A seasoned financial expert and former president of the Association of National Accountants of Nigeria (ANAN), Dr. Samuel Nzekwe,
has issued a clarion call to Deposit Money Banks, urging them to consider additional recapitalisation measures in order to effectively address the prevailing inflationary challenges within the nation.
Speaking on Monday in Ota, Ogun State, Nzekwe underlined the pressing need for commercial banks to bolster their capital reserves as the Naira continues to weaken against the US Dollar.
He emphasised that the mounting inflation rate in the country has gradually eroded the financial foundation of most banking institutions, consequently impeding their ability to fulfill their pivotal role as financial intermediaries.
Pointing out the predicament, Nzekwe highlighted that many of the banks lack the requisite financial strength to provide long-term loans to investors, given the protracted gestation period of businesses, which can span between five to ten years before yielding profits.
“It’s evident that no bank is in a position to extend substantial long-term loans to investors due to their current financial limitations,” he asserted. “The majority of their profits are derived from alternative sources like real estate investments and import activities, rather than their fundamental function of lending,” he remarked.
In light of these challenges, the former ANAN president strongly advocated for banks to reevaluate their interest rate structures on loans, aiming to attract a more substantial influx of borrowers to the financial sector.
Further, Nzekwe urged the Central Bank of Nigeria (CBN) to engage in a collaborative effort with the banks to combat instances of financial fraud that have been plaguing the banking system.
