President of the African Development Bank (AfDB), Mr. Donald Kaberuka, has commended Central Bank of Nigeria (CBN) Governor, Mr. Sanusi Lamido Sanusi, for excellently piloting financial stability in Nigeria.

Speaking during a courtesy call on the CBN Governor at the Bank’s headquarters on yesterday, January 15, 2014, Mr. Kaberuka noted that the CBN, under Sanusi’s leadership, had been innovative in addressing the challenge of the global financial crisis as it concerned Nigeria.

In commending Nigeria’s apex Bank, the AfDB President observed that the institution had demonstrated that it was not enough to have regulations. He noted that beyond regulations there must be enforcement, sanctions and then resolutions. He also stressed the need to put in place mechanisms to check risks to the financial sector.

Mr. Kaberuka, who was in the country to meet with key AfDB clients and to receive an award to be conferred on him by Daily Trust newspaper, observed that Nigeria was one of the critical markets being served by the AfDB.

While noting that the AfDB’s balance sheet was good, he expressed concern over the challenge posed by the political situation in North Africa. He, however, expressed confidence that the North African countries would rally to overcome their current challenge in order to benefit from the interventions of the Bank. His concern was that if the crises were not checked, these crucial markets would keep getting downgraded with adverse consequences for the AfDB.

He equally disclosed that the Development Bank was working on how to change the business model, which was drawn up in the 1960s, and has since become outmoded.

In his response, Mr. Sanusi congratulated Mr. Kaberuka on his visit and the award to be conferred on him by Daily Trust.

He described the Africa 50 Fund, which AfDB was about floating, as a good idea, stressing that it represented a crucial element that must be unlocked if the African economy was to grow.

The CBN Governor recalled that the 1960 witnessed huge investment in infrastructure and therefore emphasized the need for African countries to address the continent’s infrastructure challenge if there was to be positive change.

Referring to Nigeria, Mr. Sanusi noted that Nigeria’s challenge is not in the scarcity of domestic long-term funds but proper market intermediation. He expressed concern over the fact that pension assets were growing at a rapid rate without being properly channeled into the economy. He opined that at least 30 per cent of the fund could be put into infrastructure.

On Shale oil, he noted that there had been a reduction in the United States demand for Nigerian crude. He expressed the view that any economic development model based on high oil price was flawed. What Nigeria needed to do, he said, was to view oil as a raw material and not a major source of income.

While pointing out that Shale oil was still too expensive for now, he cautioned that new technology could reduce cost as had happened to off-shore drilling, which led Nigeria to having a one-sided fiscal arrangement with the international oil companies.

Expressing concern over the vulnerability of having to depend mainly on oil for government revenue and foreign exchange, Sanusi again emphasised the need to fix fiscal leakages and structural reforms. According to him, some difficult decisions have to be taken before oil prices drop and Nigeria would lose its major revenue earner.

The highpoint of the visit was the decoration of Mr. Kaberuka with the Armed Forces Remembrance Day emblem by Mr. Sanusi.

On Mr. Kaberuka’s delegation were Lamin Barrow; AfDB’s Country Director, Nigeria Country Office, Ousmane Dore; and Lead Economist, Nigeria Country Office, Barbara Barungi.

On Mr. Sanusi’s team were: Dr. (Mrs.) Sarah Alade, Deputy Governor, Economic Policy; Alhaji Suleiman Barau, Deputy Governor, Corporate Services and Dr. Kingsley Moghalu, Deputy Governor, Financial System Stability.

•Photo shows CBN Governor Sanusi decorating AfDB President Kaberuka with the Armed Forces Remembrance Day emblem . . . yesterday at the CBN Headquarters, Abuja.