The Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC) on Monday said they would strengthen regulatory framework to support efficient and sustainable banking in emerging markets. The institutions made the commitment at a two-day international sustainable banking forum in Lagos.
The Acting Governor of the CBN, Dr Sarah Alade, said that the bank would continue to support the adoption of the sustainable banking because of its benefits. Alade was represented at the forum by Dr Kingsley Moghalu, Deputy Governor, Financial System Stability of the CBN. She said that the bank had issued circular mandating commercial banks and other financial institutions to apply sustainable principles in their practices.
Alade said that the bank could not set immediate time frame because the sustainable banking principles were still new.
“You can’t set an immediate time frame because this is new. But what we’ve done is to say that now, we will be regulating the supervisory of the banking industry in accordance with how effectively they apply these principles,” she said. Alade said that the apex bank would be regulating the banking industry on the basis on how they applied the principles.
She said that the apex bank would supervise banks twice a year to check the compliance level and sanction defaulters.
“We’ve issued a circular which is binding on Nigerian banks and other financial institutions under the regulation of the CBN and making it mandatory for them to begin to apply those principles in their practices. So, we are focusing on the part of supervision and we would be doing that at least twice in every year.
“We will assess the banks and other financial institutions on how far they have gone in meeting those principles. You know the principle of banking supervision, if you don’t comply, then, we would take sanctions if non compliance becomes consistent,” she said.
“Today’s forum presents a platform for regulators to share insight on environmental and social risk management and sustainability related tools for long-term economic growth,” Alade said.
Mr Solom Adegbie-Quaynor, the IFC Country Manager for Nigeria, said that “sustainability is central to inclusive economic growth and aligns with IFC’s strategy for long term economic development”. Adegbie-Quaynor said that IFC had supported the power sector with a commitment of one 450 Mega-Watts Industrial Power Plant (IPP). He said that the corporation had made progress on gas project that could bring about 170 million standard cubic feet per day.
“We are still on the drawing board in terms of potential investors in the distribution sector, but that is because we have the transition arrangement with the Bureau of Public Enterprise (BPE)”, he said.
Stakeholders at the forum shared insights on how to strengthen regulatory framework to support efficient and sustainable banking in emerging markets. The stakeholders included representatives of governments, policy makers, multilateral development banks, financial institutions, civil society organisations and technical institutions from various countries.
They were from Bangladesh, China, Indonesia, Mongolia, Nepal, Philippine, Vietnam, Ghana, Sierra Leone, Tanzania, Guinea and Mozambique and Nigeria, the host country.
The panelists deliberated on regulatory framework supporting better management of environmental and social risks through monitoring, evaluation and incentive mechanisms.
They examined policies and frameworks that can stimulate designs and implementation of financial inclusion strategies. They also discuss how to support financial institutions through technical advisory on sustainable banking to help in mobilising market resources, solutions and tools.
