As some banks in the country embark on shedding of their staff weight (of which many more are expected in the coming weeks), the exercise runs counter to the age-long belief that banking jobs are among the safest jobs in the country. The banking industry globally is believed to be the barometer through which a country’s economy is adjudged to be healthy or in distress. As early as the second quarter of this year, some banks had shown signs that some far reaching measures would be taken due to the unhealthy economic environment.
While some have adduced reasons for their poor performances, others shortly before embarking on disengagement of staff had hinted their shareholders of the inevitability of certain actions they might take, in view of the current economic challenges. These challenges include non-performing loans, economic headwinds and a cocktail of hostile fiscal and monetary policies that led them to the non-profitability route. Some have even attributed their plight to the TSA policy. Does this mean that without the federal government money, the banks cannot do business?
The current economic challenge is not peculiar to Nigeria; it is a global phenomenon. However, before the fall in the oil revenue of the country, many of the Nigerian banks can be held responsible for their current fate. While the apex bank had on several occasions admonished them to lend to the productive sectors of the economy in order to stimulate growth, some of them were busy funding non-productive ventures which today has accounted for many of the bad loans.
Few of the banks doing well today saw the need to fund the real sector. Some were involved in agriculture, not knowing that the economy would be this hit for Nigerians to come alive to the much touted economic diversification. We need a change in taste and increased patronage of home-made goods.
Many of the MDBs top executives are living large and have mismanaged their resources. Some depended on government funds to trade, abandoning their mandates. While they are expected to be innovative agents of development and partners of the CBN in ways to grow the economy, some of them undermined the institution. Many recruited unfit staff based on political or ethnic considerations that are against their mandates. Some gave out loans indiscriminately and subsequently put their banks in trouble.
Employees are key assets to the industry and some have contributed in no mean measures to the success of individual banks, and thus required to be adequately rewarded for their good performances and at the same time open up new opportunities for the talented, committed people to join the industry as permanent staff not as contract staff. One cannot castigate some of the banks for doing away with ‘dead wood’ employees in their repositioning efforts, which is in line with the industry standards; it is the arbitrary way many of them went about it just because of the banks’ inability to fulfill their industry mandate that is a matter for concern.
The threat by the Minister of Labour, Dr. Chris Ngige, to withdraw the operating license of banks engaged in sacking of its employees was a misplaced directive. The government has no right to have issued such a directive that is capable of pitching labour against management of the banks. It is not only in the banking industry that mass sack has been taking place in recent time. It must be noted that when other businesses in the economy were shutting down and many of them relocated to Ghana, did the government stop them?
Is the government saying that people should continue to retain expenses that are injurious to their operations? The banks are not an extension of government’s MDAs. Rather, what the government should have done was to appeal to the banks to be patient for the emerging implementation of its policies aimed at repositioning the economy and enjoin them to join efforts with the CBN in its developmental agenda. And more importantly, let the government align its policies with the monetary authority for a coordinated repositioning blueprint of the economy.
The CBN at this juncture must be emulated and commended for deploying its resources to some developmental projects some of which are already yielding fruits. In particular is its recently launched Anchor Borrowers Programme (ABP) for rice farmers in Kebbi State. Deposit money banks in the country can equally finance similar projects without necessarily waiting for government funds. The banks should therefore desist from flooding the already saturated unemployment market; neither does it have to come to the point where the apex bank has to make an appeal to the banks to halt this trend.
This is the right time for the deposit money banks to be creative in fashioning people-oriented products, fund productive businesses necessary for the desired economic prosperity. It is thus glaring that financing oil and gas projects is no longer profitable with the unpredictable falling prices of oil. Billions of banks funds are presently trapped in this sector with no hope of recovery soon. Deposit money banks should as a matter of urgency begin to finance projects with value, not minding the level of profitability.
The banks should broaden their minds, employ professionals as projects officers to assist them in exploring other profitable and enduring projects in agriculture, mining, SMEs for wealth and job creation and for the growth of the banking sector. The banks should be development partners with other agencies of government in rebuilding the Nigeria economy, and not as destroyers.