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Home |   About Us |   Contact Us |   Members |   Search |   Subscribe |   Disclaimer |   THE GUARDIAN CONSCIENCE, NURTURED BY TRUTH LAGOS, NIGERIA.     Wednesday, July 28 2004   news   editorial/opinion   policy & politics   focus/record   business   sports   capital market   metro   arts   money watch   energy   maritime   Guardian Chat Click to join the chatroom Obasanjo backs CBN on N25b capital base Says banks are rent seekers From Madu Onuorah, Abuja PRESIDENT Olusegun Obasanjo yesterday backed the Central Bank (CBN) on the recent directive that banks in the country raise their minimum capital base from N2 billion to N25 billion. Speaking while receiving the principal shareholders and the management of an indigenous computer manufacturing and assembly company, OMATEK, Obasanjo accused banks of stalling the growth of the real sector of the economy in preference for easy funds. The CBN Governor, Prof. Charles Soludo, on July 6 announced the new capital base which the banks are to comply by December 31, 2005. He also disclosed that government deposits in the banks would be pulled out. Bank chiefs on Monday urged the National Assembly to reject the CBN's directive, and canvassed the lowering of the capital base to N10 billion and the stratification of the financial institutions into two, namely settlement banks and non-settlement banks. But President Obasanjo yesterday echoed the CBN governor's declaration, describing most of the banks currently operating in Nigeria as "rent seekers", who also engage in "mercantile banking." Obasanjo also complained that the high interest rates being charged by banks had almost killed the Nigerian economy, adding that the government had resolved that all measures must be taken to make sure that the real sector does not die. Commending two of the leading commercial banks for supporting OMATEK through equity participation, the President pledged that his administration would continue to vigorously implement policies that would encourage Nigerian entrepreneurs to invest more in the productive sector than engaging in mere buying and selling or serving as commissioned agents to foreign interests. Turning to the Managing Director of Zenith Bank Plc, Mr. Jim Ovia, who is one of the principal shareholders of the computer company, Obasanjo said: "Jim, I thank God that you have increased the capital base of your bank. And so, you won't go down the drain. Referring to the initial public offer by the company. He added: "I hope the response has been good " The President praised OMATEK's founder, Mrs. Florence Seriki, for her achievements. He said: "I am impressed by your vision and for your courage. Because if you go into banking, you don't need any courage to succeed. You don't even need a lot of vision. Banks use our money and we must tell them how to apply it. In a situation where we change, we need courage and we need belief in God. When I went into agriculture, it was good. But it is as if we have a policy that first destroys; then we revert to importing what we were sufficiently producing in Nigeria." The President continued: "We should not allow the productive sector to die again. And that is why I say bankers like Jim Ovia have to have belief in what you are doing. And I'm very happy that he said he (Ovia) has gone to INFOSIL in India. I'm giving you the challenge that we should have a Nigerian INFOSIL here. Let us also encourage Nigerians who are there because they are wizards. It is just a question of giving them the encouragement." Obasanjo added: "I'll continue to push the bank to ensure that OMATEK becomes much more bigger. This is because unless you push the banks, they won't put any money in production. They'll rather put money in buying and selling in commission agencies. As Ovia kept shaking his head, the President said: "Jim, don't shake your head. You and I know this. Thank God OMATEK loan was based on equity. If you had borrowed the money on interest, they will charge 25 per cent and there is no way you borrow money at 25 per cent and be in break even. There is no way! And this is what they are doing to kill the economy of this country. Get more equity from them but don't let them take control of your firm. The only thing bankers do is to have air-conditioned room, wall-to-wall carpet, they sit down there and you go to them, they speak big grammar and they charge you big interest that you can't pay back, Jim, don't shake your head." Turning to Seriki, the President said: "Madam, I'm happy they gave you money on equity but don't allow them to take over. If they want to do that, I'll take them to court on your behalf. And if any banker is playing you magomago, just let me know. Because this is a battle and we must win the battle of production in this country. We must win the battle of putting money in the productive sector - manufacturing, agriculture, industry and ICT. We must win the battle and do away with rent seeking and mercantilism in banking. What you are doing today is good, but almost everything comes from the outside. It is the old way of import substitution and we must avoid the mistakes of the past."` � 2003 - 2004 @ Guardian Newspapers Limited (All Rights Reserved).  Powered by dnetsystems.net dnet�

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