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Forex: Backward Integration Is Way Out- Agbaje

It has been established that for Nigeria to weather the storms of the phenomenal drop in foreign currency inflow there is an urgent need to embrace the backward integration policy of the Federal Government.

Group Managing Director of Guaranty Trust Bank Plc, Mr Segun Agbaje, disclosed this while giving highlights of his bank’s financials for 2015.

He urged Nigerian businesses that depend on imported raw materials for survival to urgently seek imbibe the backward integration policy with looking back as this is a sure way of ameliorating the hardship being faced because of the forex policy of the Central Bank of Nigeria (CBN).

Agbaje said the advice became imperative due to the constraints financial institutions are having meeting the foreign currency needs of their clients.

“Banks cannot meet the foreign exchange needs of their customers outside the resources available to government and so we need to begin developing our own products and raw materials using the backward integration model.” he said.

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Agbaje said it was improper to continue to blame banks, the Central Bank of Nigeria or government for scarcity of foreign exchange to import goods since it is obvious to everyone that crude oil price which accounts for over 70 per cent of the country’s foreign exchange earnings in the past, has crashed in the international market, and that the only way out of it was for organisations and individuals managing businesses that depend on imported raw materials to develop local alternatives to reflect the prevailing economic environment.

He said: “I do not think that Nigerians should continue to depend on imported products and raw materials when indeed the resources available to government for purposes of financing their import are drying up by the day”.

The GTBank boss who ruled out chances of a merger with local banks however, hinted his bank was seeking a license to enter a 10th African country, while predicting that 2016 would be a very difficult year for both commercial banks and other enterprises due to the decline in government’s earnings.

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Going forward, Agbaje said Guaranty Trust Bank’s offshore subsidiaries would be propelled to raise their contribution to group profit and earnings to about 10 per cent, adding that loans to agriculture and Small and Medium Enterprises would also be raved up to about 10 per cent over the next three years.