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Nigeria Will Weather Credit Crunch, Soludo Says

10th Nov. '08

Nigeria, sub-Saharan Africa's second-biggest economy, has the resources to weather the global credit crunch and none of its banks will fail, central bank Governor Chukwuma Soludo said. The banks are providing profits, dividends and bonuses "unlike what you find in other markets," Soludo said in an interview. "Given the huge reserves we have in the economy I can bet you that this system will continue to double its balance sheet almost every other year."

Nigeria's banks went through a central bank-ordered restructuring between 2004 and 2005 when they were forced to increase their minimum capital to 25 billion Naira ($212.1 million) from 2 billion. The policy helped to prune the number of lenders to 24 from 89 as those that were unable to independently raise the fund had to merge with rivals. "The world is doing today what we did three years ago," Soludo said.

"We have a well-capitalized banking sector. Inter-bank lending is very, very active." Nigeria will depend on industries other than oil to support economic growth, Soludo added. "The agriculture sector still has 60 percent of arable land not under cultivation," he said. "Nigeria is out of debt. We have robust external reserves."

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