They called on the Federal Government to dialogue with the oil marketers to stop their proposed strike in separate interviews with News Agency of Nigeria (NAN) in Lagos.
NAN reports that oil marketers have initiated moves to shut own depots nationwide over the inability of the Federal Government to settle the accumulated debts of over N800 billion subsidy claims.
Dear valued readers, subscribe to the Daily Trust e-paper to continue enjoying our diet of authoritative news. Kindly subscribe here
Dr Uche Olowu, former Vice President of the Chartered Institute of Bankers of Nigeria (CIBN) said that debts had affected the quality of the banks’ portfolios.
He said that the non-payment of the subsidy arrears had led to a negative impact on banks’ operational costs.
According to him, the development has led to transactional velocity of money, which has impacted negatively on the economy.
“There should be transactional velocity of money. This means that if the money comes, the money will go to other traders who will continue to use the money.
“Once this is in place, it will be able to broaden the market.
“However, this has not happened because of the gap created for not paying back the money.
“Therefore, the economy has witnessed the kind of activities that should not have happened in the first place if the money had been paid,’’ he said.
Olowu said that if the money had been refunded, it would have in return created jobs, businesses and even investments in the economy would thrive.
The banker noted that the development had contracted the economy.
“The situation is critical and because activities are slow, it has affected the economy quickly.
“On the other hand, if the government says it does not have the money, it should have at least found an alternative means to ensure that the gap was not created.
“Sovereign risk in every other developed clime means when a government says it is going to pay, you can take the promise home.
“For instance, government should have raised money either through bonds and fulfill its obligation,’’ he said.
Olowu said that the government needed to inject back the liquidity in the financial system not to allow the industry to suffer.
“Mind you, the financial system is the engine that lubricates every other sector. So, it suffers if you don’t put liquidity in the industry.
“If something urgent is not done, it can reduce the banks’ portfolios and that can have adverse impacts on banks’ liquidity, profit and in terms of provisions and all that,” he said.
Olowu decried that the situation could pose a run on banks and the industry could collapse.
He called on government to ensure timely payment of the subsidy arrears to boost the confidence Nigerians have on the regime.
“It is a very important time that the government finds a possible means of settling those debts to create more liquidity in the system.
“Without settling the debts, the banks will be running on huge loan losses.
“This will definitely be posing negative impact on the banks, the economy and as well as the image of the country,” he added.
Olowu insisted that if the financial system was not healthy and strong, there would be huge exchange rate gap created by devaluation.
The former President of Association of National Accountants of Nigeria (ANAN), Mr Samuel Nzekwe, urged the Federal Government to enter dialogue with oil marketers to stop their proposed strike.
Nzekwe said that the government needed to pay the aggrieved marketers because the transaction was one that had occurred in the past and which the two parties agreed to be part.
He wondered why government could still be delaying the payment of the accrued subsidy; adding that it might be that the government was not sure of the total estimate.
The accountant suggested that government could sort out the debts by paying the money in instalments to the marketers if the money was too huge to pay at once.
He said that it would reduce the effects of the burden on government at the same time it would give the market the assurance that the government did not forget them.
“It will be good if the government can fulfill the agreement it had with the marketers because this was a transaction done in the past, except if the government is not sure of the amount,’’ he said.
Nzekwe said that in that case, the government should confirm and solve the issue on time. (NAN)