The Deputy Governor, Financial System Stability, FSS,, of the apex bank, Dr. Kingsley Moghalu yesterday said CBN’s commitment to improved lending to the real sector was informed by the fact the institution Central Bank remained a development-oriented regulatory institution.
Moghalu, who represented the Governor, Mallam Sanusi Lamido Sanusi at a Breakfast Meeting organised by the Ministry of Agriculture and Rural Development with the CBN Governor and other banks’ chiefs in Abuja, said the Board and management of the regulatory bank believed that in playing its financial re-engineering roles in the nation’s financial services industry it was not enough that monetary policies and supervision of the banks are pursued but that such initiatives must be pursued in a way that would impact positively on the real sector and create jobs in the economy.
He said “We have done this because we believe that we are the central bank of a developing country and so it is not enough just to work on monetary policy, it is not enough just to work on banking supervision we have to make sure as the guardian of the financial system that the institutions that we supervise make their contribution to the economy of Nigeria becoming a sovereign sound economy that is not based on rent seeking but is based on production of food, industrial manufacturing, agroprocessing and so on.
“And that is where we are going, it is remarkable indeed that in the last one year or two years, we see lending to agriculture double and what the Central Bank gave in contribution to this, to de-risk lending for agriculture because we know that what has kept banks from lending to agriculture is the fear factor, the risks that they believe they run. We felt that if we could help to de risk the whole process, that this whole question of lending to agriculture can proceed on a commercial basis”, Moghalu added.
He explained further that the management of the apex bank took finance as its core business and that what the NIRSAL partnership with the Ministry of Agriculture has done is that it has brought the two institutions, one responsible for the financial system, the other responsible for agriculture, to work together to create a difference. “The Central Bank’s reforms as many of us know are based on four pillars; the first pillar is to enhance the quality of banks and the second pillar is to establish financial stability.
“The third pillar is to facilitate the evolution of an healthy financial system, mostly through reforms in the payment system and a new banking order, and the fourth one of the Central Bank’s reform is to ensure or to encourage banks to lend to the real economy and that is where agriculture comes in. We have done this, we have had this steadfast belief because we believe that we are the Central Bank of a developing country”, the Deputy Governor added.
He explained further that it was remarkable indeed that in the last one year or two years to see lending to agriculture double as part of the key achievements of the NIRSAL and other monetary policy measures adopted for the sector.