By Nik Ogbulie
A new round of banking sector recapitalisation may emerge very soon as the Central Bank of Nigeria (CBN) has passed a vote that the Nigerian banking sector as presently constituted does not have the capacity to service her dream one trillion dollar economy currently in the works.
Olayemi Cardoso, Governor of the CBN, in her first address to the members of the Chartered Insstitute of Bankers (CIBN) , Friday night in Lagos during the Bankers dinner, spoke with much fury as he reviewed the Nigerian Monetary Policy framework while introducing his regime’s monetary policy thrust in the presence of over 500 Bankers and finance executives.
Cardoso was calm and graphic as he alleys the fears of Nigerians over some perceived difficulties and assured that he has taken his time to study the issues in the system and has come up with solutions which he says will induce some significant reduction in the various challenges that have confronted financial management and the overall economic difficulties occasioned by inflation, price instability and foreing exchange dilemma.
According to the Governor, a lot needs to be done in the economy over a small time that would need an aggregation of huge capital which the current capacity of the banking sector cannot carry, and would in due course come out with modalities that will offer banks the opportunity to support huge investments in the economy by pushing up their minimum capital base.
It could be noted that the current minimum capital base of N25 billion has since been irrelevant as no bank operates with such capital base. Based on the ravaging inflation in the financial sector, banks have at several times embarked on new capital raising to be able to play in the system. The new suggestion over a new capital base will be highly welcomed as he may find many banks already operating beyond his new projection without making any fuss about it. In December 2005, the banking sector recapitalisation took effect with over 75 of the registered 89 banks relieved of their licenses in an exercise which left the NDIC Indebted to the tune of over N500 billion to numerous bank customers and other depositors in the country.
Cardoso ran a list of his targets, lambasting past CBN administrations over monetary policy bungles and reckless application of fiscal policy demands which did not help the poor price which he said compounded the standards of living in the country.
He spoke on several touchy issues in the economy and noted that the bank will only convene four monetary policy Committee (MPC) session each year, throwing away the monthly meetings which have become law in the last many years.
The Governor, whose appointment came on the heels of the arrival of President Bola Tununbu is of the opinion that almost everything was turned upside down by his predecessors .
Fillers from the market are already indicating a clearer monetary policy thrust which would obviously come with new courage streams into the economy.
There is the high expectation from the stakeholders in the financial sector and investors who can now see the way government is going.
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