The Managing Director and Chief Executive Officer of Zend Technology Company Limited, Mr. Victor Kalu has called on government at all levels to take step towards entrenching financial infrastructure that will cater for the needs of the informal sector so as to deepen economic growth and development of the nation.
Kalu who made this observation in a goodwill message at the Finance and Business Online Publishers, FiBOP 2024 Capacity Building Workshop with the theme, ” Digital Innovation: Deepening Infrastructure For Efficient Financial Ecosystem”, held in Lagos on Saturday stated that innovation in financial infrastructure is key to economic growth because it facilitates business and offer people access to financial services.
He disclosed that the revenue that flows through the Informal sector of the economy consisting of the street traders and other informal sector players amount to about N36 billion yet, most of them don’t make their way into the traditional banking system.
“Imagine if that could go in (to the traditional banking system). So, providing financial infrastructure to enable inclusion is very key to the economic development of this country”, he said.
Noting that President Bola Ahmed Tinubu is someone that believes so much in the informal sector, Kalu who is also the Executive Chairman of Vindi Petroleum maintained that financial technology and infrastructure that could facilitate the inclusion of the informal sector, would jumpstart this economy.
“So, it’s a challenge to you, journalists that are reporting the financial sector to bring this discussion to the fore, the need for the informal sector to be enabled and empowered with the right infrastructure”, he added.
Using a comparison of Nigeria and South Africa to drive home his point, he said, “Nigeria’s budget is about $20 billion, less than half of that budget is financed internally. South Africa’s budget is $12 billion, $10 billion of the said amount is from the internally generated revenue but as I told you earlier on, on the other hand, Nigeria has about N36 trillion that is not taxed or captured. Now, imagine if you have an infrastructure that can bring in that money into the banking system and generate value.
“Then, on the other hand, because this informal sector lacks access to the right financial system, they are also not empowered to grow. For example, access to credit, the players in the informal sector today have the most expensive cost of borrowing. Some of them borrow at over 100 percent interest per annum whereas big businesses borrow at 20 percent. How would the economy grow in this manner?
“With the right infrastructure, the risk assessment of these informal sector players who make up the majority of the economy can better be enhanced. You can assess their risks, you can give them credit at a cheaper rate and the economy will grow at a very fast pace. This is the biggest low hanging fruit for this government to tackle”, Kalu insisted.
He therefore, tasked the journalists reporting the financial sector to bring to the attention of the government that there is a lot of opportunity for economic growth for this country saying, “I think it’s auspicious that you are having this event at this time because even in the oil and gas industry, there’s a lot of challenges with supply and a whole lot of things can be done with the right support from the financial system that we have today.”
Photo: Mr. Victor Kalu, Managing Director/CEO, Zend Technology Company Limited speaking at the Finance and Business Online Publishers, FiBOP Capacity Building Workshop in Lagos Saturday.
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