Prominent economic indicators highlight that very soon, Nigeria may be faced with an economic recession. What is the way forward?
Accion Microfinance Bank (AMfB) spoke up during the weekend that the economic downturn will open up opportunities to invest further in the future of Nigeria. Chairman, AMfB, Mr. Patrick Akinwuntan, had this to say, “We see the challenges, we face it but we are quite reassured that it is indeed an opportunity for us to demonstrate value to our customers and to invest further in the future of Nigeria.
He said, “2015 started on a challenging note for the Nigerian economy and was characterised by several highs and lows. By end of 2015 the economy was experiencing a slow-down. Micro entrepreneurs were not left out of the challenges witnessed in the environment as inflation rose, with the cost of electricity, transportation and other essential commodities rising as well.”
Recent events such as currency depreciations, power cuts, insurgency, and the drop in oil prices have impacted Nigeria’s economy, causing a recession to loom over it. The Nigerian government is in debt on account of the sale of oil, and oil prices have fallen below $50 per barrel. The Central Bank of Nigeria is finding it difficult to support the economy due to issues arising from exceeding money borrowing and lending limits, and its struggle with macro stability.
Presently, the country’s negative per capita growth also sheds more light on its economic situation. If the country faces a recession, international trade, foreign investments, aid, and reserves will bear the impact, and the economy will naturally bear the brunt of it. Exportation will also be reduced to the minimum and investors will withdraw, among other negative outcomes.
But the AMfB Chairman believes that despite the economic challenges, there is room for more investment opportunities in the country. He says that the banks key performance indicators remained positive as active borrowers grew by 27.9 percent from 34, 243 in 2014 to 43,788 in the year under review.
To further enhance operational efficiency, he said that the bank intends to commence its digital field application project this year in order to improve loan process and guaranty easy access to customers, thereby saving time and cost.
To this end he said, “Innovation and the use of technology which has helped us operate at more efficient levels will be leveraged on in 2016 to enable us continue to serve our customers more efficiently.
“The macro economy has been challenging but that reinforces the opportunity for institution like ours to provide support for our micro entrepreneurs across Nigeria. Whilst those macro contractions come up, it challenges the country to realise its internal potential, with over 180 million people, we believe strongly that we have the human capital in Nigeria to take us through the storm. What is required is the operating environment and the support and active participation of players like our bank to support Nigerians.”
Managing Director, AMfB, Ms. Bunmi Lawson, said that the banking industry like other sectors of the economy was not immune from hash economic realities with microfinance sub sector being worst hit. She pointed out that this led to a significant decline in income margins of many banks and MFIs, adding that despite the challenges, the bank’s loan disbursement which stood at N10.33 billion in 2014 grew by 33 percent to N13.77 billion in the year under focus.
Recently, there was a mass retrenchment of banking staff across the country.