Speeches

2009 Lagos Banker’s Nite Of The Chartered Institute Of Bankers Of Nigeria, Lagos Branch

Jul 30, 2009 - Until I got your invitation to attend this occasion, I thought the global financial meltdown has been sufficiently exhausted in academic discourses, boardroom strategies, workshops and seminar discussions and contributions by financial experts and management gurus. The angle you have chosen for today’s occasion is not only refreshing but eye-opening. History, we have been reminded again and again, repeats itself because its lessons are hardly ever learnt by humanity and because of this human frailty; we are condemned to repeat it, often with dire consequences.

The world is still reeling from the worst global economic slump since the Depression 80 years ago. What lessons have we indeed learnt?

Let me however start by thanking the organizers of this occasion and the officials and members of the Lagos branch of the Chartered Institute of Bankers of Nigeria for inviting me to this 2009 Bankers’ Nite that promises to be intellectually stimulating and engaging, considering the erudition of the two guests speakers, Mrs. Oby Ezekwesili, World Bank Vice-President for African Region and Mr. Bode Agusto, former Director General, Budget Office–Federal Ministry of Finance. Given their tall credentials, I am sure we are sufficiently primed for an exciting and rewarding night.

I wish to also recognize the presence in our midst,of our royal father, the Oba of Lagos, His Royal Majesty, Oba Rilwan Osuolale Akiolu 1 and Dr. Christopher Kolade Nigeria’s former High Commissioner to the United Kingdom and Pro-Chancellor of the Pan African University, (Lagos Business School).

I am happy to note that, the Annual Banker’s Nite has become a platform where robust discussions on topical issues that affect our economic growth and national development have received adequate attention from experts and practitioners within and outside the banking industry. I must commend you for being so patriotic and for always thinking outside the box.

Since the global financial crisis started, key phrases and words that have repeatedly been used to underline the disaster have been myriad. Among the popular ones are management and prudent allocation and utilization of resources, risk management, macro-oversight of financial regulators, improved corporate governance, liquidity buffer for banks, code of conduct for regulators in the financial sector, asset based securities, regulatory competition and policy coordination at the local and international levels in a globalised economy. In fact, the current economic meltdown appears to have defied time-tested and proven economic and financial management theories. As one magazine recently puts it, the dilemmas are no doubt prompting new research, seeking to discover which form of fiscal stimulus is most effective? Or which regulatory requirement is more effective?

In our own financial jurisdiction here, haven’t we witnessed and experienced the collapse of the capital market? Have we been able to proffer locally-made economic theories to address the present challenges and forestall future reoccurrence? These I believe are some of the issues that must constantly engage the attention of our financial experts and economists.

As it is generally believed, history will always repeat itself when the lessons of history are not learnt. Let me leave the kernel of your discussions tonight to the guest speakers who I believe will do justice to the topic.

Speaking broadly however, I would like to make my remarks on this topic from two major public-sector perspectives. The first is to see the impact of the crisis on emerging economies such as ours and the second is to speak on what inadequacy it has exposed so that we can identify the lessons that were not learnt.

To begin with, the global financial meltdown caused momentary seizure of capital flow between developed financial markets and those in the emerging markets such as ours. This had an adverse impact on the access of our financial institutions to short term credit lines and reduced the access to support from international markets for trade and finance. Portfolio investments in capital markets worldwide became frozen, which affected the volume of trade in our stock market, reduced capital flows and taxes, depending on how vulnerable that country is to international trade flows.

Perhaps, the most significant impact is the effect of commodity prices especially, Crude Oil. The impact of this on Nigeria’s economy is common knowledge to everyone in this hall.

Our foreign exchange earnings dropped as a result of our dependence on crude oil exportation which itself is a victim of the vagaries of the international market predicated upon the sliding value of the US dollars.

For me, perhaps the most enduring lesson of this is the need to redirect resources in the Country from the Oil Sector into other sectors including agric, tourism, manufacturing etc. Most especially, consideration should be given to Agro-Allied Industry to boost food production and make us less dependent on food importation. And this is where I believe your association must be very proactive and responsive in assisting stakeholders in the agricultural sector to help our nation achieve its goal in food security.

You will all agree with me that as an essentially food importing country, Nigeria has had to pay for this crisis with a sharp depreciation in foreign exchange because our appetites for foreign goods did not fall in reaction to the financial crisis. One immediate measure adopted by the regulatory bodies was to clamp down on the Dutch sale in foreign exchange and increased capital for Bureau de Change. But what has this exposed?

It is this, particularly that government is expected to provide security, law and order and provide the greatest good to the greatest numbers of people, particularly in food security, housing, mortgages, transportation, education and health. The provision of such services and any other kind of public good actually guarantees that society globally will absorb better the impact of such distortions in the world financial market and proffer solutions that can make impact on the lives of the people in large number than under our present structure.

For us in Lagos State, we have learnt that prudential allocation and management of resources and the involvement of the people through consultations pay handsome dividends in our quest for social and economic infrastructural development. By the people, I mean all those in the public and private sectors, the employed and unemployed.

Through our Private-Public Partnership Initiative, we have been able to generate goodwill and financial resources to fund projects such as the security, the micro-finance scheme and mortgage housing loans, road rehabilitation and construction, traffic management, free and qualitative education to secondary level and efficient and effective road and water transportation, environmental beautification. These and many others have received massive attention such that an enabling environment has been created for local and foreign investments to the mutual benefit of all stakeholders.

In the course of implementing our development strategy, we have put in place adequate regulatory structures to prevent abuse and excesses. This is building a culture of transparency and accountability, which most investors find attractive in doing business with us. In the end, the result is a win-win situation for the collaborating parties. And we are sure this will continue and enable us to realize our goal of making Lagos the investment destination and Africa’s model mega-city.

Distinguished guests, ladies and gentlemen, the capital and human resources are inert forces that can be stirred into purposeful actions by prudent management and allocation of resources and policy coordination in a transparent and accountable manner. Development is about people and for people and the growth of any society must aim at their well-being always. The wide range reforms in the banking sector must begin to make positive impact on our economic growth and for the benefit of the people that we have all promised to serve either in the private or public sector.

Let me assure you that we will continue to welcome constructive suggestions from all stakeholders on how we can continue to deliver on all our promises. Your association is one of our critical stakeholders and I believe we shall continue to enjoy your support.

In conclusion, I wish to thank the organizers for putting up this lecture and wish you all an engaging and exciting Bankers’ Nite.

I thank you for listening.

Enjoy your night!

Mr. Babatunde Raji Fashola, SAN
Governor of Lagos State