Nigerian Banks' N43.7 Trillion Total Assets Low - Soludo

19 November 2019

A former Central Bank of Nigeria (CBN) governor, Prof. Chukwuma Soludo, has said that the total size of Nigerian banks' assets, which was N43.7 trillion as at half-year 2019, was low compared to the banking sector in some other African countries.

Soludo, who is a member of President Muhammadu Buhari's Economic Advisory Council, said this while speaking at the launch of the 2019 Nigerian Banking Sector Report, titled: 'Beyond the Precipe... Pulling Back from the Brink,' by Afrinvest West Africa Limited, which held in Lagos.

The CBN Governor, Mr. Godwin Emefiele, had in his five-year economic blueprint that was unveiled in June this year, disclosed plan to recapitalise the banks within the next five years, to make them contribute significantly to economic growth.

But, while Soludo in his speech, did not state the total value of assets he expected the banks to have, he stressed the need for banks in the country to be able to finance large ticket transactions in the continent.

"When we started, it was just about N1 trillion, before the banking consolidation. So, if you look at it from where we were before the consolidation, it was a massive change.

"But the banking total assets and all we say about their size are still too small. Let us look at where we are, in terms of the size, in comparison to African countries, in terms of ranking of banks' asset size as a percentage of GDP.

"I was shocked to find out that our banks are far low, even by African standard. Countries such as Cape Verde, Mauritius, Kenya, Senegal and Ghana are much higher than us," Soludo explained.

He added: "So, seeing the banking and financial sector and the kind of economy that we want to be able to have - we have a dream of Nigeria becoming Africa's financial and banking centre.

"Now that we are actually integrating Africa to have a continental free trade area, what kind of banking and financial system do we really need to be able to move this economy, which is the largest in Africa?

"The question is what should be the next level for the banking sector? And what should be the type of disruptive changes that need to occur, to be able to move the sector, to that level that it would be able to power the Nigerian economy and increasingly, the African economy.

"So, in this new world that is evolving, what kind of banking sector do we need to see in the five to 10 years?"

Earlier in his presentation, the Managing Director of Afrinvest West Africa Limited, Mr. Ike Chioke, pointed out that in the area of quality of education, Nigeria ranks lower than its peers in both the years and quality of learning.

Also, in the area of healthcare, he said Nigerians spend more on healthcare out-of-pocket and have the lowest life expectancy, compared with a lot of other African countries, as well as in terms of safety of life and property.

He said: "Nigeria scores low in securing property rights compared to peers. Unemployment has increased rapidly as job creation has not kept up with the increasing labour force.

"Revenue growth has been relatively weak at a compound annual growth rate (CAGR) of 3.9 per cent. Expenditure has risen at a faster pace of 7.2 per cent CAGR.

"Debt has risen faster than revenue and expenditure growth with a 17.8 per cent CAGR.

"Our 2019 projected revenues of N4.2 trillion will be 40 per cent short of N7 trillion budget while actual deficit of N3.3 trillion is 74 per cent ahead of N1.9 trillion budgeted deficit. Actual total expenditure will fall by 15 per cent to N7.5 trillion compared to the budget of N8.8 trillion.

"Meanwhile, the 2020 budget of N10.3 trillion ($33.7 billion) is projected to be funded by revenues of N7.6 trillion and a deficit of N2.2 trillion.

"Based on historical precedents, the 2020 budget is likely to suffer similar implementation challenges."

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