Besides the planned revaluation, the CBN said it would seek to achieve a single-digit inflation rate by reducing the price of agricultural commodities while extending more credit lines to Nigerian entrepreneurs.
The Central Bank of Nigeria (CBN) says the minimum value of Nigerian banks have dropped from $250 million, at an exchange rate of N100 to $1, during the recapitalization from N2 billion to N25 billion in 2005 to today’s rate of N305 to $1.
Speaking at a strategy meeting for his next run of five years as Nigeria's central bank governor, Godwin Emefiele claimed that Nigerian banks had lost $3.5 billion, making another revaluation of the country’s commercial money lenders necessary.
Besides the planned revaluation, the CBN said it would seek to achieve a single-digit inflation rate by reducing the price of agricultural commodities while extending more credit lines to Nigerian entrepreneurs.
“If you relate N25b billion with 2004 exchange rate which was about N100 (to $1), N25 billion was about $250 million. Today, if you relate N25 billion at N360 (to $1) you will see that it is substantially lower than $75 million,” the CBN governor said.
“In the next five years, we intend to pursue a programme of recapitalizing the banking industry so as to position Nigerian banks among the top 500 in the world. Banks will, therefore, be required to maintain a higher level of capital, as well as liquid assets in order to reduce the impact of an economic crisis.”
In giving weight to the need for a revaluation, according to the central bank, Nigerian money deposit banks badly need to be able to finance large transactions.
“Recall that it was Governor (Chukwuma) Soludo in 2004 that did the last recapitalization we had. He moved the capitalisation from N2bn to N25bn. And I must commend those efforts because it resulted in positioning Nigerian banks not only in Africa but among the top banks in the world in terms of capitalization," Emefiele stated.
“We are confident that when implemented, these measures will help to insulate our economy from potential shocks in the global economy.
“In my second term in office, part of my pledge is to work to the best of my abilities in fulfilling these objectives.”