Ayodele Aminu And Constance Ikokwu
12 October 2008
Washington DC — Eleven countries are consulting Nigeria on how to manage the effects of the on-going global financial crisis in their respective countries, the Central Bank of Nigeria Governor, Prof. Chukwuma Soludo has said.
The CBN governor did not however unveil the names of the countries that have approached Nigeria for such assistance.
The Governor made this known at the weekend while briefing the Nigerian media on the outcome of the African Finance Ministers' meeting at the ongoing World Bank and International Monetary Fund (IMF) meetings in Washington DC.
The global financial meltdown, which is spreading like bush fire has seen several financial institutions like AIG, Lehman Brothers, Merrill Lynch in need of rescue packages, of which the United States of America and United Kingdom governments have coughed out a $700 billion and 500 billion pounds bailout plan respectively.
But Soludo, who spoke on behalf of the Nigerian delegation to the World Bank/IMF meetings, said 11 countries have approached Nigeria with a view to learning how the country was able to take a pre-emptive step to prevent a spill-over of the global financial crises with the banking consolidation exercise.
The regulatory induced recapitalisation programme, which raised the shareholders' funds of banks in Nigeria from N2 billion to N25 billion in 2005, reduced the number of banks from 89 to 24.
"What the world is doing today is what we (Nigeria) did four years ago - the developed countries are now capitalising banks and rescuing banks just like we (the Federal Government) did for Bank of the North. We (Nigeria) took a pre-emptive measure. We did not wait for banks to fail before we started recapitalising them.
"Before consolidation, the non-performing loans of banks in Nigeria were about 23 per cent, which was close to the trigger point. If we had not done consolidation, many of the banks in the country would have been bankrupt," he said.
Commenting on the meeting of the African Finance ministers, Soludo said issues of the raging global meltdown, inflation, energy and food crisis dominated the discussions.
"The rising inflation rate in Africa was an issue. It has continued to inch up at about 14 per cent. It will differ from country to country. But in Nigeria, our major concern now is financial stability - thereafter, inflation will be taken care of. Already, a framework for inflation targeting has been worked out, so inflation targeting would commence sometime next year," he assured.
Describing the financial crisis as being of historic proportions, the CBN Governor said African finance ministers noted that most industrialised countries were affected with about 13 markets closing shops last Friday.
He said a lot of developing countries are developing capacities and institutions to manage crises in their respective countries. He added that the developed economies are the worst hit.
"Globally, many industrialised countries are likely to go into recession. The impact on Africa will however, depend on their linkage to the world. The implication is that commodity prices would fall in the developing world. We have already seen a fall in price of oil at the international market. We also expect price of other commodities like cocoa and copper to fall. Capital flows into the developing countries are also expected to be affected," he said.
The CBN governor said Africa is likely to get the third position (third Executive Director) at the World Bank and that this was a positive development. Two Africans are already serving in Executive Director positions at the World Bank (Nigeria's Dr. Ngozi Okonjo-Iweala is one of the Managing Directors at the World Bank while Mrs. Oby Ezekwesili - also a Nigerian is Vice President).
Soludo said African finance ministers are also going to press for increase in the level of resources that are channelled into developing countries and that such resources should reach the beneficiaries on time.
The Nigerian delegation, he said, also met Okonjo-Iweala to review World Bank portfolio in Nigeria and observed that the 15 per cent disbursement was not adequate.
He said the World Bank was ready to assist Nigeria with technical know-how on her power sector. "Overall, it was a good day for Nigeria as a country and for Africa," he said.
Read comments. Write your own.
Copyright © 2008 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
hi, this is the height of professionalism. people of soludo,s calibre, should be employed at all levels of our economy. there should be no tribalism in appointments, if u want to achieve results. look at the world bank managing director, ngozi, we rejected her as a minister, and world bank grabbed her. today, obasanjo, who trashed her is being trashed. obj should go commit suicide to save his face. that is what the japanese do. look at oby ezekwesili, in the world bank too. if it were to be in nigeria, yar adua, will tell u that both are ibos, and one should drop. then we get a round peg for the square hole. things will go down from there. let us learn our lessons. until u make an ibo man a president, nigeria will continue to be vandalised by notherners and westerners. try the ibo man, and see whether nigeria will be redeemed? u coconut heads, who reap where u did not sow. i suggest u try peter obi of anambra state. i do not know him, never met him. but try him. all u pen robbers out there, this is a food for thought. what is buhari coming to do in presidency, when he told a crowd out there in kano, that abacha did not still any money? buhari and babangida said this in kano. yet they know how abacha died. until we pass the FOIB freedom of information bill into law, nigerians will not know peace. nigerians wake up. i am as usual; CAPITAL G.C.