Africa: Bank recapitalisation, Alawuba urges FG, CBN to incentivise banks for long-term lending

He further suggested that improved collaboration between the government and the central bank could lead to an upgrade in Nigeria’s credit rating

The Managing Director/CEO of United Bank for Africa (UBA), Mr Oliver Alawuba, has called on the Federal Government, through the Ministry of Finance, and the Central Bank of Nigeria (CBN), to incentivise long-term lending in a bid to stimulate economic growth and development.

Speaking at the just concluded 36th Conference of Finance Correspondents and Business Editors in Abuja, Alawuba stressed the importance of long-term financing for large-scale infrastructure and the growth of small and medium-sized enterprises (SMEs), which he described as key drivers of the country’s journey toward a $1 trillion economy.

He emphasised, “Long Term Lending is very critical for this economy to grow, and I believe the central bank working with fiscal authorities should see the need to come together now that the banks are capitalising, and find what incentives can be given for us to realise the benefits through long term lending and one of them is tax breaks.”

Alawuba recommended that the government and CBN explore options such as tax incentives, guarantees, and other forms of support to encourage banks to offer more long-term loans. These actions, he noted, would deepen financial intermediation and support broader economic development.

Delivering his remarks on the theme “Banking Re-capitalization towards a $1 trillion Economy”, he called for bold reforms, strategic investments, and inclusive policies to unlock Nigeria’s economic potential. “For Nigeria to get there, clearly the country needs to grow in double digit, and the minimum double digit you can get is 10 percent,” he noted.

He further suggested that improved collaboration between the government and the central bank could lead to an upgrade in Nigeria’s credit rating. “If government and the central bank work together, we should be able to see Nigerian rating increase, you know, from B plus to BB and all that.”

Alawuba pointed out that regulatory and policy reforms are a crucial starting point. Comparing Nigeria with other nations with similar demographics and challenges—such as Brazil, China, and Bangladesh—he stressed the need to benchmark for better outcomes.

Citing Nigeria’s ranking of 131 in the 2019 Ease of Doing Business Index, he said, “So we need to deal with that issue of ease of doing business. That is how investors can come in and partner with Nigerians and begin to set up businesses that can transform the economy.”

Beyond physical infrastructure, Alawuba highlighted the importance of soft infrastructure, including the legal and regulatory environment.

“Nigeria needs to also work on the legal system and ensure that laws are obeyed in this country, because that is critical to business survival,” he stated.

He also emphasized the need for a renewed national orientation movement. “And I believe that we need a very strong orientation of our people, so that everyone will work together towards the economy that we envisioned for the country. We used to have a very strong national orientation movement. They need to, really, at this point in time, also come strong so that all of us will be mobilized towards believing in this country, that we can get it done and believe in ourselves,” he said.

Alawuba further pointed to financial accessibility as a major factor for economic inclusion. He noted that achieving meaningful progress in Africa would be difficult if the majority of citizens remain outside the financial system.

He cited India’s success in expanding financial access, saying it enabled better application of monetary tools and improved visibility of funds within and outside the financial system.

Lastly, he underscored the issue of security, reminiscing about a time when Nigerians could travel freely and safely. “It shouldn’t be so,” he said, referencing the growing insecurity that hampers economic activity and investor confidence.

Source