Considering the characteristics of the Nigerian economy which had made it to be resistant to guidance and discipline and remained factor-driven for 58 years, the Central Bank of Nigeria, CBN, deserve commendation for evolving and implementing policies that tend towards reinventing the structure of the economy to improve local production, expand the country’s industrial base and create more employment, a development that needs to be sustained going forward.
Firstly, in recognition of the strategic importance of the banking industry and the need for financial system stability which is necessary for macro-economic stability, CBN emphasizes risk-based supervision with zero tolerance on factors that could undermine the health of the financial system.
It also evolved a dividend policy that would support banks to increase their capital base through retained earnings instead of using a greater proportion of their profit to pay dividend irrespective of their risk profile. The policy stipulates that banks or discount houses with non-performing loans, NPLs, above 10 per cent were not allowed to declare a dividend to their shareholders.
On the assumption of office, CBN governor, Godwin Emefiele promised to create a “people-centred’ central bank and emphasized development financing whereby CBN would act as a financial catalyst by targeting predetermined sectors to create jobs on a mass scale and significantly reduce import bills.
Development financing aims to establish proactive approaches that leverage public resources to solve the needs of businesses, industry, developers and investor with a low-interest rate which improves return on the project. According to Emefiele, “the CBN would deploy developmental initiatives to create an enabling environment with appropriate incentives to empower innovative entrepreneurs to drive growth and development. It is important to stress here that CBN would not be targeting individual companies but rather specific sectors”. Read more<<<<<
