Lagos — That the banking sub-sector of the economy has overtaken public utilities such as NEPA, NITEL and Nigerian Airways in exciting public hatred is no longer news. What is novel, however, is the level of chicanery being applied to demonise banking and bankers. Incidentally, unsuspecting members of the fourth estate of the realm who should be at the vanguard of promoting the banking sub-sector which unarguably is the most indigenised, are being surreptitiously used as conduit for hate articles which are daily being churned out in the media
It is a sad commentary on the media and indeed society at large that instead of hailing the banking sub- sector that has innovated and indigenised the economy the most, it is daily flogging it. This is clearly a case of killing the proverbial goose that lays the golden egg. Remarkably, the continuous emphasis on the gloomy side of banking in the media is not for want of positive developments in the sub-sector to dwell on. Infact, there are legion that seem not to be catching the fancy of the media.
For example, it is worth remembering that the present First Bank of Nigeria (FBN) commenced business as Standard Bank of West Africa (SBWA) over a century ago as a British owned bank, and the present Union Bank also started operations in Nigeria as Barclays Bank under foreign ownership. But by virtue of the indigenisation decree, both banks have since shed their vestiges of foreign ownership to don the toga of wholly indigenous ownership. At first, this may not appear to be much of an accomplishment, but when their successes are viewed against the backdrop of the fact that companies in the industrial sector (Nestle Foods, PZ Industries, Lever Brothers, Cadbury, Nigerian Breweries, and Guinness as well as Shell, Mobil and Chevron) which are still labouring under the throes of foreign ownership, came into the Nigerian economy at about the same time, then you will begin to appreciate the evolutionary process that banking has undergone and the strategic role that they have played and will continue to play in the development of the Nigerian economy.
Unfortunately, bank critics who engage in what could at best be described as journalistic debauchery, if ever there was one, appear to be turning a blind eye to the numerous positive developments such as the emerging trend of Nigerian banks replicating their expertise and wizardry in sister West African countries like The Gambia where Guaranty Trust Bank is holding sway and Benin Republic where Diamond Bank is making waves.
Another area in which the banking sub-sector has made tremendous impact is the Capital Market. Since the Central Bank of Nigeria’s (CBN) charge to banks that they should increase their minimum capital base to one billion naira, a couple of years ago, the Nigerian Stock Exchange has been deepened by banks to the extent that bank stocks have been dominating daily trading in the exchange in the past one year. The hunger for bank stocks has been so much that energy sector stocks that used to be the most traded on the floor have now been relegated to the second position. Sadly, while banks are basking in the glory of their success at the stock market, they are also paying the price of their superb performance via the public odium, which is being heaped against them by those who should be eulogising them.
Naturally, banks serve as catalysts for economic growth in rather silent but revolutionary ways. That is why you will be amazed to learn how beneficial the success of the banking sub-sector has been to the development of the Nigerian society at large. As the sector that offers the populace the highest number of employment and remuneration, teeming bank employees across the country are veritable sources of business for hospitals and clinics. (An average bank like Continental Trust Bank with a staff strength of roughly 700 has retainership with at least 45 clinics nationwide). Extrapolate this figure for the big banks like First Bank, Union Bank, United Bank for Africa and Afribank with staff strengths and branch networks one hundred time more than Continental Trust Bank and you will see how deeply involved banks are in sustaining the practice of medicine in this country. By the same token, the flashy cars that some critics despise banks for are sold and serviced by a burgeoning number of car dealerships spread across the country. It is needless pointing out that these ventures which provide employment directly or indirectly to millions of Nigerians who work there are supported largely by banks who invariably provide both the funding and customers. How about vendors of computers, note counting machines and electricity generating plants whose wares are necessary to the achievement of the superb service delivery obtainable in banks? Banks practically sustain them by expending billions of naira to obtain their services. Add these to the architectural, and building firms which construct the ubiquitous bank branch offices and their state-of-the art head offices in the nation’s major cities and you can then begin to fathom the awesome benefits which the phenomenal growth and development of banks has brought to the society. Little wonder most state chief executives point to the presence of large number of banks in their states as evidence of their achievements in office.
In the light of the foregoing, why is the sub-sector still being vilified? To better identify the causes of the perceived public ill-will which banks and bankers seem to be suffering, it is necessary that we put other sectors of the economy in perspective.
For the sake of analysis, let’s use First Bank of Nigeria (FBN), which recorded the highest profit in the banking sub-sector in the last Financial Year as a benchmark, against Nigerian Breweries Plc, which also returned the highest profit in the manufacturing sector. With an Asset Base of N212 billion, FBN earned N8 billion as profit after tax from 320 branches. On the other hand, Nigerian Breweries Plc reportedly made about N10 billion profit after tax (a clear N2 billion above FBN) and less branch network, yet it has not attracted as much public opprobrium. The simple reason is that the wealth generated by Nigerian Breweries does not reside in Nigeria but in Germany as substantial equity of Nigeria Breweries is held by Heineken of Germany.
Another example is Shell Petroleum world wide which reportedly makes 49% of its profit from Nigeria. As an international company with Anglo-Dutch origin, the wealth which it makes does not also reside in Nigeria as it is also repatriated to its home countries.
How about Guinness with Irish ownership (Nigeria is reportedly its largest market after Dublin) and Cadbury with English parentage? They all repatriate their profits to their home countries where the wealth is effectively shielded from the gaze of Nigerians and the media. But the reverse is the case in the banking sub-sector where only three have foreign ownership (Citibank, Standard Chartered and Stanbic) and the rest indigenously owned. The wealth created by these banks are resident in Nigeria by virtue of their local ownership. Very often, such wealth which is in the hands of indigenous owners are invested in other strategic businesses by their owners (MTN & Econet by Pascal Dozie and Otunba Balogun of Diamond Bank and FCMB respectively) and perhaps state-of-the-art cars and sometimes palatial mansions. This is in addition to the fact that these people (banking entrepreneurs) attend the same churches and mosques; shop in the same markets; their children go to the same schools and even attend same parties as other members of the society who haven’t amassed as much fortune from other sectors. Under the scenarios described above tongues are bound to wag. This is the burden on banks and bankers.
For sure, banking and bankers do have their warts, but they are not as bad as people make them seem. Infact the hiccup which the sub-sector suffered in the early 1990s culminating in the withdrawal of the licences of about three scores of banks was actually a baptism of fire of sorts, which has resulted in the purification of the sub-sector. It is expected that the current efforts by the Presidency, regulatory and supervisory authorities would further galvanise the sub-sector which remains the only economic frontier that Nigeria has truly been liberated. Coincidentally, it was President Olusegun Obasanjo’s indigenisation decree (during his tenure as military Head of State), which paved the way for Nigerian entrepreneurs to grab a foothold in the sector which is universally acknowledged to be the live wire of any economy. Now that he is back on the saddle, it is not unlikely that Mr. President would be desirous of consolidating on the gains he made during his first time in office.