E-Financial
Bankers Committee Kicks Against Interest Rate Reduction
The Bankers’ Committee yesterday said that it might be difficult for the Central Bank of Nigeria (CBN) to achieve a lower interest for the country owing to the current level of macro economic environment.
The committee at the end of its 316th meeting held at the headquarters of the CBN specifically noted that for the country to achieve a reduction in interest rate, issues such as the high costs at which banks source for fund, the high inflation rate, as well as the exchange rate needed to be addressed in a fundamental manner.
Present at the meeting was the Governor of the CBN, Mr. Godwin Emefiele, the four Deputy Governors of the apex bank, all the Chief Executives of Deposit Money Banks, and the Managing Director of the Nigerian Deposit Insurance Corporation, Alh Umaru Ibrahim among others.
Emefiele had, while unveiling his agenda for the banking sector, stated that he would pursue a gradual reduction in key interest rates and maintain exchange rate stability to aggressively shore up foreign exchange reserves.
He had said while a reduction in deposit rates would encourage investment attitudes in savers, a reduction in lending rates would make credit cheaper for potential investors.
However, addressing journalists shortly after the bankers committee meeting, Mr. Segun Agbaje, Managing Director, Guaranty Trust Bank, said while the structure of the economy remained fundamentally fixed, there is need to address factors such as exchange rates and import substitution in order to drive down interest rates.
He, however, added that the committee would continue to support the initiative of the new apex bank boss to drive down interest rate within the medium to long term.
He said, “The interest rate environment that we have today is suitable when you take the other factors such as inflation, and price stability, and the lower interest rate going to the medium term is desirable.
“So, if you look at the policy thrust of this current governor of the central bank to bring down interest rate, but it is not going to happen tomorrow.
“You are going to balance what you see today and keep the interest rate and then gradually move to what you think as the desired state which is a reduction in interest rate.”
When asked about the impediments to achieving a lower interest rate, the GT bank boss said, “There are many impediments to lower interest rates. First you have to look at the rate of inflation, you have to look at what type of exchange rates you want, you have to look at what the cost of funds of the banks are, you have to look at what the cost of providing infrastructure, you have to look at cost of providing personnel.
“All these come into what becomes what is cost of funding before you determine what the margin is. Even your macro economic factors as a country also affect what interest rates are charged.
“There are so many variables that determine interest rate. Whether you live in lower interest rate environment we do not want interest rate that is below the rate of inflation because that discourages savings.”
Phillips Odouza, GMD of United Bank for Africa, who also spoke at the media briefing said that since the commencement of the biometric registration of bank customers, about 10,000 customers have been captured .
He said the project was vital for the banking sector as it will assist in consumer lending by providing credit to people that were hitherto excluded from the banking system.
Titan Trust Bank has selected Oracle FSS for its core and digital banking technology, it is understood.
The start-up bank recently obtained its license by the Central Bank of Nigeria (CBN).
It’s understood that Temenos and Infosys also competed for the deal.
The shortlist came down to the two most widely installed international core systems in Nigeria, Infosys’ Finacle and Oracle FSS’s Flexcube.
The Nigerian banking sector has seen a great deal of upheaval over the years, with many mergers, start-ups and closures. Flexcube is a well respected name since the late 1990s (the pioneer was Access Bank, now one of the country’s top five banks) and has been a commonly selected platform since then.
The new bank is believed to be one of five to have gained regulatory approval of late (Globus Bank is another).
Local media sources say the new licences stem from the Central Bank’s desire to attract new investments into the sector and better serve the country’s 50 million+ unbanked and under-banked citizens.
Titan Bank is said to be headed by a former executive director of Heritage Bank (which is a Finacle user).
Oracle FSS did not respond to request for comment.
International Monetary Fund (IMF), has appointed Tony Elumelu, Nigerian billionaire and group chairman of Heirs Holdings, owners of United Bank of Africa, to its advisory council on entrepreneurship and growth, convened by Kristalina Georgieva, the fund managing director.
The announcement was disclosed in a statement on Friday.
According to the statement, the IMF advisory council comprises global business leaders, policymakers, and academics dedicated to identifying and addressing regulatory barriers to entrepreneurship.
The IMF said Elumelu will be instrumental in ensuring that Africa’s entrepreneurship is central in policy making.
“Elumelu, Africa’s leading advocate of entrepreneurship and whose Foundation has funded, mentored, and trained over 25,000 African entrepreneurs since 2015, champions entrepreneurship as the engine for the economic transformation of Africa,” the statement reads.
“A self-made entrepreneur, Elumelu’s embracing of entrepreneurship is fundamental to his concept of Africapitalism, his belief that Africa’s private sector can and must play a leading role in the continent’s development, making long-term investments that deliver social and economic value.
“Elumelu will be instrumental in ensuring that Africa’s entrepreneurial potential is central to global economic policy making.”
Speaking at the inaugural meeting of the advisory council on March 26, Georgieva said the appointees would share their experiences on how macroeconomic and financial policies “can provide a supportive environment for innovation, entrepreneurship, and productivity — key ingredients for a thriving private sector and strong economic growth”.
Africa’s Micro, Small, and Medium Enterprises, fintech industry, scaling remittances, and cross-border payments will be the driving forces behind the continent’s digital ballooning payments system, which is estimated to reach $1.5 trillion by 2030.
This is according to a MasterCard-commissioned study by Genesis Analytics, which states that the digital payments economy is growing faster on the continent.
This comes as the World Bank says Sub-Saharan Africa has shown significant growth in financial inclusion over the past decade, much of it driven by mobile money account adoption.
Dimitrios Dosis, president, Eastern Europe, Middle East and Africa at MasterCard, comments: “Africa is filled with immense possibilities, and its people have the potential to shape the global economy in the decades ahead.
“MasterCard remains deeply committed to driving digital transformation across the continent, working closely with entrepreneurs, merchants, banks, start-ups, telcos, and governments. By increasing our investments, expanding innovation, and fostering inclusion, we are helping build a more connected and accessible digital future.”
The payment technology company went on to say as a longstanding technology partner to Africa, its continues to strengthen its commitment to the continent’s digital growth through strategic investments, public-private partnerships, and innovation initiatives that drive financial health and economic growth.
In addition, it says trends in Africa signal a strong shift towards digital transactions, with businesses and consumers increasingly embracing contactless solutions, further accelerating economic participation and financial accessibility across the region.
“For over five decades, MasterCard has worked alongside African governments, businesses, and communities to advance financial inclusion and economic development.
“With Africa projected to host nine of the world’s 20 fastest-growing economies, we are focused on leveraging our expertise and a technology to support the continent’s continued digital transformation.
“Our investments today will help build a more resilient economy for the future,” says Mark Elliott, division president, Africa, MasterCard
By fostering collaboration with key stakeholders, MasterCard says it aims to enhance digital connectivity, expand economic opportunities, and enable millions of people and businesses to thrive in the digital economy.
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