Economy downturn: Banks have become more creative, efficient to remain in business- Analyst

…Says ECOWAS target of single currency by 2020 not realistic

Motolani Oseni

Former Chief Economist/Group Head, Research & Economic Intelligence Group at Zenith Bank Plc, Marcel Okeke, has said that commercial banks that are creative and efficient will keep on doing well, no matter the odds in the industry and Nigeria’s economy. He also, said that the plan by Economic Community of West African States (ECOWAS) to achieve single currency for the region by 2020 is no longer realistic. Speaking at the Finance Correspondents Association of Nigeria (FICAN) 2018 Economic Review and 2019 0utlook held in Lagos at the weekend, Okeke said that banks do not operate in a vacuum but are the product of the domestic economy where they do their business. “They are parts and parcel of the economy. All these variables, if the economy is doing well, generally, the banks will also be doing well. On the other hand, how well a bank does, is also a function of creativity. The truth is that even in an economy as bad as this, some businesses are still doing well in the system. And so, a bank that is efficient, no matter the odds in the system, will keep on doing well,” he said. Continuing, he said: “If you check, and if one of us have one or two accounts or three, you will notice that whatever you do with your phone, there is a service charge. Those charges were not there years back. It means those banks are becoming more creative. And you cannot on the course of that, decide to keep your money under your pillow in your house. As long as you keep banking your money, and they keep making those gains, and adding them to their performance, and balance sheet, they will keep doing well”. According to Okeke, banks are also careful as to who to lend money to because of interest rates on loans. “The essence is that if the rates are high, they will not be keen on lending to everyone that comes. So, that means that want to give money to borrowers with the capacity to repay the loans.” “In a nutshell, those banks that have been doing well ill keep doing well. That means there will not be undue exposures to the banks. I will say that the banks the are doing well to do well, head or tail. Some of the banks are going into forced mergers and acquisitions, but many other banks are still waxing stronger,” he stated. Okeke, who is now the Lead Consultant, Mascot Consult Limited, said single currency for the region comes with some challenges and criteria that many of the member’s countries will not be able to meet. According to Okeke, the ECOWAS common currency has been on for many years and needs the member countries to attain key milestones for its successful takeoff. “It is not certain that it will happen in 2020. For instance, a country like Nigeria and other countries must not have inflation rates that are double digits. They must not have exchange rates that move up and down. So, there must be stability in all those indicators across the board. As I stand with you, many member countries have not attained this feat”, he said.