Thursday, 28th March 2024
To guardian.ng
Search

‘Brexit is not all about economic doom for Nigeria’

By Chijioke Nelson
04 July 2016   |   2:30 am
Exit of Britain from the European Union popularly called Brexit is not all about doom for Nigeria’s economy and the rest of Africa, financial experts, at the yearly lecture series of the Chartered Institute of Bankers of Nigeria (CIBN), have said.
 Deputy Governor, Economic Policy, CBN and Chairperson, CIBN, Dr. Sarah Alade

Deputy Governor, Economic Policy, CBN and Chairperson, CIBN, Dr. Sarah Alade

Exit of Britain from the European Union popularly called Brexit is not all about doom for Nigeria’s economy and the rest of Africa, financial experts, at the yearly lecture series of the Chartered Institute of Bankers of Nigeria (CIBN), have said.

The decision, they say, portends, a mix development for emerging economies, much would also depend on how the country negotiates the exit with the rest of the European countries.

The President of Chartered Institute of Bankers of Nigeria (CIBN), Prof Segun Ajibola, in his address, pointed out that Brexit debate has just begun, as the historical relevance of United Kingdom (UK) in the comity of nations; its industrial revolution; and most legal, economic, socio-cultural and commercial structures globally have a trace from it.

“The Great Depression of 1930s was traceable to economic dislocation in Britain; UK occupies a central position in global trade, politics and economic alignment; and as a former colonial master, most Commonwealth countries still look up to UK for leadership and direction.

So, Brexit has social, political and economic consideration globally. It has implications on Embassies and diplomatic relations – visa issuance, territorial matters; intergovernmental relationships; implications on European Union, trade agreements, other global economic union, currencies and exchange rate regimes,” he said.

For Nigerian banks, he said, it throws open a number of pressing issues ranging from lending and borrowing relationships entered into under the Aegis of Europe; correspondent banking relationships entered into on the strength of Europe; the impact on assets and liabilities in pounds sterling and euro currencies given possible depreciation and appreciation in those currencies; and treatment to be given to the differentials in currency values in the books of banks under the International Financial Reporting Standards.

Also, the impact on banks open position as designated in those currencies; bank customers whose deposits and assets are in affected currencies; futures transactions in the currencies; and possibility of Scotland and Ireland redefining their status.

The Chief Consultant, B. Adedipe Associates Limited, Dr. Biodun Adedipe, said now is the time “walk the talk” about Africa’s trade integration, as new trade hubs in the continent are emerging, which will serve as a buffer against dependence on Western economies bilateral trade deals.

“The top five destinations in a recent research collated by Ecobank are Cote D’Ivoire, Kenya, Senegal, Ghana and Ethopia. These are the destinations for funds flow. Of all, two- Cote D’Ivoire and Kenya are trade partners in terms of regions and they represent the trade hub for each of their region.

“It then tells us that integration in Africa, is beginning to come about in clusters. That is, rather than looking for trade partners outside the continent, it is better for us to look for partners within Africa.

“The financial institutions, which would therefore, serve these emerging entities must begin to have a wider scope in terms of how they understand the dynamics of what is happening around them,” he said.

Speaking on the risks for Nigeria, he identified foreign exchange earnings, which is major driver of government’s revenue and the policy response and the likely effect on correspondent banking operations

He urged the Central Bank of Nigeria to do a proper diagnosis of Brexit and recommendations on what we should be doing in a new environment we find ourselves.

The Deputy Governor, Economic Policy, CBN and Chairperson, CIBN, Dr. Sarah Alade, said the unfolding perspectives about the risk the financial system faces as a result of Brexit is very welcome, but assured that apex bank is committed to establishing the dimension of the risks and its mitigation.

Represented by Director, Monetary Policy, CBN, Moses Tule, she said that CBN would identify with any seminar that may be organised to unravel and brainstorm on the likely impact on the economy.

“In the main time, even as the EU itself is trying to dimension what the risks are, as we are doing the same thing because it’s a very volatile situation. But a whole lot of opportunities are there in the horizon. It’s not as if everything about Brexit is negative, but depends on how it negotiates its way with the rest of the EU.

“The Brexit is not going to be as chaotic as 2008 global crisis, but it presents opportunities and there are going to be losers. Nigeria should rework its system because of the perceived consequences of Brexit, as well as an analysis and recommendations to government and financial institutions, on what should we be doing at this time

“CIBN must begin to train new set of financial service providers in a new society we are. It’s a good decision CBN came out with the new forex policy before the EU decision. We have to take forex training very seriously,” she said.

The Chief Executive Officer of Proshare Nigeria Limited, Femi Awoyemi, said the market was taken by surprise as it never foresee the possibility of Brexit, leading to sharp reaction, because market does not normally tolerate uncertainty.

“What happened in Britain is going to affect Nigeria. CIBN should gather together a think-tank and let experts in Nigeria brainstorm, giving policy direction to government. The situation should not be left for politicians alone to manage because the future is still uncertain.

“The UK is the major international financial centre: in terms of cross-border bank lending. UK holds 17% of the international market share and in terms of hedge fund asset, it holds 18% of the market share, compared to one per cent of France.

“In terms of wholesale financial services, UK holds about 12% majority of the whole business. It dominates the world’s foreign currency market deal. So, when you talk about UK, you talk about a financial hub. The crisis presents a good opportunity and as well as difficulties. “The Bank of England is such a significant influencer of global standard in prudential supervision, regulation of banks globally. Would they lose that? No.“There are opportunities. Britain has not been present in Africa. The only country playing the dominant game is France.

The business of financing people is the understanding of the risks involved. We must start to do risk assessment in terms of legal issues. Also, it will be necessary that by third quarter everybody would have a definite risk assessment.

Still, Mrs. Bisi Lamikara of KPMG noted that Brexit would have impact on the employment conditions for immigrants in the United Kingdom.According to her, when you have tightened the macro-economy, it has a direct impact on employment. It will directly impact on inflow of remittances, which Nigerians in Diaspora are not exempted from.

0 Comments