Banks’ Non-SMEs Weakens Economic Growth


The President and Chairman of the Council, Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola, has identified that non lending to critical sectors of the economy by commercial banks in the country was the reason the country’s economy is recording weak growth.

Ajibola, who spoke at the third inaugural lecture of Caleb University, Imota, Ikorodu, Lagos State, identified the critical sectors as agriculture, small and medium scale enterprises and micro businesses and manufacturing.

“The failure of banks to lend to agriculture, Small And Medium Scale Enterprises (SMEs) and micro businesses account for the weak performance of the economy over the years as bankers demonstrate ostentatious lifestyles, largely at variance with the dictate of the time,” he said.

Speaking on the theme: Rhythms and Riddles of Bank Credit: Synergies and Dislocations in Nigeria’s Economic Growth,  Ajibola also highlighted the criticisms that trail banking, banks and bankers in Nigeria and other economies that share common features with the country which should not come as a surprise.

He added that interest rates charged by Nigerian banks are among the highest the world just as he regretted that fraud and other malpractices are on the rise on a daily basis through collusion, insider’s abuse, staff convenience depicting total loss of integrity among practitioners.

He said banks are only interested in quick wins, thereby supporting trade and commerce without due concern for the growth of the real sectors of the economy.

He disclosed that banking originated as a noble profession with trust as a key ingredient.

He said that banks compete with one another in a bid to declaring high profits, often at the expense of the customers and that financial intermediation occupies the center stage in the business of banking and finance.

He, then, advised banks to redefine their lending behaviour to favour longer tenor loans.

He enjoined the government, bank regulators, deposit money banks and other financial institutions that are purveyors of credit to tighten the rules that govern lending for general commerce, especially imports, to block leakages that usually arise from over-invoicing and other acts of economic sabotage.