A former Chief Economist/Group Head, Research & Economic Intelligence Group of Zenith Bank Plc, Mr. Marcel Okeke, has said the plan by Economic Community of West African States (ECOWAS) to achieve a single currency for the region by 2020 is not feasible.
According to him, single currency for the region comes with some challenges and criteria that many of the member countries will not be able to meet.
Okeke, now the Lead Consultant, Mascot Consult Limited, who stated this while dissecting the nation’s economy at the 2018 Economic Review and 2019 Outlook at the Finance Correspondents Association of Nigeria (FICAN) forum in Lagos, recalled that the common currency talk has been on for many years without any headway as member countries are required to pass through the eye of a needle for its successful takeoff.
“It is not certain that it will happen in 2020. For instance, a country like Nigeria and other countries must have single digit inflation rate. They must not have multiple exchange rates that move up and down. So, there must be stability in all those indicators across board. As I stand with you, many member countries have not attained this feat,” he said.
He said there are pros and cons for its implementation, stressing that, “some member countries of the Euro zone are having serious economic problem, which is rubbing off on the rest of the members. That is the type of challenge we might have in ECOWAS and I do not believe that the common currency plan will happen by year 2020,” he added.
Speaking on the banking system, Okeke said that banks do not operate in a vacuum but are product of the domestic economy where they do their business. “They are parts and parcel of the economy. All these variables, if the economy is doing well, generally, the banks will also be doing well. On the other hand, how well a bank does, is also a function of creativity. The truth is that even in an economy as bad as this, some businesses are still doing well in the system. And so, a bank that is efficient, no matter the odds in the system, will keep on doing well,” he said.
Continuing, he said: “If you check, and if one of us has one or two accounts or three, you will notice that whatever you do with your phone, there is a service charge. Those charges were not there years back. It means those banks are becoming more creative. And you cannot on the course of that, decide to keep your money under your pillow in your house. As long as you keep banking your money, and they keep making those gains, and adding them to their performance, and balance sheet, they will keep doing well.”
According to Okeke, banks are also careful as to who to lend money to because of interest rates on loans. “The essence is that if the rates are high, they will not be keen on lending to everyone that comes. So, that means they want to give money to borrowers with capacity to repay the loans.
“In a nutshell, those banks that have been doing well will keep doing well. That means there will not be undue exposures to the banks.Some of the banks are going into forced mergers and acquisitions, but many other banks are still waxing stronger,” he stated.
Speaking on the economy, he said foreign exchange reserves in Nigeria decreased to $41.99 billion in November from $42.13 billion in October 2018, adding that Nigeria’s external reserves inched up to $42.54 billion at the end of December.
The figures, he said, showed a decline by $5.25 billion, compared with the $47.788 billion it was as at the end of June, 2018. “It stood at $43.28 billion as at January 21, 2019.”