Banking sector forecast to drag Nigeria economy down
LAGOS, (CAJ News) – A global markets watcher has projected Nigeria to remain in a recession for longer than anticipated if the banking sector fails to adapt to prevailing market conditions.
The projection by Rand Merchant Bank (RMB) comes in the wake of the Central Bank of Nigeria’s (CBN’s) most recent financial stability report recounts the dismal performance of the economy in the first half of the current year.
RMB pointed out the report by the apex bank highlighted a stark deterioration in the quality of banking sector assets, particularly oil and gas loans, on account of inefficiencies within the foreign exchange market.
“The bank’s findings, which were presented by Governor (Godwin) Emefiele, reinforce our view that the macroeconomic environment will remain challenging over the next 12 to 18 months,” RMB stated.
RMB projected non-performing loans, which breached the 10 percent mark in the first half of 2016 after ending 2015 at less than 5,5 percent, would continue to rise due to exorbitant loan charges and the inability of debtors’ to service dollar borrowings.
This week, Emefiele noted that “the increasing quantum of non-performing loans posed a major concern for regulators in the review period”, but maintained that a banking crisis would be averted.
– CAJ News
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