Fasasi Charles Adeniye has over two decades of banking experience. Prior to his appointment as Managing Director/Chief Executive of Skye Bank, Guinea, he was the Branch Manager of Zenith Bank Isolo. He started his career in Zenith Bank in the year 2000 and rose to Senior Manager level. He worked in Apapa and Isolo Zones of the bank where he handled different roles of Branch Management, Group Head and Acting Zonal Head. An Ogun State University, Ago Iwoye (now Olabisi Onabanjo University) First Class Honours graduate in Economics, Adeniye who also holds a Masters degree in Finance from the University of Lagos, is a Fellow of the Institute of Chartered Accountants of Nigeria (FCA). In this interview with SULAIMON OLANREWAJU, he speaks on the economy, banking and infrastructure financing. Excerpts.
The Finance Minister believes Nigeria has a revenue problem and not a debt problem. Do you agree with her?
As against her belief, Nigeria has a debt problem and not revenue problem. A significant part of the country’s borrowing is made for consumption rather than directing such funds into vital sectors of the economy that could generate revenue to pay off the debts and create employment. If the borrowed funds are used to create jobs for the citizens, taxes would increase and this would lead to increase in the country’s revenue.
What’s the difference between revenue and debt problems?
Debt problem occurs when a country cannot repay its debts. A debt problem happens when revenue accruable from taxes, oil and non-oil of the country are lower than the expenditure incurred over a certain period. Revenue problem, on the other hand, occurs when there is a gap between the expected revenue and the actual revenue generated.
One of the major challenges of Nigerian banks is non-performing loans. What is the cause of this?
So many factors are responsible for non-performing loans but some of the major ones are; poor credit appraisal, unfriendly/unfavourable business environment, inconsistent policies by the government, character problems of loan obligors, multiple taxes, corrupt practices of officials, amongst others.
What are the effects of non-performing loans on the economy?
The major effect of non-performing loans is its negative impact on the Return on Asset (ROA) and the ability of banks to effectively play their roles in the economy. The import of this is that the higher the volume of non-performing loans, the lower the ability of banks to support the real sector. This is why the Central Bank of Nigeria (CBN) is particular about reducing the incidence of NPL in banks.
Lately, Nigerian start-ups, such as Flutterwave, have been raising funds outside the country. Why does that happen?
Start-ups and SMEs are important to the growth of the country’s economy in terms of contribution to the Gross Domestic Product (GDP) and creating employment opportunities. Frankly, the business environment in Nigeria is harsh and unfavourable for most start-ups, making it difficult for them to thrive and occupy their place in the economy. Funding that comes at a cheaper rate will assist start-up businesses to scale but unfortunately such funding sources are not available in the country. This is why focus is shifting to sources outside the country.
How can the authorities improve entrepreneurs’ access to funding?
Inadequate access to funding has been a challenge towards the growth of entrepreneurs. Authorities can improve entrepreneur’s access to finance through the granting of project-based concessionary loans, developing other sectoral credit guarantee schemes other than the one for agriculture, and promoting foreign direct investments (FDIs) in areas relating to entrepreneurial trades.
Will digital banking lead to redundancy of bank workers?
Digital banking became the new normal during the peak of the COVID-19 pandemic in 2020. It underscored the limitation of the traditional brick and mortar branches because payments and trade settlements were carried out smoothly with less intervention from account officers. Similarly, payment through different channels experienced a quantum leap and modern technologies are now being deployed to handle large repetitive tasks which were hitherto done by bank staff. Though, it may seem technology is replacing jobs in the bank, more staff would be deployed to relationship management where decisions can only be taken by bank staff.
How can we salvage the Naira?
One of the ways to salvage the Naira, is to engage more in export of home grown products and reduce the import bill. A country that heavily relies on importation for almost everything would experience attack of its currency. Industries and manufacturing plants should be revived and government should improve the infrastructure in order to reduce overall cost and make the products competitive in the global space.
How do we stem rising inflation?
One of the ways to curtail rising inflation is to contract the supply of money into the economy by increasing interest rates and reducing bond prices. This will lead to reduction in cost and ultimately prices of goods and services.
You participated in the financing of Unicem plant (now Lafarge) in Calabar. What was the experience like?
It was a great experience. Financing of the Line 1 and 2 plants transformed an expanse of green belt in Calabar into an economic city providing direct and indirect employment to citizens, improvement in infrastructure and generating revenue to the government in taxes. There were some challenges particularly in completing the Line 1, being a greenfield especially cargo traffic in Calabar port and transportation of heavy duty machines to the project site. The banks in the syndication worked closely with the contractor to overcome the challenges. The experience and lessons learnt in Line 1 plant was brought to bear during the financing and construction of the line 2 in 2013.
Many of the infrastructure projects in Nigeria go on for years due to poor funding. How can we improve on that?
Infrastructural projects in Nigeria go on for years without completion due to nature of funding. Government funding for project is done to the extent of revenue generated and since revenue is challenged, it goes without saying that amount available for funding of projects will be affected. In alternative, institutional investors could be engaged in financing of large scale infrastructure but this has to be done with proper legal framework in assuring the safety of the investments and return. Different financial instruments could also be created to generate funds for infrastructural finance.
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and then