Nigerian investor Victor Asemota weighs in on the financing gap between the poor and the rich Legit.ng
– Victor Asemota says the rich are the bank’s profit pool, which is why they focus less on retail banking
– Nigerian investor said rich live on poor people’s deposit because they don’t use their money to buy things
– Tech expert said the rich own or have a stake in banks because of the benefits of having a bank as leverage
Serial investor and tech enthusiast, Victor Asemota, explained why Nigerian banks take money from the poor to the rich. For years there has been a debate about why the financial gap between the poor and the rich continues to widen.
Asemota said that the rich Nigerians do more banking transactions than the rich, which is why lenders use the deposit to finance the company of the upper class. He made it known on a thread posted on his Twitter timeline.
He said deposit banks are more profitable when dealing with the wealthy class, making wealthy individuals the best profit pool when the government goes broke for working with creditors.
Asemota said that is why retail lending is not prioritized by commercial banks, most of which pay more attention to business banking. He based his knowledge on the experience gained from helping a wealthy man manage his debt.
He supported his point by stating that this is why most wealthy Africans own a bank or have an interest in a financial institution.
“Someone here was arguing that the rich buy yachts with cash. I was laughing out loud and had to give a measured response. Banks support the rich because the rich have more bank accounts than the poor. I managed. a rich man’s debt before and I know what I’m saying.
“The banks are also slaughtering the businesses of the rich and that’s why you find that most Nigerian banks don’t care about retail lending and only take deposits from the poor to lend to the rich. Their biggest profit pool now that the government is broke is this gap.
“There is a reason why most rich Africans own or have an interest in banks. This is how they get leverage. Leverage. Learn this word if you want to be rich and stay rich. The leverage creates wealth for the banks and the wealthy through fractional reserve lending. ” Asemota said
Not far from the truth
Nigerian banks have often directed most of their capital to the upper class, denying the lower class access to credit to finance a business. This disparity had led to the Central Bank of Nigeria the launch of the loan / deposit ratio in 2019.
Currently, lenders are required to have a loan-to-deposit ratio of 65% every quarter and improve their lending to small and medium-sized businesses operating in the economy.
Failure to do so will cost a bank some of its capital base. The more money a creditor borrows from small and medium-sized businesses, as well as the real estate sector, the more liquidity the financial regulator will release.
This policy of the Governor of the CBN, Godwin Emefiele, has increased the amount of credit in the economy even though it hurts the banks as NPLs increase. The monetary authority made the decision to close the financial gap between the rich and the poor.
Meanwhile, Legit.ng previously reported that a Nigerian, Michael Okaredje, dare the wrath of Uber and Bolt, because the founder of Pickmeup aims to compete with foreign carpooling companies.