- 2019 Elections: CBN to Monitor Banks’ Lending to Politicians
The Central Bank of Nigeria on Thursday said it would monitor the rate at which banks provide loans to politicians to finance their campaign spending ahead of the 2019 general elections.
The Governor of the CBN, Mr Godwin Emefiele, disclosed this while briefing journalists shortly after a two-day Monetary Policy Committee meeting which were held at the headquarters of the apex bank in Abuja.
Responding to a question on what steps the apex bank was taking to check excessive lending by banks to politicians, the governor said that the CBN would be monitoring their activities with a view to intervening when things are about to go wrong.
He expressed optimism that due to past experiences, Deposit Money Banks would not want to take excessive risks by increasing their lending exposure to politicians.
Emefiele said that while banks have their own risk assessment criteria, the apex bank would be closely monitoring their activities so as to protect the banking sector.
He said that the CBN had met with chief executives of banks and during the meeting; they were warned on the dangers of involving in money laundering activities.
The CBN boss said that for any bank that is caught in money laundering activities; the apex bank would not hesitate to impose the appropriate sanction on such bank.
He said, “We have had meetings with the banks and we have asked them to be very careful on money laundering issues, and I believe they will be careful themselves because they know that if they are caught, it means that they will be heavily penalised.
“When you talk about lending to politicians, banks have their risk acceptance criteria and I don’t think that the banks would do that at this time. Everybody must have learnt their lessons.
“We at the Central Bank we are watching. When things go wrong or about to go wrong, we will deal with it as appropriately as possible.”
On the MTN $8.1bn controversy, he said that apex bank had met with top executives of the company who came in from South Africa on the issue.
He said very soon, a final decision of the apex bank on the matter would be announced.
He gave some of these risks as destruction of agricultural products from flooding, insurgency in the North-East, herdsmen and farmers’ crises, high cost of energy, anticipated spending in the run up to the Christmas festivities and campaign relates spending towards the upcoming general elections.
He said there was need to come up with measures to address these challenges as well as to ensure speedy implementation of the budget.
On the issue of minimum wage, the CBN governor explained that the increase in wages would boost aggregate demand in the economy.
Emefiele also said the apex bank was working on a new initiative to channel the flow of credit to small businesses in the rural areas.
He said, “The committee urged the bank to deepen and broaden access to finance to high employment elastic sector with particular emphasis on small and medium enterprises.
“The committee called on the bank to extend the success recorded under the Anchor Borrowers’ Programme to other items including fish and palm oil by introducing more stringent measures to curb access to foreign exchange for products that can be produced in Nigeria.”