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Bad News: Fuel scarcity set to make a bigger comeback

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Bad News: Fuel scarcity set to make a bigger comeback

By Tersoo Achineku

If you’d thought that you’d seen the last of the fuel crisis then brace yourselves as the stinging scourge is set to make a comeback.

Raising an alarm on the “disappearing” flow of funds into the banking sector, CEOs of top financial institutions and the oil and gas sectors have predicted another round of fuel scarcity in the country.

They raised the concerns on Thursday June 25, 2015 in Lagos at a conference where the Chief Executive Officers of First Bank of Nigeria Limited, Zenith Bank Plc, UBA Plc, Mobil Oil Nigeria Plc, Seplat Petroleum Development Company Plc and Oando Plc were panelists.

Also, they called for the further devaluation of the Naira and the restoration of liquidity to the foreign exchange market.

Bisi Onasanya, the Group Managing Director/CEO, First Bank of Nigeria Limited, explained that the current level of N200 on the official market cannot support the economy, and called for further devaluation of the currency.

He said: “It is not sustainable, and the longer we continue to hold unto this, the more we send signals to the international market that we are not serious as a country.

“There has to be some adjustment in the present level of the naira. There has to be a re-opening of the market for activities to continue in the market otherwise, the economy will be at a standstill.”

The Group Managing Director/CEO of UBA Group, Phillips Oduoza, who was represented by the bank’s Executive Director, Treasury and International Business, Femi Olalokun, also indicated that there should be a little bit of adjustment in the currency given the current situation, stressing the need to diversify the economy, broaden the base of income and restore liquidity in the foreign exchange market.

“I think we need to increase the rate of interest for funds to come in,” he said.

The First Bank boss also said the Nigerian economy was contracting owing to the decline in oil revenue, which account for about 85 per cent of foreign exchange and from which the totality of the country’s import bills are financed.

He said: “This has signalled that the economy is contrasting and mainly as a result of dwindling government revenues.

“So, you can’t take the banking sector out of that equation. I believe very strongly that this will impact deposits in the market, the volume of deposits in the market and the rate at which funds can come into the system.

“Savings rate will slow down. Funds that come into the purses of various states today are barely enough to meet their overheads; 18 states today are defaulting in the payment of salaries. So, what does that tell you?

“The flow of funds into the banking sector that used to help in accretion of deposits to fund the real sector of the economy has slowed down, if not disappeared.”

Onasanya said he was not surprised that the Central Bank of Nigeria (CBN) decided to average out the cash reserve requirement between the public and private sector deposits, because in reality, public sector deposits had disappeared from the market.

“The reality is that we have a contracting economy; we have an opportunity, however, to see this as a process to start looking within and rebuilding the Nigerian economy from the basis,” he said.

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