The Chief Executive Officer, Guaranty Trust Bank, Segun Agbaje, has thrown his weight behind the International Monetary Fund, as he called for the removal of fuel and electricity subsidies.
Agbaje, who stated during the PwC’s strategy+business initiative, explained that the economy may record better short-term growth if subsidies on fuel and electricity are removed. To him, the estimated 2% economic growth for Nigerian is insufficient and the chance of any significant change is slim.
“There are some economies in sub-Saharan Africa that seem to be growing. Ghana seems to be growing. The GDP growth figures for Nigeria are around 2%. Over the next 12 months, I can’t see anything that would significantly change that.
“If you look at our population growth, for Nigeria to achieve its full potential, it probably needs to be growing at about 5 to 7%. 2% is definitely not sufficient for Nigeria,” Agbaje said.
On policies that could help boost the country’s growth rate, the GTBank boss admitted that although banks had been told to lend more, it should not end there. He said that there were policies that should be looked into, one of which is the removal of oil and power subsidy.
[READ MORE: Nigeria in trouble as rising subsidy cost exacerbates revenue crisis)
Speaking further, on the nation’s banking sector, Agbaje said banks have to deal with a changing competitive landscape as the competition for customers is not within banks alone. He added that the competitors of banks are no longer financial institutions but fintechs, telcos and even betting companies.
“For example, some online betting companies today have up to 25 million mobile wallets. If you have 25 million mobile wallets, you have 25 million potential customers for financial services. I also suspect [these companies] are using data analytics and artificial intelligence to target customers. Some of them might even have started finding ways to extend credit,” Agbaje added.
What you should know: The International Monetary Fund (IMF) has oftentimes in the past advised Nigeria to phase out implicit fuel subsidies and reduce the gap between the poor and rich in the country.
Nairametrics had reported when the IMF cautioned the Federal Government to reduce spending on oil subsidy. The Fund cited the drop in global oil prices and lean resources as a reason for the warning.