The President and Chairman of Council of the Chartered Institute of Bankers of Nigeria, CIBN, Dr. Dele Alabi, has said that improvements in macroeconomic indicators will amount to little if they fail to translate into lower living costs, more jobs, higher incomes and better living standards for citizens.
Alabi spoke Tuesday at the opening of the 19th Annual Banking and Finance Conference of the CIBN in Abuja, where he said the ultimate test of Nigeria’s economic reforms should be their impact on households, businesses and the daily lives of ordinary Nigerians.
It will be recalled that economic experts had said repeatedly that though the nation’s economy is stabilising and witnessing growth, it is not reflecting in the lives of the people currently facing harsh economic conditions.
The CIBN President said: “They are milestones, not the destination. The true test is whether stronger fundamentals translate into lower living costs, more jobs, higher real incomes, affordable credit, reliable public services and reduced poverty.
“Macroeconomic progress must, therefore, be felt at the micro level in households, small businesses and the daily lives of ordinary Nigerians. Our task is to build systems that learn, adapt and emerge stronger.”
He said the next phase of Nigeria’s economic reforms must focus on transmitting the gains from macroeconomic stability to businesses and households.
Alabi further said the CIBN’s conference was designed to give practical expression to the institute’s IMPACT Vision, which he unveiled on assuming office in May this year.
He said the institute’s advocacy for scalable SME hubs across the country is a practical response to challenges confronting micro, small and medium enterprises, MSMEs.
According to him, MSMEs continue to face high operating costs, poor infrastructure, limited market access, low productivity, skills gaps and slow digital adoption.
Also speaking, Lead Private Sector Development Specialist at the World Bank’s Nigeria Office, Ms Bertine Kamphuis, who was represented by the bank’s Division Director for Nigeria, Dr Mathew Verghis, said credit to Nigeria’s private sector remain inadequate.
She urged banks to channel more financing to sectors with the greatest potential to create jobs, particularly agriculture, manufacturing and MSMEs.
According to her, with between three and four million young Nigerians entering the labour market every year, expanding access to productive credit has become imperative.
Her position came against the backdrop of a charge by President Bola Tinubu that Nigerian banks must rethink their approach to risk and play a more active role in financing productive sectors of the economy, rather than focusing mainly on profits and shareholder returns.
Tinubu, represented by the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, said at the conference that strong bank profits alone are no longer sufficient, stressing that financial institutions must contribute more directly to economic growth and the welfare of Nigerians.
Tinubu said: “For years, we have measured financial institutions by balance-sheet growth, profitability and shareholder returns. These remain important. But we must increasingly ask: what is the financial system doing for the real economy?
“A resilient banking system cannot exist indefinitely where businesses cannot obtain affordable credit, manufacturers struggle to finance expansion, and millions of productive MSMEs remain outside the formal financial system.
This requires us to rethink risk. The safest loan on an individual bank’s balance sheet is not necessarily the best allocation of capital for the economy.”
According to the President, Nigeria’s economy has returned to a path of stability, with rising investor confidence, but cautioned that macroeconomic stability should not be mistaken for prosperity.
“Economic stability has returned. Credibility is rising. And prosperity is coming. These improvements matter. But we must not mistake macroeconomic stability for economic prosperity. Stability is the foundation; prosperity is the destination.
“The current phase of our reform journey is about accelerating the conversion of stability into investment, investment into production, production into jobs, and growth into improved living standards.”
Tinubu said the next phase of Nigeria’s development should not merely produce bigger banks with larger balance sheets but a larger and more productive economy.
“Capital must reach ideas, finance must enable enterprise, technology must expand opportunity, risks must be intelligently shared, and growth must translate into better lives for our people,” he said.
He added that the banking and financial services industry will remain central to achieving the objective, urging banks to fully embrace their financial intermediation role.
On the ongoing bank recapitalisation exercise, the President said the initiative must deliver more than stronger balance sheets.
“It must translate into capital formation in the real economy, financing Nigerian businesses as they expand across Africa and pursue our ambition of a one-trillion-dollar economy.
bigger bank that does not finance a more productive economy is a suboptimal outcome. We must build a system that finances potential and opportunity rather than quick gains for the privileged.”