Expert Urges FG to Float Bond to Offset FX Loans to Oil Marketers

July 28, 2016
By Obinna Chima

A former Chief Executive Officer of Diamond Bank Plc, Mr. Emeka Onwuka has advised the federal government to float a bond programme to cover backlog of forex payments due to the downstream oil and gas companies which were funded by banks.

These loans, Onwuka, who is currently the founder of Origins Capital Limited, said are presently due in the books of most banks, were compounded by the recent devaluation, "which has impaired the capacity of the customers to pay outstanding trade obligations."

He said this while presenting the keynote address during the launch of a book titled: "Dynamics of the Nigerian Financial System (Essays in Honour of Phillips Oduoza)," which was written in honour of the outgoing CEO of the United Bank for Africa (UBA), in Lagos yesterday.

"In resolving this situation, the government may consider floating a bond programme to cover the backlog including FX differentials to date and the banks will be made to subscribe to the extent of their exposure to the oil marketers, thereby switching the relevant risk assets to liquid assets to improve their balance sheets. The government will then introduce petroleum products tax that will be used to fund the redemption of the bond," he said.

Speaking further, Onwuka who welcomed the new forex policy by the Central Bank of Nigeria, argued that it may be necessary to place a one year minimum tenor on repatriation of all CCI (Certificate of Capital Importation) transactions to discourage entry of hot money.

He urged Nigerians to support the CBN for the forex market to settle and achieve the desired objectives of the new regime.

"Hopefully the rates at which the market will settle will ultimately result in improve liquidity in the forex market," he added.

Meanwhile, banking industry experts and university dons have hailed the contribution of the outgoing Oduoza towards the growth of the banking industry.

The Chairman of UBA, Mr. Tony Elumelu described Oduoza as a very hard working and committed Nigerian. Elumelu explained that UBA has an institutionalised transition process, which was structured to promote corporate governance.

"Phillips worked at Standard Trust Bank (STB). But I must tell you all that Phillips never applied for the job. I called him to join the bank and since then he has done a lot of wonderful things in the bank. When I was retiring from UBA, as you all know we hire the best in the industry. So, it was difficult to choose a successor from a team of great and intelligent people. But finally the board appointed Phillips as my successor and he did very well," Elumelu said.

Also, a former CEO of Diamond Bank, Dr. Alex Otti praised Oduoza for his commitment to corporate governance.

The editor of the book, Prof. Mike Ogbeide of the University of Lagos, in his comment said Oduoza was committed to putting his extraordinary talent towards service to the society.

"That is why he has been able to make such a huge impact in the banking industry. This book is a worthy testimony to his sterling contributions to an industry whose zenith he reached by scoring many first," he said.

The Chairman of the occasion, Mr. Emmanuel Ijewere, commended Oduoza for his exemplary lifestyle and dedication to his job.

In her presentation, the wife of the outgoing UBA boss, Mrs. Jumai Oduoza, thanked the staffs and management of the bank for supporting her husband throughout his tenure at the bank.

"Something tells me that this retirement leads to the beginning of another adventure that leads to a productive end. Phillips would be carrying you in his heart into the future. It would be such a joy and honour to find you in that future. I personally appeal to you to keep your door open when and if he comes knocking," Jumai added.

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Steven Rich
Sep 17, 2018:
Well done

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