Political Interference, poor asset quality, downplay DFIs’ laudable goals – CBN
Development Finance Institutions (DFIs) in Nigeria and Africa as a whole are trying to do good things, but they face big problems like political interference, poor assets, and bad management.
In the same way, ineffective risk management, not having enough money, having strict rules, and not using information technology enough have all contributed to the problem.
Even though the Federal Government has helped set up a few DFIs over the years, which were meant to provide financial support for businesses in key sectors of the economy and work with traditional banks to fund long-term development projects, these efforts have not lived up to what stakeholders had hoped for.
Director of the Other Financial Institutions Supervision Department at the Central Bank of Nigeria (CBN), Nkiru Asiegbu, told the annual General Assembly/Conference of the Association of Nigerian Development Finance Institutions (ANDFI) in Abuja about this yesterday.
Asiegbu, who was represented by Harry Agbo of the CBN’s OFIS Department, said that despite these problems, the subsector did well in some areas. He also said, “In terms of the impact on the economy, the aggregate net loans and advances grew by 45.06 percent from N1.092 trillion at the end of December 2019 to N1.58 trillion at the end of December 2021.”
Asiegbu also said, “Total assets also went up by 51.12 percent, from N2.02 trillion at the end of December 2019 to N3.05 trillion at the end of December 2021.”
The director said that the total amount of money owned by shareholders went up by 67.16 percent, from N271.14 billion at the end of December 2019 to N453.24 billion at the end of December 2021.
In his welcome speech, Olukayode Pitan, Chairman of the Association of Nigerian Development Finance Institutions (ANDFI), said that Nigeria is a unique setting for the development mandate of DFIs. He also said that the country is responsible for helping different parts of the economy, such as agriculture, industry, infrastructure, export and import, and mortgages.
Pitan, who is also the Managing Director of the Bank of Industry (BOI), said that global and local economic headwinds, difficulty getting access to funds, bad credit ratings, and deteriorating assets, among other things, have made it harder to spread execution. He also said that the arrival of Covid-19 has made these problems even worse, and that these problems have hurt the success and growth of private sector players in Nigeria.
He said, “At this point, let me give you an update on the ANDFI secretariat. A new, fully-furnished office has been set up at the BOI Abuja Corporate Office, and three staff members have been hired: an Executive Secretary, an Administrative Officer, and a Research/Training Officer.” They have been asked to carry out the secretariat’s vision and give regular updates as needed.
He told the people there to speak with one voice and work together to change government policies and other things that affect everyone. He also told them to help each other and invest in each other, to invest in their training and development, and to work together to study issues of national economic growth in order to help our country grow.
Mrs. Patricia Adongo, Managing Director of Uganda Development Bank Ltd, said in a paper on the theme “Innovative Financing for Sustaining Growth and Development” that ANDFI has a role to play in economic development on the African continent. She also said that policymakers in Africa have realized the need to get the money they need to support and finance national development plans.