Monday, March 27, 2023

Inside Nigerian Banks, an insider’s perspective on sector reforms

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Jaafar Jaafar
Jaafar Jaafar
Jaafar Jaafar is a graduate of Mass Communication from Bayero University, Kano. He was a reporter at Daily Trust, an assistant editor at Premium Times and now the editor-in-chief of Daily Nigerian.
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Published in 2016 by Pen Print Solution Ventures, Lagos, Nigeria, Inside Nigerian Banks written by journalist, writer and editor, Nik Ogbulie, gives a rich analysis and firsthand perspectives on the reformation process banks underwent and are still undergoing and their operation, services and flaws.

It presents readers, bank regulators, policy makers and customers with all they need to know to make informed decisions about regulations, policy initiation and implementation, and what banks are best to bank with.

To give a clear understanding of the reformation, Ogbulie draws from history, stating the number of banks in existence before the first reformation exercise (89 banks) under the leadership of Chukwuma Soludo as the governor of Central Bank of Nigeria (CBN) and Professor Ndi Okereke-Onyiuke as Director General (DG) Nigerian Stock Exchange (NSE), and how many survived after Sanusi Lamido Sanusi succeeded Soludo.

The author states clearly that Inside Nigerian Banks is a dedication to the dynamism and transparency of Onyiuke when she headed NSE as the DG from 2000 to year 2010.

Inside Nigerian Banks is divided into eight chapters, with a foreword, preface and an epilogue. Chapter one paints a vivid picture of the revolution that occurred in the banking sector in Nigeria.

Beginning from the history of CBN, the various governors it had and its uhuru from the Federal Government (FG), after long years of being “an extension of FG treasury”, dancing to the whims and caprices of the political terrain in Nigeria and serving as the boy-boy of whoever was the military head.

The chapter suggests that CBN’s independence began with Joseph Sanusi, whose efforts were geared towards disentangling CBN from all financial regulations that were only favourable to the military autocracy.

According to Ogbulie, this laid the “foundation for CBN in a truly democratic setting.” A former bank chief, Godwin Emefiele, now leads CBN. He continues, Emefiele has “remained obviously unindicted”, unlike his predecessors.

This chapter also suggests that banking revolution in Nigeria was made possible through the partnership of CBN and NSE under Soludo and Onyiuke, and the initial groundwork lay by Sanusi, who was Soludo’s predecessor.

Not only this, but the introduction of some non-banking financial institutions, such as Assets Management Company of Nigeria (AMCON), made the banking reformation exercise, which according to the author has no time frame, a success.

It also highlights the flaws inherent in the regulations and policies brought up by CBN under Soludo and Sanusi.

Chapters two and three stress the book’s title and appraise the reformation and its effect both short-term and long-term on the various banks in Nigeria. Chapter two, while alluding to international banks, sees the introduction of Bank Verification Number (BVN) and electronic (E) banking as some of the positive effects recorded by the revolution. Noting that today, the level of a bank’s application of E banking facilities determines the bank’s image, because E banking is “the future of banking.”

Little wonder banks invest heavily in improving on their technology, which aids efficient and stable service delivery. It also identifies banks that championed e-banking even before the reformation. One of such is Fidelity.

However, the author is able to quickly note that e-banking isn’t without flaws and limitations. One of such limitations is very poor electricity supply, as it eats away large chunks of banks’ profits invested to provide their own electricity to keep their platforms accessible.

This clearly mirrors Mr. Bright Okpocha’s (Basketmouth) statement at the Independent National Electoral Commission Youth Votes Campus Outreach held at the University of Lagos a week ago. “Every Nigerian is his or her own president, because they provide their own electricity, water, housing and security”, he said.

Banks entangled in a profit-making race is seen as one of the flaws of the revolution, as the author alleges, “banks have perfected the execution of some deals known to have fallen out of regulatory standards.”

The greed has allowed banks to advance their e-banking facilities to carryout inexplicable and unwarranted debits for numerous charges to accounts, which, Ogbulie notes are both “official and unofficially”, while also calling for a “review of banks overall attitude to transactions.”

Chapter three dwells on four banks in Nigeria; three defunct and one barely struggling to revive its image dragged in the mud by Sanusi’s reformation policies, which the author sees as political rather than systematic and transformational. Ogbulie hints that Union Bank, Afribank, Intercontinental Bank and Oceanic Bank were strong enough not have been declared “technically insolvent” by the Sanusi-led CBN government, having survived the first reformation years under Soludo.

Chapters four, five, six and seven consider the future of Nigerian banks; the protection, guidance and support they receive from non-banking financial institutions such as Security and Exchange Commission (SEC), Nigeria Deposit Insurance Corporation (NDIC), Debt Management Office (DMO), Bank of Industry (BOI) and AMCON, which the author refers to as a bridge between banks and their overflowing risk assets; the vital role of the corporate affairs unit of banks, as it manages a bank’s reputation, and banks ever increasing battle against financial crimes and the cost of having a lawyer on retainer to rescue banks from the myriad cases of fraud and money laundering carried out by bank employees and criminal customers.

Chapter eight presents a compilation of the author’s articles written from the year 2008 to 2016. One of the articles captures CBN and NDIC’s failures and the N5000 denomination discourse, clouded by what Ogbulie calls “sentimental economist” judgment. Some look at the issue of budget padding and implementation as a recurrent phenomenon. We can recall the recent budget-padding saga as President Mohammadu Buhari signed the 2018 budget. One of the articles is the author’s glorification of Fidelity Bank and other banks, where he sees Fidelity Bank as “one investment destination that many investors would find rewarding, based on its current level of stability and available skilled manpower.”

The epilogue commends Onyiuke for her role as DG of NSE and in rallying Africans to support ex-president of the United States of America, Barack Obama and her early retirement from NSE.

Ogbulie, in his Inside Nigerian Banks, does a fine job in presenting readers with information needed to understand the past, the present and the future of Nigerian banks, and their daily struggles to stay afloat in a nation where regulations and policies are ever changing. Giving us a historical perspective as well as supporting articles, he adds pictures of the various governors who have manned and who is currently manning CBN.

Readers, who probably would have passed these moguls down the road unknowingly, would now have an idea of what they look like. He transports readers into the banks and makes them to sympathise with bank operators and staff and makes them pay attention to the risks and benefits each customer faces in bank choice and E banking.

He captures the influence of CBN, NDIC, NSE and other non-banking financial institutions in implementing and sustaining banking revolution to the point where Nigerian banks can be on a par with world-class banks across the globe.

His articles can be seen as both relevant and irrelevant to understanding Inside Nigerian Banks. It appears like a fill-up-the-space and an increase-page-numbers geared writing. Although the articles were interesting, informative and sarcastic such as “Buhari, the Economist”, some of the article would have best been infused in each chapter to corroborate themes and arguments put forward.

Inside Nigerian Banks is well written to aid banking regulators and policy makers, commercial banks, merchant banks, retail banks, investment banks, bank chiefs or Chief Executive Officers (CEOs), non-banking financial institutions, financial and economic journalists and people with interest in the world of banking and finance.

Others that can learn from this book are researchers, teachers, college heads, administrators, and students who can gain a perspective on Nigerian banking operation. Surely, this book will pique the interest of many.

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