Impact of Global Recession persists in the Domestic EconomyAggregate Economic Activities contracted generally with Manufacturing at 32%, Electricity at 13.Reduction in Credit growth to the Private Sector.High Rate of Business failures, Increase in unemployment.. Foreign Resources fell from USD52
1. ASSESSMENT OF NIGERIA ECONOMY AND THE PROSPECTS OF NIGERIA BANKING INDUSTRY IN YEAR 2010
OVERVIEW OF NIGERIA ECONOMY Impactt of Global Recession
Aggregate Economic Activities contracted generally with Manufacturing at 32%Impactt of Global Recession
Aggregate Economic Activities contracted generally with Manufacturing at 32%
2. Impact of Global Recession persists in the Domestic Economy
Aggregate Economic Activities contracted generally with Manufacturing at 32%, Electricity at 13.
Reduction in Credit growth to the Private Sector.
High Rate of Business failures, Increase in unemployment.
3. Foreign Resources fell from USD52.7bn to N43.1bn [Depreciation in Local currency is 26%.
Major Liquidity crises/upheaval in banking Industry.
A collapsing Stock Market. The NSE lost over 32% of its Market Capitalization.
4. Prospects of Nigerian Economy in January 2010 Economic Activities are expected to pick up in year 2010, aided by:
Strong demand for Oil as Western economies pick up.
Cold Winter would further stimulate energy consumption.
Crude Oil prices are expected to recover and remain in the high 70’s in the year.
5. Accretion to Foreign Reserves will undoubtedly stabilize the Foreign Exchange Rate Regime.
A general increase in funds circulation is expected.
6. Major Indices
Year 2010 Year 2009
Revenue 2.517 trillion 1.778 trillion
Expenditure 4.079 trillion 2.87 trillion
Deficit 1.562 trillion 1.09 trillion
Crude Price $57/barrel $45/barrel
Crude Output 2.688 2.292
Inflation 11.2 8.2
Exchange Rate N150/$ N122/$
7. Factors that may improve the year 2010 Economic Outlook Improvement in Power Generation.
Higher Oil Revenue Above Benchmark price of USD57/barrel.
Faster Recovery of Western Economies and Asia.
Successful Deregulation of the Oil & Gas [Down stream].
8. Factors that may Worsen the 2010 Outlook Failure of the Niger Delta Amnesty Programme.
Prolonged Recovery of the President.
Budget Implementation: Capacity of Civil Servants to Implement Reforms
9. Outlook for the Banking Industry in year 2010 Mixed Fortunes dominates the Landscape.
Stressed Banks will focus on Debt Recovery and stabilization of Operations.
Confidence will gradually return in the Industry.
Less stressed Banks will keep the system going at less than the optimal level.
CBN’s guarantee of Interbank Placement will ensure stability and Liquidity in the system.
10. Asset management Company, if implemented, could provide Relief. However, the mode of implementation remains uncertain.
Fragile confidence will lead to pick-up in credit to Commercial Sector.
Stock Market will stabilise; gradual recovery will begin by half year.
Good News: No bank will be allowed to fail.
11. Recipe for Success in year 2010 People are the organization's greatest Resources. The Successful bank must focus on it Human Resources –
People! People!! People!!!
Leadership is key, transparency, Energy, Focus, Doing things Right.
Harness Technology to Aid transactions.
12. Structured Operations, and Systems when properly implemented can lead to quantum improvement in service delivery .
Focus & drive to succeed will truly lead to Recovery. Confidence building is critical.
Deliberate and conscious efforts on economic diversification from over-dependence on Oil
Sustained action on Reflation of the economy
13. CONCLUSION The potential of the banking Industry in still large and highly untapped-Next Eleven Economy by Goldman Sacchs
Present set back is temporal : Good days are Ahead.
Progresses in the recapitalisation of the Rescued Eight Banks.
Nigerian economy still presents a dynamic location for foreign investment