Nigeria Economy: Banks At Forefront Of Technology Leverage – BAA Consult

Banking in Nigeria is as sophisticated as can be found anywhere else in the world and the banks have proven to be at the forefront of technology leverage.

The founder and Chief Consultant of B. Adedipe Associates Limited (BAAConsult), Dr.‘Biodun Adedipe, disclosed this recently in Lagos at a forum organized by Finance Correspondents Association of Nigeria (FICAN) with the theme: “Half-Year Economic Review and outlook for the banking sector”

Adedipe noted that there are improvements in some economic indices and the resilience of the banking industry in the last five years despite concerns over Nigeria’s current foreign reserves at low 5.45 months of import coverage which is below the 11 months required for an economy in Crisis.

In his words; “The banks are doing well in the digital space supported by deepening internet penetration, large youthful and rapidly growing population, rapid urbanization, strengthening innovation culture driven by survival instinct and increasing attention to competitive strategy.”

He said critical future and forward thinking is now the order of the day and banks are already competing against large powerful shadow banking systems. He restated the need for the lenders to do more since they are facing extensive competition from Silicon Valley both in the form of Financial Technology (FinTech) companies and big tech companies like Amazon, Apple, Facebook, Google and now Walmart that is here to stay.

Adedipe observed that the Nigerian banking industry grew double digit in the last five (5) years, which he said demonstrates effective marketing and noted that with loan-to-deposit ratio averaging 70.4per cent, the banks are below prescribed maximum with room to expand lending but the challenge being how the lending environment can be de-risked, especially in lending to Medium, Small and Medium scale Enterprises (MSMEs).

“There is no sector you operate in, in the Nigerian economy that there is no space for you to thrive, if you do the right things, at the right places, and right time, for the right person and with most things now digital. The downward trend in all indices: price, production and export is a warning sign for Nigeria and is a sign of the urgency of diversification of foreign earnings”, he emphasized.

Adedipe however urged the Nigerian authorities to take pragmatic steps to save the economy, already in crisis. According to him, with a monthly import bill of N2.283 trillion or $6.025 billion in the first quarter (Q1) 2021, liquid external reserves of $32.85 billion (as at July 9, 2021), represents 5.45 months of import, meaning that Nigeria is below the minimum threshold of 6 months of imports for stability and twice below 11 months required for an economy in Crisis.

Analysts insist that with economic recovery still fragile, the business cycle going forward will remain anchored by restoration of peace in troubled regions especially, confidence in the mind of farmers that they can farm without fear of being attacked by herdsmen or bandits,  developments in the oil market and domestic foreign exchange policies.

The FICAN Half-Year Economic Review is an industry-based knowledge sharing platform that allows guest speakers subtly speak to power and to key issues on the economy to enable participants write from the position of knowledge.

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