Nigerian banks should be required to direct more credit to productive sectors such as agriculture, manufacturing and construction to accelerate job creation and ensure that the benefits of economic reforms reach ordinary citizens.
This is according to Chidozie David Okonkwo, Founder and Chief Executive Officer of ZINNC.
He made the remarks alongside Tunji Andrews, Founder and CEO of Awabah, and Arnold Dublin-Green, Managing Director and CEO of Asset Management at Renaissance Capital Africa, during the latest edition of the Drink and Mic podcast.
Policies that encourage banks
Okonkwo said Nigeria’s financial sector reforms would have limited impact on the wider economy without policies that encourage banks to finance businesses capable of expanding production, creating jobs and driving economic growth.
According to Okonkwo, banks need both policy direction and incentives to channel more lending towards productive assets, particularly factories and businesses in labour-intensive sectors.
- “For a bank to lend, one, two things have to happen. They have to be forced to lend. There needs to be policy in mandating that,” he said.
He added that lending should prioritise productive investments rather than consumer credit, arguing that Nigeria needs to strengthen its industrial base to generate employment and improve living standards.
- “I’m not a fan of consumer lending. I’m a fan of lending for productivity first and foremost, factories,” Okonkwo said.
High operating costs undermine business productivity
Okonkwo warned that directing more bank credit to businesses would not be sufficient unless the government also addressed structural constraints that raise production costs.
He cited rising electricity expenses and unreliable power supply as major challenges facing manufacturers, arguing that businesses cannot expand production effectively when the cost of operating factories continues to increase.
- “The guy with his factory, his power costs have gone through the roof,” he said.
He added that unreliable electricity supply continues to undermine businesses, preventing the benefits of financial sector reforms from translating into better economic conditions for ordinary Nigerians.
- “The problem is on the ground. In that factory in Alimosho, the power is still epileptic, like it’s not going to work,” Okonkwo said.
According to him, Nigeria needs a broader economic strategy that combines financial reforms with improvements in infrastructure and the conditions required for businesses to operate efficiently.
He identified agriculture, construction and manufacturing as priority sectors because of their potential to generate employment at scale.
- “At the size that we’re at, we need like the low hanging fruit, agriculture, construction, manufacturing, things that employ lots of people quickly,” he said.
Okokwo also cautioned against relying excessively on technology as a shortcut to economic development, arguing that Nigeria still needs to build a strong industrial foundation.
- “I’m a tech guy, but at the same time, I’m a pragmatist,” he said. “We can’t skip industrialization.”
Policy reforms need to translate into jobs
Arnold Dublin-Green said economic policy measures have reached a point where institutions and businesses must play a greater role in translating reforms into employment and broader economic opportunities.
- “Policy has done what it can, up until where it can do what it can do. Now, we need institutions to now step in, start providing jobs,” he said.
His remarks highlight the importance of private sector investment and job creation in ensuring that macroeconomic reforms produce tangible improvements in household welfare.
For Okonkwo, stronger lending to productive businesses would be one way to bridge the gap between financial sector reforms and economic activity on the ground.
He argued that without adequate financing for factories and other employment-intensive businesses, the benefits of reforms could remain concentrated in the financial sector rather than spreading across the broader economy.
Fiscal policy remains a major concern
Andrews said Nigeria’s monetary policy measures had made progress but argued that fiscal policy remained a critical weakness in translating economic adjustments into broader prosperity.
He said the government needed to manage public resources more effectively and deploy them in ways that generate a multiplier effect across the economy.
- “I’ve always felt we needed to separate monetary policy from banking regulation. But yeah, monetary policy, they’re doing great, right? So what we know is still lacking is fiscal policy,” Andrews said.
He added that the government’s ability to manage resources and use them productively would be central to determining whether economic reforms ultimately improve conditions for Nigerians.
According to Andrews, although some developments suggest the economy is moving in the right direction, many citizens are struggling to see tangible benefits from the changes.
- “Some things are good, and some things are going in the right direction. But some things also give you the impression that it looks like we would be dead before we get to the promised land,” he said.
He noted that while people who understand macroeconomic policy may have greater confidence in the reform process, others who are experiencing economic pressures directly are losing hope because they cannot see the expected improvements.
The discussion underscores the need for a coordinated approach that combines monetary and fiscal policies, productive-sector lending, infrastructure improvements and private sector job creation to make economic reforms more effective.