The existing financing system in Nigeria is absolutely faulty and it is one of the factors responsible for the rising armed robberies in the country.
This observation was mad recently by Mr. Paul Erihri, the group managing director of Public Finance and Management Consulting Group in a welcome address he presented at the first annual seminar on Public Finance in Nigeria.
According to him, the present financial system in Nigeria cannot promote economic development but can only discourage it.
Said he, “In a situation where all the financial establishments are risk-averters, and followers of resources there can be any room for economic development.”
He said that significant elements of risk must be accommodated by the financial system as a stimulant for economic development.
According to Erihri, the ongoing implementation of the various aspects of Structural Adjustment Programme, SAP, under the old financial system new wine inside the old bottle.
He said that the ideal arrangement should involve the restoring of the entire financial system to accommodate the various components of SAP.
In his submission, he said, for the principles of SAP to be fully integrated and efficiently operated due attention should be paid to the divorce of fiscal and monetary instruments. To this end, he said that the CBN and the Federal Ministry of Finance should be equal partners and not master-servant relationship as it now prevails.
Erihri, observed that the Nigeria Capital Market is highly underdeveloped. The various operational sub-systems should be restructure to meet the challenges of a free economy.
He also said that the scope of the capital market should be expanded to accommodate additional operators, such as jobbers, individuals brokers, dealers, analysts and authorised agents.
Erihri, contended that there is urgent need on the part of the federal government to encourage the promotion and development of non-bank financial institutions as a vital sub-sector of the Nigeria financial system.
He suggested the evolvement of financial institution such as consumers finance houses, savings and credit associations, mutual funds, unit funds/underwriters, trustee services and investment companies.
In his own remarks, Professor Ojo, head of department of finance, University of Lagos described the Nigeria finance system as a “lame duck” which has failed to satisfy the real development needs of the nation.
According to him, the growth in deposits, loans and advances, investments and profits in Nigeria banks might easily make one conclude that they have being doing well. But when judged against the provision of financial services they fail woefully to meet the challenges and developmental needs of Nigeria.
