The anticipated economic reform from the new administration is bound to weigh heavily on money deposit banks. However, analysts from Renaissance Capital warn that it will be a serious gamble to put more burden on banks in a way that may increase the incidence of non-performing loans in the industry, reports Festus Akanbi
With the inauguration of the new National Assembly last week, it is obvious that the coast is clear for President Muhammadu Buhari to unveil his economic team to Nigerians.
So, as attention is fixed on the National Assembly, with the hope that the ministers’ list will make its way to the chamber any moment from now, keen watchers of the nation’s economy have begun to take positions on the fate that awaits the various sectors of the economy; considering the personality of the new president, the rising expectations of the people and the reality of the state of the economy.
This was the position of the international financial and investment advisory firm, Renaissance Capital in its latest reports titled ‘Nigerian banks: Where is the bottom?”, which was made available to our correspondent recently.
The research firm, which based its findings on series of separate meetings held with operators in banks, oil and gas, power, manufacturing and general commerce, concluded that some far reaching decisions were bound to be taken by the new administration with the corresponding pains of the anticipated reforms in the economy.
Pain of Reforms According to the report, “The decline in oil prices and the significant shock to the country’s revenue, coupled with the coming to power of a new president who is focused on deep-reaching reforms, suggests to us that the Nigerian banks are unlikely to be unscathed by the reform process. The reality is that the new government has to make certain tough decisions that we expect to affect the banks directly and indirectly near term.”
Possibility of Higher Taxes The instability in the oil sector and the attendant shortfall in revenue have made a sharp diversification of the economy a non-negotiable step for the new administration. Government officials have been hinting on the readiness of the new administration to carry out fundamental reforms in tax administration as a way of hedging the economy against further shocks.