“If the foundations be destroyed, what can the righteous do?”-Psalm 11:3
“These words I speak to you are not incidental additions to your life, homeowner improvements to your standard of living. They are foundational words, words to build a life on. If you work these words into your life, you are like a smart carpenter who built his house on solid rock. Rain poured down, the river flooded, a tornado hit—but nothing moved that house. It was fixed to the rock. “But if you just use my words in Bible studies and don’t work them into your life, you are like a stupid carpenter who built his house on the sandy beach. When a storm rolled in and the waves came up, it collapsed like a house of cards”-Matthew 7:24-27 (MSG)
“To date, we have only raised tribal chiefs and not national leaders. Those who come up to leadership positions in Nigeria quickly surround themselves with people from their own side of the geographical location and sideline others no matter how good they are. That needs to change” – Matthew Ashimolowo
AS IT WAS IN 1975, SO IT IS NOW
Some five years ago, I led my team to the residence of my boss for life, the chairman of THISDAY and Arise Media Group, Prince Nduka Obaigbena, to interview him as part of the video documentary I was coordinating for his 60th birthday. In the course of the interview, while answering some of our questions, he made two statements, which have refused to fade out of my memory.
The first was in response to why he was no longer interested in active politics. His response: “Nigeria’s politics is a very funny and interesting one; if your followers invite you to their places, you pay and if you invite them to your place, you also pay!”
The second was to pick his mind on the state of the economy. To buttress his point that nothing had changed, he pulled out some old editions of THISWEEK as far back as 1987 which I had helped him source from Lanre Idowu, the first editor of that influential magazine and some current copies of THISDAY and asked all of us to scan through the headlines to spot the difference. To our surprise, we discovered, true to his statement, that nothing had indeed changed as the headlines were highlighting the same issues that had confronted the country since God knows when. A friend even stretched this scenario further as I was putting this article together by sharing with me an old edition of The New Nigerian of Monday 24 March 1975 with this screaming headline: PETROL SCARCITY STILL ACUTE, with an image of a long queue. That was some 49 years ago. Will the headline not match if you just change the masthead to that of THISDAY 24 May 2024?
The interesting puzzle is this: why has Nigeria been circulating on the same spot, appearing to make one progressive step forward but in a twinkle, the gain is reversed 10 steps backwards? The story of Nigeria has remained like a circuit show since about 1975 with no net progress made if you discount all the gyrations we have been making.
THE FAULT IS AT THE FOUNDATION
On deep reflections over a long period, what the writer of the Psalms says in Chapter 11 verse 3, reproduced above, pins it down for me: “If the foundation be destroyed, what would the righteous do?” It is a question and interestingly, the answer is very clear and easy. I would interpret it this way: if you are trying to build a house on top of bad or no foundation pillars, regardless of the material you use for the house on top, it is just a matter of time before the whole house comes down. That is the problem of Nigeria and nothing has changed and nothing is likely to change until the contradicting foundational dynamics are addressed. A Yoruba proverb puts it this way: a passer-by is complaining that the load on the head of a cripple is tilted and another person asked him to stop looking at the load on the head but instead direct his gaze to the right place, the crippled legs, to gain an understanding of the problem he is complaining about.
When Biodun Akinjayeju, managing director of Fund Quest sent me an invitation to attend a colloquium organised to mark the 60th birthday of his deputy, Bisi Oni, a close friend of over 20 years, I was drawn to the subject of discourse: Transcending from Financialism to a productive and innovation for impactful development”. I was even more curious when I saw that the keynote speaker is a banker Mr. Abubakar Suleiman, the MD/CEO of Sterling Bank. I wanted to see how he would address the obvious disconnect between the banking sector which is portrayed to be progressing in an economy that is almost failing, where banks are declaring fat profits every year while the manufacturing companies are closing shops in their thousands. Walk through Oba Akran road in Ikeja, for instance, you would see that the spaces that used to be occupied by manufacturing companies have now been taken over by religious houses, eateries and banks. In the country, the population rate is growing faster than the rate of GDP growth.
Except for a few, most of the banks have virtually abandoned their core banking role which according to a World Bank report involves “accepting funds from those with surplus (depositors) and lending them to those with ability to use additional funds for productive purposes (borrowers). Borrowers must be able to use the funds to create products or services that generate adequate income to repay the principal plus a usage fee (interest, markup) at a rate high enough to provide the bank with interest differential income”. The first transgression by the majority of the banks is that most of their loans are not in production, not in locally dependent businesses but in speculative lending activities that fuel high levels of bad loans recorded by most of them since most of those transactions are usually at high interest rates which make loans to go bad.
I knew the keynote speaker was going to be on the hot spot and I, like many of the guests, was eager to hear how he would extricate the banks. In his opening remarks, Akinjaiyeju hit the nail directly on the head telling the audience that the theme of the discourse encapsulates a critical aspect of the country’s economic landscape and that “as we journey into the future, it becomes increasingly clear that the role of financial institutions, particularly banks, is pivotal in fostering a conducive environment for productivity and innovation across industries”. He called out the banks, asking them “to transcend from the perceived predatory disposition to a more symbiotic and supportive partner in national development and stop being a General Overseer that is getting fatter while the congregation is getting leaner.”
The keynote speaker had not finished making his presentation when members of the panels discussing his presentation started to fire salvos at him in quick succession, taking a cue from Akinjayeju’s subtle attack.TUNDE Adaramaja, an accountant, put the guest speaker on the duck flaunting evidence of his customers that the banks had wrecked through their predatory under-hand banking practices.
Tim Akano, CEO of New Horizon System Solution, submitted that without redefining the purpose of banks, Nigeria cannot develop. According to him, trillions of naira are declared as profit yearly in a country where hundreds of companies are either folding up or in distress. “For whom do the banks exit?” Akano asked.
Mrs Oluwaseun Adesoye, Group CEO, Myrtle Asset Management & Trust Limited not too frontal in her intervention also urged the bank to listen to the voice of reason.
ON THE SPOT
I looked and listened intently to see how Abubarker would wriggle out of the hostile environment with no one saying anything positive about the banking industry.
Interestingly, I would assume that the guest speaker had accurately predicted what scenarios would play out and he was prepared and by the time he was through, he won the heart of everyone, including mine. His first tranquilising intervention was to apologise on behalf of the banks for the perceived wrong they had done to their customers and, by implication, the economy. But he was going somewhere and everything he said in his presentation tallied with my initial framing of the country’s problems.In his contribution, Mr Abubakar explained that the banks are mere intermediaries for capital, to complement other sources of capital like savings, friends/family support, and venture capital and that they are not expected to play the role of a Father Christmas.
He maintained that for growth, the nation must focus on education, electricity and the issue of population explosion. “Let us get our priority right, the banks alone cannot lift people out of poverty. The government must fix the problem confronting the efficient use of capital. The bottleneck at the Port in Apapa, for instance, must be fixed. Presently, it is cheaper to bring goods from China than to move them from Apapa port to Ibadan”, he said. Abubarkar was not through yet as he finally dropped what looked like a bombshell. He said of every 100 naira every bank mobilises from customers, only 25 naira is available for lending as both the Nigerian Deposit Insurance Corporation and the CBN confiscate about 75 naira! “Where do they expect us to get the money to lend out to the productive sector of the economy?
Expectedly the atmosphere of the colloquium changed when my very good friend, Olufemi Awoyemi, chairman of Proshare Group of companies strolled into the hall a little after the discourse had started. As Akinjayeju had warned the audience to prepare for disruptive engagement, while introducing him, Awoyemi’s short intervention was indeed a table-shaking one. His interventions summed up the contradictions in the country’s economic reality. He concluded that the patterns of disconnect were evident all over but just that Nigerians had not been paying attention. He asked if everyone in the hall had bothered to probe into the component of the banks’ earnings and what they meant by other income. Here is the poser according to Awoyemi, “if the banks are not performing their duty of lending from where then are they earning their income which according to him could not be other than forex and other speculative activities”. Another poser from Femi: “How can a country progress when most customers put their cash deposits in current accounts as opposed to savings accounts? Can any country develop without a culture of saving?”Abubakar stole my heart away and I believe those of most of the guests in the hall, especially those who had thrown antagonistic salvos at him initially. Awoyemi also spoke highly of Abubakar: “As far as I am concerned, Abubakar is the future of the banking industry in Nigeria”.
THE CRUX OF THE MATTER
Abubakar’s final submission tallied with my refrain: “What is happening in the banking industry is a perfect reflection of Nigeria’s economic realities. The Nigerian experiment as a whole is challenged suggesting that until this faulty foundation is fixed any policy, no matter how grandiose they may appear cannot stand even if you bring Barrack Obama to take over as the president of the country.
What then are these foundational issues and how can they be solved? I will make a few observations quickly to complement Abubakar and Awoyemi’s submissions that the foundation issues be resolved first before we can expect positive changes and then follow with two suggestions on what I think should be done.
The first foundational problem was summed up in the statement from Pastor Matthew Ashimolo, the General Overseer of the Kingsway International group of churches when I interviewed him in 2017: “To date, we have only raised tribal chiefs and not national leaders. Those who come up to leadership positions in Nigeria quickly surround themselves with people from their own side of the geographical location and sideline others no matter how good they are. That needs to change”.
Here is the bitter truth, since independence, Nigeria has not succeeded in producing a visionary national leader with a clear vision who could galvanise everyone into collective enthusiasm to buy into the Nigeria project. And worse, there is no national common vision for the country to which every citizen is persuaded to subscribe willingly. The Bible says without a vision, people (and nations) would perish.
Solution: Create a national common vision arrived at through intelligent national conversations and brainstorming sessions and then match this with changing the leadership recruitment system that would ensure that those who have no business in leadership positions are not foisted on us.
The second is the gross misunderstanding of the managers of the economy on the relationship between the fiscal and monetary policies and how to carefully deploy them to propel the economy into greatness. When you hear people talk of fiscal policy, they are invariably referring to the activities of the Ministry of Finance. When they talk of monetary policies, they are focusing on the Central Bank of Nigeria (CBN) and the series of unconnected and uncoordinated actions the CBN governor is compelled to take.
The truth. In reality, the fiscal policies consist of four intricately connected sets of activities: the trade and investment policies, foreign policies, Ministry of Finance through tax from Federal Inland Revenue and national economic plans. In the same way, monetary policies consist of four connected activities: the interest rate policy; the inflation rate policy, the exchange rate and if you like the unemployment rate policy.
Trade policy: A trade policy is set in place by a government and affects the number of goods and services a country exports and imports. Policy-makers usually would want to employ a trade policy to benefit the domestic market and its industries
Interest rate policy
The policy interest rate is an interest rate that a country’s monetary authority (i.e. the central bank) sets to influence the evolution of the main monetary variables in the economy (e.g. consumer prices, exchange rates or credit expansion, among others).
The interest rate policy determines the levels of the rest of the interest rates in the economy since it is the price at which private agents—mostly private banks—obtain money from the central bank.
Inflation Rate Policy
Inflation targeting is a monetary policy strategy in which a central bank forecasts and makes public a target inflation rate and then, attempts to steer actual inflation towards the target through the use of key monetary policy instruments, such as central bank policy rate, OMO bills, repo and reverse repo and other.
Exchange Rate Policy
The exchange rate policy refers to how a country manages its currency relative to foreign currencies and the foreign exchange market.
Foreign Policy
Foreign policy is how a country uses different strategies to guide its relationships with other countries and international organisations. This means that foreign policy is made up of different global issues, relationships with other countries, and even domestic politics.
National Development Plan
Nigeria’s National Development Plan (NDP), 2021 – 2015 is a medium-term blueprint designed to unlock the country’s potential in all sectors of the economy for a sustainable, holistic and inclusive national development, developed by the different facets of the Private Sector, Sub-national Government, Civil Society Organisations (CSO) and facilitated by the Federal Government of Nigeria. This was deliberately done for inclusiveness, participation and citizen engagement to ensure no one is left behind.
Solid development would only take place when you put in those positions individuals who can manage the intricate relationships within those set of eight policies. We could infer that the Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala has been the only one so far who understood those intricate relationships and she was able to manipulate them to achieve stable and visible economic growth during the President Olusegun Obasanjo’s administration.
Solution: Invite experts who can educate the current managers of the economy on what those sets of broad indicators mean and how to manipulate them intelligently to propel economic growth.
I sincerely think that Abubakar’s fellow bank CEOs should post to him a note of appreciation for not only apologising on their behalf but also for leaving thought-provoking interventions in the event hall. I particularly give him kudos on the experience he shared on how his bank intermediated with four sectors of the economy to induce profitable productive activities there. Kudos.
On a final note, I think the banking industry should also thank Bisi Oni and Fund Quest for providing a platform for a robust discourse on a vital aspect of the economy. Oni himself is not a frivolous individual. He is a solid analyst of impeccable character who has used his expertise in financial management and good nature to bail many out of their economic predicaments. As testimonies from some people in the hall poured forth, the conclusion from the event is that Bisi is a silent benevolent spirit who leaves a positive mark on the life of anyone who encounters him.
Happy birthday Bisi and thank you for choosing to use the occasion of your 60th birthday to organise impactful national discourse. Your own intervention was also not lost on the audience. Oni advised the government to focus on a sector that has linkages, especially electricity. “Solve this problem because it has multiplier effects on the economy. Electricity is central, without it, you cannot build infrastructure, effective transport and corporations. So, government must solve the electricity problem and you will see so many things that will revolve around it,” Oni said.
Congratulations.
QUOTE
“If the banks are not performing their duty of lending from where then are they earning their income which according to him could not be other than forex and other speculative activities”.
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