The Central Bank of Nigeria, CBN, will transfer N5.5 trillion for development activities to the Ministry of Finance, Development Finance Institutions (DFIs) amid its restructuring plan.
According to a new report, this move aligns with the
recommendations from the International Monetary Fund, IMF, on the need for the
CBN to streamline its economic policies and focus on core central banking
functions.
“The CBN’s decision to phase out its development finance
activities is welcome. These activities (5.5 trillion naira) will be
transferred to development finance institutions, owned jointly by the Ministry
of Finance Incorporation, MOF and CBN, and private financial institutions.
“An orderly portfolio transfer is key to avoiding
interruption of credit flows to agriculture and small and medium enterprises.
Undercapitalized financial institutions should not be eligible to absorb CBN’s
portfolio”, the report read.
Under the new strategy, the CBN will gradually phase out its
direct involvement in development financing, which historically included
lending concessional terms to sectors like agriculture and small and
medium-sized enterprises (SMEs).
These activities will now be handled by DFIs, jointly owned
by the Ministry of Finance (MoF), the CBN, and private financial institutions.
After Olayemi Cardoso emerged as CBN governor, he reiterated
that the apex bank would limit itself to its primary function.
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