News Column

'Nigerian Banks Don't Have Enough Deposits to Support Real Sector'

May 5, 2014

Steve Omanufeme

The Executive Vice-Chairman and Chief Executive Officer of Multi-Trex Integrated Foods Plc, Mr Dimeji Owofemi has said that the problem with real sector financing lies with the government and not the banks, adding that the banks deposit mix as currently constituted cannot provide adequate support for the sector.

Owofemi disclosed this in an interview with a select group of business editors at the weekend in Lagos. He said government policy of domiciling export proceeds from oil and services in foreign banks have starved domestic banks of funds which would have been used to finance the real sector.

"A lot of people blame Nigerian banks for not supporting the real sector. It is nothing to do with them. In the real sense of it banking can never be fully funded by private depositors. Big deposits come from government which are currently being put in foreign banks," he said, adding that the banks are just being made scapegoats.

He maintained that the banks are very well regulated that if they have the oil export proceeds in their deposit mix they will fund the real sector which oftentimes need long term financing and almost always risky.

Owofemi pointed out that government claims of attracting foreign investment is not totally true as no fresh capital is coming into the country since the so called investors go to the foreign banks to borrow the money Nigeria has deposited with them at a premium due to what they call country risk.

"Even our local banks in syndication with foreign banks make use of these money starched away in foreign banks. Government does not have confidence in our local banks," he explained, adding that when China, UK generate money they put it in their banks and not foreign banks.

"Have you seen America or UK putting their money in Nigeria banks?"

For him, Nigeria's economic managers must be bold enough to customise the economics practised in advanced economies to suit the Nigerian environment.

"I have nothing against the coordinating minister, nothing against her, but it is time for her to modify Brentwood economy practiced in Hollywood and customise it for Nollywood because this is a Nollywood environment. You can't practice Brentwood economy in a Nollywood environment," he said.

Owofemi obviously referred to Brentwood, an affluent neighborhood in the Westside of Los Angeles, California where Its 33,000+ residents are considered highly educated.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: AllAfrica

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters