Mathematically Impossible Rules Stump Nigeria Banks on Loans
- Contradictory cash, loan regulations seen stifling banks
- It’s getting harder to manage central bank policies, EFG says
Outside the headquarters of the Nigerian central bank in Abuja, Nigeria.
Photographer: KC Nwakalor/BloombergThis article is for subscribers only.
Nigeria wants banks to perform a difficult two-step -- keep more of their cash for emergencies and aggressively expand lending into a shrinking economy.
Lenders must hold 27.5% of deposits as reserves -- more than 10 times that of South African banks and six times their Kenyan counterparts -- as the central bank battles to contain inflation. At the same time, they’re being forced to extend 65% of these deposits as loans to spur growth. Analysts say the measures don’t add up.