yesterday in Abuja.
Addressing State House Correspondents after the FEC meeting presided over by President Yar'Adua at the Presidential Villa, Abuja, Information and Communications Minister Dora Akunyili said the reform programme presented by the CBN recommended that more funds should be injected into the banking sector to strengthen the economy.
“Nigeria economy remains resilient and the near to medium term outlook is positive. Nigeria banking system remains strong. However, there is need for government to inject funds into the system,” Akunyili said.
Speaking further on the CBN presentation, the minister said: “Intervention by CBN towards resolving the immediate challenges of Nigeria's banking system will have positive impact on the Nigeria economy. So far, there had been no run on the banks and there is significant drop in inter-bank rate.”
On the performance of the economy, Akunyili said: “There had been steady growth in Gross Domestic Product (GDP) and a decline in the various measures of inflation. Inter-bank rates are being moderated. However, there had been a sluggish growth in monetary and credit aggregate since the beginning of the year“.
She stated further that the apex bank therefore recommended “fiscal stimulus through the spending of capital release by the government”.
The minister said the CBN reform was spurred by “the deterioration in asset quality and liquidity problems. With significant exposure to the oil and gas and capital market, a section of the banking sector was badly affected”.
She also highlighted the reports and performances of six ministries which include police affairs, defence, information and communications, commerce and industry, foreign affairs and justice.
The review of the performances of the ministries under review, according to Akunyili, is part of the monthly assessments of the different ministries, department and agencies (MDAs) by the council.
Within the period under review, the minister said the justice ministry budgeted a total of N6 billion as judgment debts to further restore faith in governments and in the rule of law programme.