Naira loses 85% of value in two years – CBN

Naira notes

Oyetunji Abioye

The Central Bank of Nigeria says the naira has lost about 85 per cent of its value in the last two years and there is a need for risks managers in banks to be on top of their job because of the risks facing the banking sector.

The Director, Banking and Payment System, CBN, Mrs. Tokunbo Martins, said this in a presentation at a round-table discussion organised by the Risk Managers Association of Nigeria in Lagos on Friday.

She said the Nigerian economy, including the banking sector, was facing various kinds of risks occasioned by the challenges of high inflation, naira depreciation, oil price crash and decline in manufacturing output.

 

As a result, the CBN director urged risk managers to rise to the task of maintaining robust risk management practice in the banking sector.

Martins said, “There is a need to avoid the situation the world experienced during the global financial crisis through the use of regulations and standards. During the global financial crisis, risk managers got significant amount of the blame.

“The nation’s Gross Domestic Product has contracted by 2.2 per cent, inflation has gone up to above 18 per cent, the currency has depreciated by about 85 per cent in the past two years, and manufacturing has contracted by three per cent.”

Martins, who is also a member of the Board of Trustees of RIMAN, added, “The oil that we produce, apart from the price, has fallen by about 70 per cent. The volume has also contracted a great deal and banks are exposed to manufacturing, oil and gas, and to the government.

“The government’s revenue has declined. Non-performing loans have increased. We do have a very cocktail of risks in our hands. What is the future of risk management? It is more and more regulation and standards.”