Published On: Thu, Oct 6th, 2016

More challenges projected for Nigeria economy

Nigeria economyLAGOS, (CAJ News) – AN international financial firm projected Nigeria’s recession to worsen if the country’s banking sector did not adapt to ongoing economic challenges.

The projection by Rand Merchant Bank (RMB) comes after the Central Bank of Nigeria (CBN) most recent financial stability report recounts the dismal performance of the economy in the first half of the year.

It highlights a stark deterioration in the quality of banking sector assets, particularly oil and gas loans, on account of inefficiencies within the foreign exchange market.

The bank’s findings, which were presented by Governor Emefiele on Wednesday, reinforce RMB’s view that the macroeconomic environment will remain challenging over the next 12 to 18 months.

RMB projected non-performing loans, which breached the 10 percent mark in the first half of 2016 after ending 2015 at less than 5,5 percent would continue to rise due to exorbitant loan charges and the inability of debtors’ to service dollar borrowings.

Emefiele noted the increasing quantum of non-performing loans posed a major concern for regulators in the review period but maintained that a banking crisis would be averted.

RMB however projected negative prospects for the economy.

We believe that Nigeria could remain in a recession for longer than anticipated if the banking sector fails to adapt to prevailing market conditions,” RMB stated.

CAJ News

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