Chief Executive Officers (CEOs) of three prominent banks have resigned their membership of the Nigerian Economic Summit Group (NESG) board.
They resigned on Wednesday in protest against the NESG’s position against some of the measures taken by the Central Bank of Nigeria (CBN) to stabilise the financial system and fast-track economic recovery.
The apex bank had also initiated a chain of policies to mitigate the negative impacts of the Coronavirus pandemic on Nigerians.
Those who resigned from the NESG board are United Bank of Africa (UBA) Plc Group Managing Director Kennedy Uzoka; First Bank of Nigeria (FBN) Plc Managing Director Adesola Adeduntan and Sterling Bank Plc Managing Director Abubakar Suleiman.
Suleiman runs Sterling Bank, where Asue Ighodalo, who is the chair of the NESG board, also serves as Chairman.
Apart from Ighodalo, others on the NESG board are: Niyi Yusuf (Vice-Chairman); Mrs. Onyeche Tifase (Vice-Chairman) and Laoye Jaiyeola (CEO).
On Tuesday, the NESG criticised CBN’s intervention policies as not being in the interest of the economy.
The resignation of the NESG Board members is believed among financial experts to be the confirmation of the eroding credibility of the private sector-led think tank and policy advocacy group under the current leadership.
It was learnt that the NESG management’s criticisms of President Muhammadu Buhari-led Federal Government policies and the Godwin Emefiele-led CBN have created disagreements among its members.
It was gathered that the group’s Tuesday statement entitled: “Matters of Urgent Attention”, which did not have the input of members of the Board, draw the ire of members and triggered the latest uproar.
In a report, the NESG said since the inception of this administration, agriculture and the need to ensure zero hunger for Nigerians have received considerable attention.
But the group added that despite the budgetary allocations and huge sums of money disbursed by the CBN through the Anchor Borrowers’ Programme (ABP), a huge gap remains in meeting the food requirements.
“Evidently, the issues are beyond money and therefore, require a complete overhaul of the management of, and support for the Agriculture sector and all related sectors – with a view to getting more value for our investments”.
Noting the evolving developmental roles of central banks around the world, especially as it concerns resource allocations, the NESG said such allocative roles must be undertaken in an open, transparent and fair manner.
It said: “The group expresses serious concerns about how the CBN has carried on the business of foreign exchange transactions, loan disbursements (intervention funds) and price fixings without appropriate policy clarity.
“This can be subject to abuses, manipulations and significant market disruptions, reflective of a policy akin to crony capitalism. We therefore respectfully request the appropriate authorities to properly review this policy to restore credibility into our financial sector.”
The NESG also expressed severe concerns about certain provisions of the ‘repealed and re-enacted’ Bank and Other Financial Institutions Act 2020; recently passed by the National Assembly, and in the process of being transmitted to the President for assent.
The NESG said: “These are draconian, totalitarian and inimical to the development of a stable and transparently regulated financial sector. We respectfully request that the President should please withhold his assent until the Bill is properly reviewed, amended and is made fit for purpose.
“We also most respectfully request that our legislative houses should subject all Bills, in particular, such crucial bills, to the most efficient scrutiny necessary to assure compliance with the Nigerian Constitution, transparency, good governance and the best interest of the people of Nigeria.”
The NESG pointed out distortions in the liquidity and interest rate management of the financial system it said portents grave disadvantage to domestic investors and pensioners.
But the CBN fired back, saying its intervention policies were necessary to keep the economy going in the face of the COVID-19 pandemic.
It also said similar interventions were extended to other developed and developing economies by their central banks.
The apex bank said from the one year extension of moratorium on principal repayments for CBN intervention facilities, strengthening of the Loan to Deposit Ratio policy, which has resulted in a significant rise in loans provided by financial institutions to banking customers, to creation of N50 billion target credit facility for affected households and small and medium enterprises through the NIRSAL Microfinance Bank and N100 billion intervention fund in loans to pharmaceutical companies, the apex bank had taken steps to lift the economy and businesses during the pandemic.
“The CBN also feels compelled to let Nigerians know that in spite of the cordial and open relations between both organisations, the NESG could have raised its allegations directly with us but never did.
“On the CBN’s development finance activities, we are comforted by the NESG’s reluctant admission that many Central Banks around the world are also engaging in similar actions. The CBN engaged in development finance in order to address the credit needs of the sectors critical to improving livelihoods, reducing poverty, and promoting inclusive growth.
“These goals have become doubly important in light of the significant shocks to the economy following the ongoing COVID-19 pandemic. In pursuit of transparency, the CBN usually publishes disbursements made under these activities in our economic reports.
“Although the bourgeoises atop the NESG may not feel the impact of the bank’s development finance activities, many ordinary Nigerians, including smallholder farmers, households, and medium-scale entrepreneurs across the country know better.
“As encapsulated in our most recent monthly economic report published on the Bank’s website, a total of N38.11 billion was disbursed as loans to 44,458 beneficiaries through the NIRSAL Microfinance Bank (NMFB). This number has risen to N59.12 billion; supporting to 103,189 beneficiaries as of August 2020″.