(Special Report) Understanding Dangote’s diversification advice to Nigerian banks
Reviewing the multifaceted challenges’ facing the global crude oil prices due to the drop in crude oil demand and threatening COVID-19 worldwide, the Chairman, Dangote Group, Alhaji Aliko Dangote had on Wednesday last week urged government and other major stakeholders including banks’ to urgently adopt more proactive measures to deepen diversification of the nation’s economy.
Speaking on banks specifically at the consultative roundtable meeting organised by the Central Bank of Nigeria (CBN) in Abuja, with the theme: “Going for Growth 2.0”, Alhaji Dangote strategically called on in the banking sector to also diversify, especially to the manufacturing sector.
A closer look at the richest Africa’s son’s specific call and remark on banks’ has raised issues of serious assessment of the real contributions of Nigerian banks to the economy.
Fact checks showed that majority of banks in South Africa and Egypt and other developed parts of the world are known for their strength and power in owning and managing chains of productive ventures including manufacturing and mega housing estates.
In South Africa, a sizeable percentage of manufacturing concerns and massive estates are owned by commercial banks, but here in Nigeria, there is no single industry one can effectively point to an being owned by a bank, still yet, Nigerian banks kept reporting humongous profits both before and after taxes.
Fact checks show that Nigerian banks have no history of investments in real sector but are deep into veiled forex trading and that had been why it has remained very difficult for international agencies to believe some of the financial results churned out yearly by the financial institutions.
Though the issue Dangote raised may have been quickly swept under the carpet, because it will raise questions which banks’ cannot have real facts to answer when compared with their always massive profits, analysts say the issue Dangote raised will continue to haunt even the regulator, the Central Bank of Nigeria (CBN) because it has not really done much well in forcing banks to invest and run businesses rather than clouding their endless rise in stardom in currency round-tripping unabated
Though only recently, the CBN was able to do a little by jerking up the Loan Deposit Ratio (LDR), but it was not clear if adequate check is being deployed by the apex bank to truly monitor how banks react to the directive.
Though Dangote did not go further in explaining why bank should also diversify their income with special reference to manufacturing g as its done in other saner climes, that singer shaking of the bankers’ table by Dangote may send the needed regulatory signal to the CBN and even some smart banks that banks in other saner climes are major players in manufacturing and not only in lending and forex buying and selling.
