As financial authorities battle foreign exchange scarcity, the Central Bank of Nigeria (CBN) and Deposit Money Banks (DMBs) have resolved to suspend further allocation of forex for the purpose of school fees and medical bills overseas.
The decision was reached in Abuja yesterday at the Bankers’ Committee meeting where the members said forex allocation for medical bills and school fees constituted 15 per cent of foreign exchange demands in the country.
Briefing journalists after the meeting, the Director, Banking Supervision, CBN, Mrs. Tokumbo Martins, said banks had resolved that most of the foreign exchange demands would be granted to developing the real sector.
Martins said that although the decision would be painful, it was a sacrifice Nigerians would have to go through in the short term in order to achieve a long-term development for the economy.
She said: “You know it is something that affects all of us and I think that the watchword is belt-tightening. It is the pain we may need to go through today, short term, so that there will be long term development in the country whether it is infrastructure, manufacturing etc.
So, the question is how we can prevent or reduce the crowding out of the real sector where there is increase in demand on the invisible.
“So, it is something that CBN is looking at and it is something the Bankers’ Committee is looking at.
“If you think about it, the pressure on forex now – from school fees abroad – is significant. At what point should we begin to look inwards?
“The pressure on medicals is significant. At what point should we begin to look inwards? As Nigerians, we also need to be patriotic in terms of our sentiments.
“We need to think about what do I have to sacrifice today for the long term benefit of our country and the economy?”
On his part, the Managing Director of Access Bank, Mr. Herbert Nwigwe, said banks had decided to channel such forex to the real sector because those demands tend to crowd out demands to import raw materials and to support industries.
He said: “The problem with that is the fact that it tends to crowd out the critical foreign exchange that should be used in the real sector to import raw materials, to support industries, to encourage employment. So, there is a question around how far we are going to allow this to continue. Shouldn’t we redirect these resources towards the real sector as we should?”
Nwigwe said there was a deliberate effort to increase the rate of financial inclusion, which has risen from 30 per cent to 40 per cent in recent times and is now 66 per cent. He put the banks’ target of financial inclusion at 69 per cent before December 2016.
The committee reached a common ground on how to stimulate more interest and enhance the inclusion of more Nigerians into the banking system.
Martins said: “Currently, we have about 66 per cent, which is 67 million people already included as against the 30-40 per cent we were having some couple of years back, and this improvement is substantial compared to what it used to be. Our target is to have up to 68.5 per cent by the end of December 2016.”
Considering the dwindling oil prices in the international market and the timely agitations by experts that the economy should be diversified to prevent an imminent economic doom, the committee resolved to pay more attention to the real sector by supporting manufacturing companies, so as to produce export worthy goods and services at a minimal cost.
Focusing more on raw materials development was another common ground that they reached.
The committee also agreed to reduce paper documentations for customers who want to open account at cost effective prices.
The committee also expressed satisfaction on the result which the BVN policy had yielded in the country, saying that the policy had made significant impact to loan, instill confidence in the lending culture of the economy as it now disallowed customers from visiting other banks for loans when they are already in default.
