In the month of May 2015, Nigeria was plunged into very excruciating era of fuel scarcity as petroleum marketers embarked on a strike over alleged non payment of funds by the Federal Government and it seems that the fuel crisis is yet to be over.
The Chief Executive Officers (CEO) of some of the top financial institutions and oil and gas sectors in the country have raised alarm over the dwindling flow of funds into the banking sector and predicted another plunge into the pool of fuel scarcity.
These concerns were raised by the CEOs of First Bank of Nigeria Limited, Zenith Bank Plc, United Bank for Africa (UBA) Plc, Mobil Oil Nigeria Plc, Seplat Petroleum Development Company Plc and Oando Plc at a conference held in Lagos State on Thursday, June 25, 2015 where they were panelists.
The participants at the conference also called for the devaluation of the Naira and that liquidity to the foreign exchange market be restored. The Group Managing Director (GMD)/CEO of First Bank of Nigeria Limited, Mr. Bisi Onasanya, further said that the level of N200 currently on the official market would not be able to support the economy hence the need for the devaluation of the Naira.
He said: “It is not sustainable, and the longer we continue to hold unto this, the more we send signals to the international market that we are not serious as a country.
“There has to be some adjustment in the present level of the naira. There has to be a re-opening of the market for activities to continue in the market otherwise, the economy will be at a standstill.”
The UBA Group’s GMD/CEO, Mr. Phillips Oduoza, who was represented by the Executive Director, Treasury and International Business of the UBA Group, Femi Olalokun, also pointed out that given the current situation, the currency needed a little adjustment adding that there was a need to diversify the economy, broaden income base and restore liquidity in the foreign exchange market.
“I think we need to increase the rate of interest for funds to come in,” he said.
According to the GMD/CEO of First Bank, said that the economy of the Nation was contracting due to the decline in oil revenue which accounts for about 85% of the foreign exchange and from which all of the country’s bills are serviced.
He said: “This has signaled that the economy is contrasting and mainly as a result of dwindling government revenues.
“So, you can’t take the banking sector out of that equation. I believe very strongly that this will impact deposits in the market, the volume of deposits in the market and the rate at which funds can come into the system.
“Savings rate will slow down. Funds that come into the purses of various states today are barely enough to meet their overheads; 18 states today are defaulting in the payment of salaries. So, what does that tell you?
“The flow of funds into the banking sector that used to help in accretion of deposits to fund the real sector of the economy has slowed down, if not disappeared.”
He also said that he was not surprised by the decision of the Central Bank of Nigeria (CBN) to average out the cash reserve requirement between the public and private sector deposits. He asserted that the reality of the situation is that public sector deposits had disappeared from the market altogether.
“The reality is that we have a contracting economy; we have an opportunity, however, to see this as a process to start looking within and rebuilding the Nigerian economy from the basis,” he said.
