Banking Sector May Face More Challenges – ICAN's Soetan

President, Institute of Chartered Accountants of Nigeria, Titus Soetan, told Punch that the problems facing the economy may make the banking industry experience more challenges. Brief except:

The CBN has just adopted flexible exchange rate policy. What is your opinion about it?
I think it is a right step in the right direction as many people have opined. Like you said, people have been clamouring for the relaxation of the rigid exchange rate regime because it is not sustainable. It was laden with many distortions, sharp practices and rent-seeking activities. The fear is that the interbank rate will go up but it will gradually find its level. As far as it will eliminate rent-seeking and distortions, it is good. We are an oil-dependent economy but that has to change now.

A major challenge we have is lack of infrastructure. Government needs to strive to give us electricity and good roads. Within the limited resources that we have, government needs to work harder to give better infrastructure. This is what shows the difference between a developed and an undeveloped economy. Even with the poor state of our infrastructure, some people are still destroying it to show their agitations. My advice to the government is to dialogue with them. We don’t have any other country we can call our own.

The banking sector, which is at the heart of the economy, is facing challenges. What advice do you have for stakeholders in this sector?The Treasury Single Account policy has affected the banking industry. They need to look inward now because the era of free funds is over. We have not seen the end of these challenges. Other issues will still affect them, especially those who have foreign loans will be affected by the new foreign exchange regime. I see the banking sector still facing further challenges. 

The challenges in the economy will make more loans to still go bad. Again, the banks provide infrastructure for their operations because of the poor state of infrastructure in Nigeria. All these will still affect their overheads and they need to look at how to cut costs in other areas now. The banks also need to look at other things they can do to boost their bottom lines and help the economy to grow.