Bank Reform'll Boost Economy - NACCIMA
By Crusoe Osagie
Nigerian Association of Chambers of Commerce and Industry Mines and Agriculture (NACCIMA)has expressed its support to the bank reform policy, stating that the policy would boost nation's Gross Domestic Product (GDP) and lead to overall economic development.
The President of the association, Nze C. Maduako, who disclosed this to newsmen in Lagos yesterday, explained that the N25 billion recapitalisation directive of the Central Bank of Nigeria (CBN) was appropriate but should be executed in phases.
He, however, stated that the deadline for banks to comply with the recapitalisation directive should be shifted to December 2006 instead of 2005.
He called on government to stratify the recapitalisation and capital base of different banks into three categories with capital base ranging from N5 billion to N25 billion.
"Banks should be stratified into three categories with small banks having a capital base of N5 billion, medium banks N15 billion and large banks N25 billion," he said.
He added that the recapitalisation exercise would not only encourage mergers and acquisitions in the banking industry, but also reduce overhead/operational cost through staff right-sizing, improved service delivery by use of modern technology and enhanced professional banking practices as well as reduced frequency of sanctions by CBN for default.
"The recapitalisation exercise would certainly ease the problem of distress presently inherent in the banking industry through the elimination of the era of one-shop banking, improvement of the settlement amount paid by the National Deposit Insurance Corporation (NDIC) in the event of distress and the reduction of the number of banks operating in the system thereby ensuring reliability and strong liquidity base," he noted.
He stressed that the recapitalisation exercise would help to improve the foreign exchange in-flow into the country and attract more Foreign Direct Investment (FDI) into the country, reduce the present high inflation and interest rate in the country as well as put banks in better position to support the real sector.
He, however, counselled that CBN should avoid attacking family businesses in the country so as to ensure sustainability of entrepreneurship and joint stockholding development culture which was prompted 30 years ago by the Nigerian Enterprises Promotion Decree.
"The existence of family businesses does not exist only in Nigeria, the situation in Nigeria compares with several centuries of entrepreneurship development as practised in Europe, Far East, United States of America and Asia, which eventually grew to multinational conglomerates such as Coca-Cola, Guinness, Cadbury and Nestle among others," he said.
He urged government to handle the matter with utmost care in the interest of the populace to avoid creating an artificial distress, guide against market indiscipline and policy inconsistency.
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