THISDAYonline

In a bid to ensure the efficiency of Nigeria's payment systems, the Director General, West African Institute for Financial and Economic Management (WAIFEM), Dr. C.O. Itsede has called on all stakeholders to build adequate human and institutional capacity for risk management.

Itsede who made this call recently in Lagos at the "Regional Course Payment Clearing and Settlement Systems and WAIFEM/World Bank Regional Workshop on Modelling Risk for Sovereign Liability Portfolio" stressed the need of risk management to be regarded as an integral element in the activities designed to improve the efficiency of payment systems.

"In this regard, concerted efforts should be sustained at the national and regional levels to build adequate human and institutional capacity for risk management", he said.

He noted that the risk management will not only improve the efficiency of payment systems, but also sovereign debt, reserves management and other macro-economic aggregate that is subject to volatility.

Besides, he listed key areas that need to be harmonised to include; access rules to Central Bank credit, rules and practices for loan valuation, loan loss provisioning, loan recovery and foreclosure, a common counting standard and detailed reporting formats.

Noting that managers of sovereign debt and the national payment system are confronted by various risks every day, he said that risks could be managed through hedging so as to avoid the systemic disruption.

"Just as it is important for countries to hedge to reduce risk through the smoothing of fluctuations in external prices around trend, so is it crucial for the monetary authorities to insulate payment systems from the vagaries of various risks including cost over runs", he added.

WAIFEM was established by the Central Banks of Gambia, Ghana, Liberia, Nigeria and Sierra Leone in July 1996. Its principal mission is to strengthen capacity for macro-economic and financial management in the constituent countries.