Afrinvest to unveil 2023 Nigerian Banking Sector Report

* Finance Minster is Special Guest of Honour

Afrinvest West Africa Limited will be unveiling the 2023 Nigerian Banking Sector Report in Lagos on Tuesday, November 14, 2023.

The report, with the theme, ‘Getting Nigeria to Work Again!’ will be unveiled by noon at the Civic Centre, Victoria Island, Lagos.

The event will attract dignitaries from private and public sectors, market leaders and stakeholders in the financial sector, who will discuss key issues necessary to get the country’s economy return to path of growth.

The Special Guest of Honour, Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, will use the opportunity to present steps being taken by  the government to stabilise key segments of the economy. 

Panellists for the event include Founder/Chief Executive Officer, Outsource Global, Amal Hassan; Chief Executive Officer, Pinnacle Oil & Gas, Robert Dickerman; Co-founder/Chief Operations Officer, Piggyvest, Odunayo Eweniyi; Head of Service, Edo State Government, Anthony Okungbowa and Director, Corporate Affairs, TGI Group, Sadiq Kassim.

The yearly report, which has, for years, shaped the direction of market developments and given clear guidance to domestic and foreign investors on the state of the economy, will, this year, provide same advantage to financial market players and economic managers. 

Managing Director, Afrinvest West Africa Limited, Ike Chioke, said the report would provide insight on global economic review and outlook, global monetary policy review and outlook, global banking sector performance and outlook, evolving trends in the global banking industry and domestic macroeconomic review and outlook.

Issues will revolve round domestic forex market performance and indicators, price stability, insight on the strategic agenda for the new Central Bank of Nigeria Governor.

“As the new CBN leadership takes over, Nigerians and the banking industry are on the lookout for a positive and timely turnaround of stifling banking regulations and major monetary indices – exchange rate, inflation rate, and Foreign Portfolio Investment & Foreign Direct Investment flows,” the report said.

It also provides highlights of the 2022 Nigerian Banking Sector report themed ‘Brace for Impact’, which coincided with the onset of fresh global risks as the receding Covid-19 pandemic left deep footprints.

“This evolution of risks shifted focus from economy-stimulating policies to the introduction of guard rails for overheating economies.

Specifically, the emergency adoption of the Modern Monetary Theory playbook in response to the pandemic dovetailed into a glut of financial liquidity. Although the broad stimulus deterred prolonged global recession, the absence of a commensurate productivity boost drove real and financial sector prices higher and threatened real output recovery,” it said.

It explained that the central banks had since embarked on historic policy normalisation and disinflation campaigns which – as theory predicts – curtail bank credit creation, constrain capital investment, and drag consumer spending. 

Beyond 2023, the report explained that the prevailing macroeconomic headwinds of elevated prices, higher-for-longer interest rate, currency volatility and escalating debt crisis portend systemic risk to the global banking and financial sector. 

It gave insights on what will play out in the debt market and how it will affect the central banks and economies of debt-prone nations. 

Already, more than $5tn of global corporate debt will mature in 2024, based on International Monetary Fund reporting, requiring refinancing at significantly elevated interest rates. Banks cannot afford material increase in bad loans, as they have sizable unrealised losses on disappointing non-loan assets. 

“Central banks have their hands full; the increasing debt burden on governments due to the tight financial markets would require some debt monetisation, and fiscal bailouts might not be expansive enough to cover troubled banks. Hence, we anticipate critical revisions to global banking guidelines should the tightening cycle persist,” it said. 

It noted that over the last 12 months to September 2023, CBN’s regulations have largely focused on improving the operating environment for banks and OFIs in line with changing global dynamics, incentivising financial services integration, and restoring sanity in the post-botched Naira redesigned policy implementation. 

“To our mind, the potential gains from these moves would only crystallise if major FX inflow sources – crude oil sales, capital importation, and diaspora remittance – are enhanced by supportive fiscal and monetary policies that would incentivise new investment in the oil & gas sector, restore foreign investors’ confidence, and encourage more capital repatriation by the Diaspora,” it said. 

The report also provided way out of current economic difficulties faced by both government and some private sector operators especially with ongoing acute dollar crunch. 

“In the meantime, we canvass that the authorities double down on efforts to check insecurity, curb oil theft, tame inflation, anchor market yield on MPR, and improve the business environment. Also, we believe that the sustained high demand for FX in the parallel market due to lingering weak supply in the official market, coupled with inefficient processing time, would continue to undermine the objective of these measures. As regards the impact of the measures on the banking industry, we expect the re- introduction of the willing buyer, willing seller model to support a modest positive upside for the FX transaction income of banks going forward,” the reported. 

The report also highlighted the need for the new CBN leadership to be geared towards reversing the unorthodox policy measures of the last administration, restoring market confidence in the CBN’s autonomy, and prioritising the core goals of price and exchange rate stability. 

“Nonetheless, we believe that achieving all of these in a short-term would be a herculean task, given that complementary fiscal policy actions are required for the CBN to record gains,” it said.