The Managing Director/Central Executive Officer of Fidelity Bank Plc, Mr Nnamdi Okonkwo says here about the ongoing issues in the Nigerian Economy and Banking Sector. He also talks about Fidelity Bank Plc’s impressive performance so far in 2017. Here are excerpts from his interview with Business Editor Emeka Anaeto;
The Nigeria Bureau of Statistics recently announced that Nigeria has come out of recession. Being a banker, can you tell us some of the damages that the recession caused in the Nigerian Economy?
Simply put, a recession is a negative growth in an economy over a specific period of time. I am not in the position to quantify the damage done but because the banking industry is at the centre of everything that happens in the economy, I am in a position ton know that a lot of things slowed down due to the slow economic growth brought about by the recession.
For example, if Fidelity Bank Plc had a customer located in Idumota, Lagos, who normally paid N1 million into his account daily and now he is paying in N200,000, it is because something has happened to his means of generating that amount and that source is no longer generating revenue as it used to.
About Expanding Production Line
If a bank gave a loan to A customer and it is not doing well, it is probably because that customer, government, employee or corporate employee is not getting his salary on time, in accordance with the situation of the economy. The same thing applies to when a bank provides financing for a factory that was out to expand its production line and suddenly realises that it cannot kickstart the line due to a drastic reduction in the demand for its product because of a general slowdown in demand.
Because of this I am not able to calculate the quantum however, when it comes to the aspect of the everyday impact on business, the recession was a thing that everybody felt. With that being said, we should take the news of Nigeria being out of recession with care and not be too quick to celebrate. Indeed the Federal Government has begun the recovery and growth plan, but for now, it is the discipline to execute the plan to the end that will matter.
On the monetary aspect, I wish to commend the efforts of the Governor of the of the Central Bank of Nigeria (CBN), Mr. GodwinEmefiele and his entire team because despite being under immense pressure to further devalue the Naira, they remained focused in addressing the issue from the retail end of the exchange market by sestting up a window where banks were given $2 million weekly in order to enable individuals to buy foreign exchange to pay the tuition fees of their children studying in higher institutions outside the country and in very little time, the exchange rate dropped from N520 per dollar to about N370 where it currently stands.
Apart from the payment of tuition fees, the apex also enabled SMEs and operators in the aviation industry to have access to foreign exchange but maybe the most significant of the moves made by the Central Bank in stabilising the currency was the introduction of the Investor/Exporter window FX which has yielded some major influx in terms of foreign investment portfolios.
Why Are Banks Reluctant in lending To Agriculture And The Real Sector Of The Economy?
There has been a lot of talk concerning banks not willing to provide funds for the Agricultural Sector of the economy and I have continued to ask why a bank, having been set up for the purpose of buying and selling money, see an opportunity to sell the money that it has bought and instead not be willing to sell.
The answer is that if a bank finds a liable agricultural project, it will fund it. For example, if an individual has some money to lend as a money lender, it is unlikely that he/she would like to go to a village and lend the money to a local farmer who does subsistence farming, does not know how to use herbicides and is ignorant about book keeping and who does not know that the money that the lender gives to him to fund his agriculture is a debt that he must be paid back.
Thankfully, Fidelity Bank Plc now has a platform for funding such local farmers through the Anchor Borrower Scheme, where their prodcts are guaranteed off take by bigger companies such as rice mills. And quite interestingly, the scheme is producing a great quantity of rice in the country. So if subsistence farmers in the villages could be put together by professional private sector operators under cooperative societies are being built like what is obtainable in the Central Bank’s Anchor Borrower Scheme, banks will be willing to fund such farmers because their products have guaranteed off take and there is some organised structure under which they are operating.
Having mentioned that there a lot of liable agricultural projects that banks have funded, and are still funding across the country, for example, Fidelity Bank has a large portfolio of agricultural projects that it has supported over the years. One of the best rice mills in the country today, based in Kano, was founded by Fidelity Bank and I am not talking about right now, when everyone is talking about the Agricultural Industry. I am talking about as far back as the year 2010. If you go visit the place today, you will find that there is a very solid company that we are proud of.
Despite Fidelity Bank’s Remarkable Performance In The First Half Of The Year, What Was Responsible For The Slight Decline In The Deposit Base?
We experienced a slight drop in deposits because of the high yield in treasury bills and bonds which attracted depositors to migrate to the use of such instruments. Secondly, we intentionally made a decision to optimise our balance sheet because we do not want to be known as a bank without reliable returns.
As a result, however, we were able to grow our deposit by about N20 billion using expensive deposits but profits and returns will suffer. The half-year results showed that Fidelity Bank is producing more revenue with less assets and we are rolling out even more revenue with a more efficient Balance sheet.
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