In order for Nigerian banks to be more alive to their responsibilities in building the production base of the economy, several financing schemes were introduced, over time, by the Central Bank of Nigeria to compel the deposit money banks to stay in line. Of interest is the Small and Medium Enterprises Equity Investment Scheme introduced in 2001 and the Small and Medium Enterprises Credit Guarantee Scheme unveiled in 2010. While the SMECGS was meant to fast-track the development of the manufacturing and SMEs sub-sector by providing 80 percent guarantee for bank credits and to provide N100 million maximum loan facility, five year’s tenor for projects (with the objective to create more jobs), the earlier SMEEIS compelled the money deposit banks to set aside ten per cent of their Profit after Tax annually in support of equity investment in small and medium enterprises. How successful the scheme was, and whether the banks really comply with the scheme’s rules and regulations is a case for serious study – and for another day. What is of much concern in this piece is the attitudes of the DMBs in the first place that had turned banking upside down, thereby making them turn their back on MSMEs’ local production activities and would rather trade directly with depositors’ funds or at best do short-term financing of imports.
If you are having a greenfield production project and you are thinking that a bank in Nigeria will listen to you, you have another thing coming your way.
In an ideal and saner economy where every sector knows and performs its role, the banking and finance sector are saddled with roles such as creation of credit, channeling funds to productive investments, capital formation, encouraging the right industries, optimum utilisation of resources, among others, through the savings and deposits they mobilise. But Nigerian MDBs have other ways to deploy depositors’ funds to make quick gains and report humongous billions of naira as profits after tax every twelve months in an economy whose real sector had collapsed, local production is near zero with unemployment rate so monumental and more than half of the population are adjudged multi-dimensionally poor.
In my piece, titled: “Redesigned Bank Notes, Cashless Policy and Urgent Tasks Before CBN Governor,” I highlighted some of the infractions that the money deposit banks in Nigeria are committing against depositors. In the piece I wrote that ordinary Nigerians are at the mercy of these money deposit banks with all manners of nail-biting punishment through unholy and unhealthy cleverness being perpetrated by the MDBs under the nose of the regulatory body, the CBN. Among the myriads of yokes placed on Nigerians through the CBN cashless policy include excessive multiple charges, failed transactions, increasing activities of hackers, system failures, electronic transfer charges, per-transaction ATM withdrawal charges, card maintenance charges, debit card charges, sms alerts, intra-scheme money transfer charges, charges on statutory enquiry request by customers, cash limit charges, etc. Today in Nigeria, money deposited in banks will reduce in amounts through frivolous and myriad charges the MDBs are loading uncontrollably to deplete depositors’ funds.
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Banking shouldn’t become the number one enemy of the people they pledged to serve. But the foreign exchange round tripping issue hanging on the necks of the money deposit banks is becoming a slap too many to bear by the people of Nigeria in this very poor and dolarised economic period. The activities of the banks and the bureau de change contributed in no small measure to the proliferation of dollar cash in Nigeria. To ask: do Nigerians need to flaunt dollar cash in Nigeria? How do we come about having dollar volume scattered all over the streets in a naira economy to compete with the country’s legal tender? Who does that in other economies? To ask again: why should Nigerians be looking for foreign currencies to use as a medium of exchange in a naira economy? For how long will this country remain a vassal of foreign economies and the people gleefully celebrate slavery by demanding payments in foreign currencies by loading payment cards?
Without mincing words, Nigerian money deposit banks are destroying the Nigerian economy through their FX trading activities and the uncouth flamboyance of the bank executives who are now competing with entertainers for popularity and celebrity position in a very poor, non-producing economy. Why should the MDBs find it so easy to divert forex allocation from CBN for profits? This daylight robbery that has been happening for several years shouldn’t go unpunished. It is time to bring these trading companies camouflaging as banking and finance institutions to book.
. Emmanuel is a business planning consultant and founder of Leacent Incorporated Trustees, a network of entrepreneurs and group of cooperatives. He works with a team of international consultants to conceptualise and plan agribusiness and housing projects. As a certified trainer authorised to use the International Labour Organisation’s enterprise development modules, he trains entrepreneurs and organises workshops and seminars for potential and practising entrepreneurs as well as business managers and cooperatives. He also speaks and facilitates at leadership and management workshops on invitation. His book, Business Planning Made Easy: Step by Step Guide On How To Turn Your Idea To Profitable Business’ is the latest of the books authored by him. Tel: +234(0)9068602954 (call and sms), +234(0)8023257707 (WhatsApp only).
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