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Why Banks Don’t Give Long Term Loans – Bank MD

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10 years ago

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The inability of commercial
banks to give long-term credit facilities is due to the non-availability of long-term-deposits by Nigerians, a financial expert, Mr Nnamdi Okonkwo has said. Okonkwo, also the Managing Director, Fidelity Bank Plc, made the remark at a conference organised by the Finance Correspondents Association of Nigeria (FICAN) in Lagos.
The theme of the conference was: “Nigeria beyond Oil, Financing Options for Non-Oil Exports’’.
He said that most depositors who had huge amounts to save, did it on short-term basis because of uncertainties of the economic policies.
Okonkwo wondered why banks were always condemned at every occasion for not lending long-term facilities to businessmen and farmers, whereas they traded mainly with short-term deposits.
The managing director insisted “that commercial banks do not have the kind of huge amount of money to lend out to those in businesses for long-term period’’.
The financial expert also listed lack of the right framework as being responsible for local banks not lending long-term to Small and Medium Scale Enterprises (SMEs). He said lack of infrastructure, such as power, among others had made the bank to generate private electricity for its operations. According to him, banks paid full interest on all deposits, while 25 per cent was taken as Cash Reserve Ratio (CRR), leaving banks with only 75 per cent of the amount to trade with. He said, “If as a bank, I know a secret place where I can get long-term funds to trade with, I will be the number one bank in Nigeria today because I can lend  long-term.
“Bring me a depositor that will place N100 million today with me at 10 per cent.
“I will then give a loan at 15 per cent and pay the depositor’s interest on N100  million but I have to trade with N75 million because the Cash Reserve Ratio is deducted from the N100 million.
“For me to get access to five per cent of the money, I have to lend to a cocoa farmer. You have to lend for industrial production,’’ Okonkwo said.
The managing director said that banks paid three per cent as premium to Nigerian Deposit Insurance Corporation (NDIC) from all deposits.
“Not only that, the bank will also pay three per cent NDIC premium on the same N100 million deposit.
“Remember, I run my own power. In fact if you put together the voltage we produce in 248 branches of Fidelity Bank, it can power the whole of Lagos State,’’ Okonkwo said.
He said that it was difficult to get a Nigerian who will deposit money in the bank for one year, yet, people kept blaming the banks for not lending money for long-term projects. Okonkwo said that a lot of banks collapsed in the past because of assets mismatch. That is people who matched long-term assets with short-term funds.
“When there is a run in the system, the owners of the short-term funds will come for their money and you have to pay them.
“If you pay them, the people you gave long-term loans cannot pay up. Then you begin to have distress in the system”, he said.
The financial expert, however, said that the Nigerian Export Import Bank (NEXIM Bank) and Fidelity Bank Plc were taking measures to enhance non-oil exports and create wealth for Nigerians.
The managing director said the lender was always at the forefront of financial services solutions and lending, adding that supporting SMEs should go beyond funding. “This is what informed the Fidelity SME Radio Forum, a programme designed and sponsored by Fidelity Bank to educate, inform, advise and inspire budding entrepreneurs, that is aired on Inspiration FM Lagos,” he said.
The Managing Director/ Chief Executive Officer, Heritage Bank Ltd., Mr Ifie Sekibo, said Nigeria had export potential in some agricultural commodities like cocoa, cashew, groundnut and fish. Others are: sesame seed, ginger, cassava, snails, tobacco, coffee, cotton lint, rubber, among others. He said Nigeria could export bitter leaf, plantain flour, melon, crayfish and maize.
Sekibo was represented by Mr Olugbenga Awe, Group Head, Agriculture Finance, Project and Development Finance Department of Heritage Bank. He said that the country could also export manufactured goods such as: cocoa cakes, butter, powder and liquor.The managing director said that others include: detergents, malt drinks, palm kernel cakes and oil, baby clothes and confectioneries.
In the category of handicraft, Sekibo said that Nigeria could export talking drums, calabash, wood carvings, raffia products, among others.
He said that the nation’s entertainment industry contents from the Nollywood artists could be exported to neighbouring countries.
Sekibo expressed regret that exporters from Nigeria were not competing enough, adding that some Nigerian exporters went to Cameroun to bring in products and  blend them for exports.

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Boat Mishap Kills Pastor, Wife And Church Members  In Brass Water

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1 week ago

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May 18, 2026

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A boat accident in Bayelsa state has killed a serving Pastor, Wife and other church members along Brass waterways
The sad incident happened at Odioama in Brass local government area of Bayelsa State when the Pastor, wife and  members of his church were in a programme.
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?Tide confirmed that the lifeless body of the Pastor’s wife has been found and deposited in a mortuary while the remains of her husband ,the Pastor is yet  to be recovered
as search party are still ongoing.
Although the real cause of the boat Mishap is not yet known as at the time of this report,  our Correspondent gathered  that the identities of the Pastor, wife and church members were not disclosed to the public.
The mishap, Tide gathered occurred on Friday morning when the church members were on a boat transit
The Bayelsa State government and the state police command are yet to issue official statement’s  on the sad accident
By: CHINEDU WOSU
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Rivers Workers Seek Scrapping Of Contributory Pension Scheme

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1 week ago

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May 18, 2026

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The Rivers State Council of  Nigeria Civil Service Union has called on the State Government to urgently scrap the contributory pension scheme, describing it as unfavourable to long-serving civil servants in the state.
Chairman of the union, Chukwuka Osuma, said this in an interview with newsmen in Port Harcourt,  recently.
Osuma said the current pension structure has continued to worsen post-retirement hardship for workers.
He noted that  the contributory pension scheme had failed to provide adequate retirement security for workers who had spent many years in service, especially those approaching retirement age.
According to him, civil servants who had served for more than 20 years were among the worst affected under the scheme, insisting that many retirees could no longer cope with prevailing economic realities.
He also  informed that the Union has made moves to showcase their concerns, pleading with Governor Siminalayi Fubara to abolish the pension policy and introduce a more favourable arrangement for affected workers.
“The union was not opposed to pension reforms, the contributory scheme should only apply to newly employed workers or those with fewer years in service”, he said.
Osuma explained that workers who had already spent decades in the civil service ought to remain under a more secure pension structure capable of guaranteeing stability after retirement.
The labour leader further noted that inflation and the rising cost of living had continued to erode the value of retirement savings, thereby increasing the suffering of pensioners across the country.
He also appealed to the state government to consider extending the years of service in the civil service from 35 to 40 years and the retirement age from 60 to 65 years.
Osuma argued that such adjustment had become necessary in view of present-day economic realities and changing conditions in the workplace.
The unionist also reviewed that similar policies had already been adopted in some sectors and jurisdictions, expressing optimism that the State could also implement the reforms for the benefit of workers.
He however, commended Governor Fubara for approving an N85,000 minimum wage for workers in the state, noting that the amount was above the national benchmark of N70,000.
Osuma also acknowledged the government’s efforts in the area of workers’ promotions and bonuses, but insisted that pension reforms and extension of years of service remained critical to the long-term welfare and stability of civil servants in Rivers State.
By: King Onunwor
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FG Begins South-West Tour To Promote New Cooperative Bank

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2 weeks ago

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May 13, 2026

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The Federal Government has launched the South-West zonal engagement and ministerial advocacy tour on the Cooperative Bank of Nigeria share capital mobilisation, sensitisation and cooperative sector digitalisation.
 Reports say the initiative was launched through the Federal Ministry of Agriculture and Food Security.
According to reports, the advocacy tour, organised by the ministry’s Federal Department of Cooperatives, began on Monday in Lagos.
Speaking at the event, the Minister of State for Agriculture and Food Security and Supervising Minister of Cooperative Affairs, Dr Aliyu Abdullahi, said the initiative was part of President Bola Ahmed Tinubu’s Renewed Hope Agenda.
Abdullahi described the exercise as a strategic effort to reposition the cooperative sector as a key driver of inclusive economic growth, financial inclusion, enterprise development, food security and national prosperity.
“Today represents a defining moment in our collective determination to reposition the cooperative sector as a major driver of inclusive economic growth, financial inclusion, enterprise development, food security and national prosperity,” he said.
The minister noted  the modern cooperative movement in Nigeria originated in the South-West following the 1934 Strickland Report, which led to the enactment of the Cooperative Societies Ordinance of 1935.
According to him, the decision to commence the sensitisation and share capital mobilisation tour in the region is symbolic, as it marks a return to the roots of cooperative development in the country.
Abdullahi said the advocacy tour was a direct outcome of resolutions reached at the 8th Regular Meeting of the National Council on Cooperative Affairs held in Abuja in March 2026.
He said the council approved the Renewed Hope Cooperative Reform and Revamp Programme, a comprehensive framework designed to strengthen the cooperative sector and align it with the administration’s goal of building a one-trillion-dollar economy.
“The reform programme focuses on seven strategic pillars, including governance reforms, cooperative financing and the establishment of the Cooperative Bank of Nigeria, digitalisation, capacity building, value chain development, inclusion of youths, women and persons with disabilities, and strategic partnerships,” he said.
He said the establishment of the Cooperative Bank of Nigeria and the digitalisation of the cooperative sector were the two major transformational initiatives under the programme.
“The Cooperative Bank of Nigeria is aimed at rebuilding a strong cooperative financial system capable of supporting cooperators, farmers, artisans, traders, SMEs, youths, women and persons with disabilities with accessible and affordable financial services,” he said.
Abdullahi emphasised that the proposed bank would be government-enabled but not government-funded.
“Government is not establishing the bank as an owner, nor will it rely on Treasury Single Account funds.
“The role of government through the FMAFS is to provide policy support, stakeholder coordination, regulatory facilitation and an enabling environment under the Renewed Hope Cooperative Reform and Revamp Programme,” he said.
Also speaking, the Lagos State Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs Folashade Ambrose-Medebem, reaffirmed the state government’s commitment to cooperative sector transformation.
She described cooperatives as critical tools for promoting inclusive growth, grassroots productivity, food security, financial inclusion and community wealth creation.
Ambrose-Medebem said Lagos State would continue to support reforms and collaborate with stakeholders to ensure the successful implementation of the Renewed Hope Cooperative Reform and Revamp Programme (2025–2030).
“Together, let us build a cooperative ecosystem that is modern, transparent, digitally enabled, financially inclusive and globally competitive.
“Let us build cooperatives that not only mobilise savings, but also mobilise prosperity,” she said.
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