By Babajide Komolafe

Managing Director/ Chief Executive, Financial Derivatives Company Limited, Rewane Bismarck, has called for the restructuring of the nation’s banking industry to facilitate economic development.

He made this call at the 2013 Lagos Bankers Nite organised by the Chartered Institute of Bankers of Nigeria, CIBN, Lagos Chapter, while presenting a guest lecture titled, “Positioning Nigerian Banks for National Economic Development and Global Competitiveness “.

According to Rewane, the nation’s banking industry is presently not structured to support development. He noted that while a development project takes between 10 to 15 years to execute, 97 percent of deposit of Nigerian banks has maturity profile of less than one year. He said that among other things, the country needs financial institutions that will offer long term funding to support development project, while banks in the country should partner with foreign financial institutions to attract long term funding into the country.

He said, “The Nigerian banking systems deposit liabilities was about N13 trillion in 2012 and is growing. The deposit profile shows short term deposit outranks long term deposit. The CBN half year 2012 report shows short term deposits with one to 365 days tenor at 97.3 percent of total deposits, while long term deposits with three to five years tenor is 2.4 per cent. It is obvious that the ability of banks to fund developmental projects is greatly constrained. The banking industry in Nigeria is not structured to support national development.

“Our banking system needs to be more efficient in other to play the role of financial intermediation and support the nation’s developmental agenda. The panacea to the problems cannot be achieved by mere thought or wave of a wand. It requires a careful, conscientious, detailed and holistic approach to formulate the right policies and agenda. This will require participation from all relevant stakeholders to address the structural gaps in the system.

The following are some of the steps to be considered in formulation of such a programme: Provision of long term funding – Sovereign Wealth Fund; Offering of real interest rates to boost savings; Effective use of Pension assets; Structural changes; Partnerships with in multinational agencies; ADB, World Bank etc; Raising of equity to boost funding ability; and Improvement of staff capacity through trainings The implementation of some or all of the above will help position Nigerian banks to support economic development and to compete globally.

“National development occurs based on the ability of nations’ public and private institutions to utilize resources effectively to form a basis of competitive advantage. For financial resources to be made available for optimum use, the intermediating institutions need to function effectively.”