to increase crude oil reserves to 40 billion barrels by 2010, to increase
capacity to handle 4.5 million bpd by 2010, to increase the value that the
sector adds to the national economy, and to move from an oil industry
to an integrated oil and gas industry. In the case of gas, the upstream
targets include generating as much revenue from gas as from oil within
a decade, ending gas flaring by 2008, supplying the energy requirements
of local industry from an efficient local gas market, and creating new gas
industries from the old oil industry. Downstream short-term goals include
improving the capacity to use the existing infrastructure (refineries, depots
and pipeline systems). Privatising them is a long-term goal.
Finance
168
550.
In the financial sector, the focus is on the stability of financial-sector
institutions, efficiency in rendering financial services, and access to financial
resources and services. The CSAR highlights major achievements with:
liberalising interest rates and monetary policies (credit ceilings, liquidity
management and open market operations, and their impact on savings
and investment); consolidating the insurance subsector; consolidating the
banking subsector while taking into account weak corporate governance,
declining ethics, de-marketing, the pruning of marginal banks and insider
abuses; a new pension scheme based on the Pension Reform Act of 2004;
and developing the capital market.
551.
In line with the CSAR, the CRM found that consolidating the banks has
resulted in increased capitalisation through mergers and selling shares
on the stock market. Following the recent banking-sector reform, the
Nigerian banking sector has become competitive and sounder. Indeed, 20
of the 25 Nigerian banks were in the top 100 banks in Africa in 2006, and
17 Nigerian banks were in the top 1,000 banks in the world. There were
none in 2005.
552.
However, stakeholders echoed the concerns raised by the CSAR that
consolidating the banking sector has not resulted in increased lending,
especially to the agricultural and industrial sectors, partly because of the
stringent collateral requirements and the high risk associated with these
loans. They urged government to improve the environment in order to
reduce risk and increase the returns on developing the private sector. Key
aspects of the environment include agriculture-related infrastructure and
prices.
553.
The CRM was informed that there are several constraints. They include: the
time taken to approve credit, which was often too long; the absence of longterm investment funds, although frameworks to finance manufacturing do
exist on paper; and the focus on consumer loans rather than on producer
loans. The trend has been that commercial banks post very high profits
every year. They have a lot of money which could be channelled towards
real-sector activities. Unfortunately this does not happen. Instead, they
are always competing for customers.
554.
With regard to micro-finance institution (MFI) initiatives, stakeholders
emphasised the need to improve access to credit. The current stringent
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