The World Bank warns that the Nigerian Banking System faces a destabilisation risk due to the effects of Coronavirus which might lead to Nigeria’s worst recession in 40 years.
The World Bank had earlier warned if Nigeria stops the spread, the economy would dip by 3.2%, but if not contained by later this year it could dip as low as 7.4%.
Nigerian Banks are heavily exposed to the oil and gas sector which has suffered heavily under the Pandemic. While other dollar based exposures for Nigerian Banks will cause more strains.
” Pressure in the external sector and the stress Covid-19 caused in global financial market could destabilise Nigeria’s financial sector ” World Bank warned.
” The gradual lifting of restrictions may reveal a need for further market adjustments”.
Nigerian Banks petitioned CBN to restructure about 30% of their loans as the Pandemic has heavily affected the business climate.
World Bank also expects inflation by the end of the year to reach 13.8% compared to 11.4% last year.