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 Infrastructure development will attract large investments – CIBN

The Lagos State Branch Chairman of the Chartered Institute of Bankers Nigeria (CIBN)/Managing Director, Brent Mortgage Bank, Kola Abdul, has said that improved rail system and energy sector which includes power transmission, gas and petrol, have huge potentials to attract and retain large investments.

While speaking at the yearly general meeting of the Lagos Chapter of CIBN, in Lagos, Abdul reiterated the need for the government to address the macro economic issues, which are things that make Nigerians to default more often.

According to him, Nigeria’s dependence on export receipts as the sole source of external financing made the country more vulnerable than countries, which receive large Diaspora remittances and large investments’ inflows, in addition to export revenue. He maintained that there is an urgent need to increase the global rank of Nigeria as an investments destination, as opportunities to grow exports are currently limited by the global commodity glut, while opportunities to grow capital inflow are more abundant, given the global liquidity glut.

“It has been said that weak commodity prices brought Nigeria’s economic growth to a very abrupt end and inflicted heavy bouts of devaluation to the Naira. “Nigerian economic growth would have been more resilient if the country has a better rail transportation system and energy infrastructure which would have underpinned higher value addition in the industry.

“The government urgently need to open other sectors that have huge potentials to attract and retain large investment, such as the rail transportation and energy which including power transmission, gas and petrol.

“Nigeria’s experience with FDI inflows into the telecoms sector and the recent $1 billion Eurobond issue shows that capital can flow in shortly after necessary steps are taken,” he said. He noted that Non-Performing Loans (NPL’s) are products of policy summersaults, which are caused by the regulators through their encouragements of banks to lend to particular sectors and instituting policies that stifles growth in those sectors, making it impossible for loans to turn bad.

“With some policies, there is no way the NPL’s will not increase. Things are this way because the banking industry does not have access to the press and one cannot report its regulators.

“The regulators also know that it’s beyond them because the government is looking at the macro economy and this aids the increase of underdevelopment. The economy is at its nursing stage and those policies will engender growth.

“Some of these things are not deliberate but when the government do them, they have untold effects on the loans that were given to that sector to the extent that those who have borrowed from that sector will not be able to respond as earlier agreed and those loans will turn bad.

“Look at the crisis in the energy sector, banks were allowed to lend to those DISCO’s but now people say they have no competence to deliver. If government takes over some DISCOS’s, the loans created for them will definitely turn bad which runs into billions making the NPL’s to go up again,” he added.

Credit: Guardian

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