Banks recapitalization to fuel advertising boom, industry growth
By Seun Johnson
A groundbreaking shift has been projected in the Nigeria’s advertising industry with the latest decision of the Central Bank of Nigeria (CBN), mandating all banks to increase their capital reserves, a move that indicates a possible surge in advertising spend.
The Apex Bank had in a circular released on its official website late last month, directed all commercial banks with international authorization to jack up their capital base to 500 billion naira while those with national licences are required to meet 200 billion naira threshold.
The statement, which was signed by its Acting Director of Corporate Communications, Sidi Ali, also compelled banks with regional authorization to increase their capital floor to 50 billion naira while non-interest banks with national and regional authorization are expected to meet 20 billion and 10 billion naira capital base respectively.
Reacting to the development, the Managing Partner and Chief Executive Officer of MediaFuse Dentsu Nigeria, Emeke Okeke posited that, while the decision will have a crunching effect on the manufacturers, it is going to be a boom to the advertising industry.
Okeke disclosed this while speaking in an exclusive interview with MARKETING EDGE on how the advertising industry had fared in the first quarter of 2024 and the prospects it holds for its players in the second quarter.
According to him, advertisers are steadily coming back in this second quarter.
“As soon as SEC starts approving petitions for Initial Public Offers (IPO), we are going to go back to the trenches for a piece of the action as we say it. There will be initial public offers and there will be private placement. I think the worst is over . I like to remain optimistic about our market. It’s going to grow and the growth is going to come out of heightened activities.”
Continuing, the Dentsu Boss said: “The extended part of it is that a lot of these multinationals because they were edging against losses, have lots of inventory of naira in the market. So there is likelihood that many of them are going to approach agencies that have regional clouts in Nigeria to be able to buy across jurisdiction, and to be able to use their naira inventory in another jurisdiction. That’s another massive opportunity for those who are playing at the continental level. So those are opportunities we will see in the marketplace,” he stated.
Reflecting on first quarter, Okeke identified political upheavals, electioneering activities and policies that were churned out by government such as fuel subsidy removal without careful thinking, floating the naira without element of control as reasons for the high tension experienced in the first quarter.
He, however, expressed confidence on how the government is rising up to the occasion by correcting some of the mistakes it made and churning out policies that have not been seen in the past.
“We can see it is already having positive effects on the local currency and invariably, bringing back confidence of advertisers and local manufacturers in the marketplace because the most crushing one was the insane free-floating of the local currency. We lost values, our lives, houses, foods and everything were devalued but thank God there is a relief and I hope it is not peace in the graveyard,” he said.
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