Economy: Nigerian bankers and the banks

By Terka Jam

Again Nigerians are letting the commercial banks off the hook without as much as a slap on the wrist for their role in the current economic recession. In the gang running our banking sector, somehow, we have managed to create a super caste that is above the law. They know that nothing has happened to them in the past when they gambled away shareholders’ and depositors’ funds, which has now reassured them that there is no price to pay for putting the country on the brink with their cowboys’ attitude towards what they should have treated as their responsibility to the rest of us.

It is okay for Nigerians and even government officials to engage in the ongoing self flagellation in which there is the acceptance of the blame for not diversifying the economy. It is overlooked that government can only drive the economy towards diversification to an extent while the private sector takes it up from there. In all the years that preceded this eventual fallout I challenge our commercial banks to dare publish their loans portfolio and show which ones deliberately targeted support for local industries and manufacturing.

Their preference has always been for extending short term facilities to importers with tenure that averages the time it takes to ship products from the factories in Europe and China to Nigeria. Companies that have to go through the growth process of building factories and manufacturing are automatically not eligible because of the longer tenure. So, in addition to stifling domestic growth the banks also encouraged the offshoring of Nigerian jobs.

Next to manufacturing, mortgage would have been another boost to the economy as construction of new homes would have generated employment on a scale that will yield multiplier effects. But not the Nigerian commercial banks for whom 30 years is too long a time to wait for borrowers to exit their mortgage facilities. That is why is common in Abuja, which tends to have the most number of new homes being built, to see repayment period of 24 months for a house priced at 45 million naira.

There are interventions funds that are lying dormant with specialized institutions, including the Central Bank of Nigeria (CBN), which have remained unaccessed because our commercial banks cannot be bothered with the concessionary rates stipulated by the institutions providing the credit. The returns have to be able to justify the jet set lifestyle of our overpampered bankers for the loans to be worth processing for our small and medium scale enterprises.

In addition, the banks would rather extend jumbo uncollateralized credit facilities to elites pals of the directors than to give same to hardworking businesses. The N6.6 trillion debt held by the Assets Management Company of Nigeria (AMCON) is a testament to how Nigerian commercial banks nudged us into this situation without anyone holding them accountable for their actions. Curiously only 6% of the Eligible Bank Assets (EBAs) that AMCON purchased is represents exposure from manufacturing.

Those years of granting toxic loans to their associates were conveniently concealed by the practice of round tripping that allowed them to hide steady losses from the public. Sadly, irrespective of CBN intervention, sharp practices around currency speculation is one that the bankers’ clique are not willing to let go of as recently proven when the apex bank had to suspend all but one of them from forex sale to bureau de change (BDC).

Commercial banks’ spurning of CBN’s directive goes beyond playing hanky with forex. They also serially disregarded the Treasury Single Account (TSA) until the big stick was again wielded. Their failure to comply with the directive was borne out of a desire to maintain the business as usual regime that ensures corruption continues to thrive. Proof of this is their penchant to hide under the depositors’ confidentiality to frustrate the tracking of stolen funds. That stolen funds passed through their systems without alerting authorities to suspicious transactions as required by anti-money laundering laws speaks volume of their commitment to seeing the nation survive.

All these serial violations directly affect the economy and in a bad way too. So, even when we blame past government for not implementing safeguards, these commercial banks are in reality responsible for 70 percent of our economic problems because they abdicated their core mandate in preference of speculative activities that add no value to the economy, if anything they made it worse.

It is therefore worrisome that these same guys are metamorphosing under the cover of “the private sector”, the same one they depleted by starving financing. The bankers or private sector as they have labelled themselves are complaining that there is no economic team. One would expect that they know by now that President Muhammadu Buhari knows the antics of the Lagos gang that gets into public committees to sabotage the government from the inside using privileged information they get in the course of being part of the economic team.

The years they were part of the economic team was the same period they used to pervert the system such that policies were manipulated to suit their insatiable acquisitiveness. They practically came up with their own committee which took over regulatory and enforcement roles over from the apex bank – the world over once an industry places self regulation over institutional regulation then there is need to be worried. The killing off of government institutions is not a fluke. If government organs are in place performing functions as prescribed by extant rules and regulations in line with financial manuals there would be no need to accept gate crashers and scams from Lagos to come and meet in Aso Rock under any name.

This is the era of change. We know the antecedent of the names demanding economic team. They played roles in previous bank consolidation bazaar that was carefully orchestrated to defraud Nigerians who lost money through Initial Public Offers, and Private Placement platforms and deposits that got threatened. As soon as the last of the banks was done collecting money from Nigerians they crashed the value of the shares and left investors with shreds of tissue paper in their hands, which they were made to believe were share certificates. That and other frauds before and after it were possible because those running the commercial banks have compromised the system through the access they got through being members of the economic team.

This latest attempt by commercial banks to again infiltrate the government to surreptitiously become part of the economic team must be resisted. If not by the government definitely by the populace.

Jam writes from Abuja.