Central-Bank-of-Nigeria

Banking is much more sophisticated than simply funding importation of petrol and conspicuous consumption. Are the banks thinking? Do they have knowledge desks in the establishments? Can they see the future? Are they feeling the buzz? Still thinking at the level of hardware when software is powering massive disruption? What is their plan for the start-ups presently mushrooming? What is their plan for tomorrow? Banking in an ocean of poverty is delusional, they need to know. We are not able to help our banks simply they have refused to help us. We cannot help them, even if we want to.

It is difficult to know what to make of, or do with Nigerian banks. They are so used to feeding fat for doing nothing extra-ordinary, that it will take a miracle for them to successfully navigate the stormy waters they have found themselves in, with the avenue for making so much for doing very little not as available as it used to be. The loopholes, especially those of the very recent past, are closing in on them, with each day. Weaning them off easy cash from public sector funds blocked by the introduction of the Treasury Single Account (TSA) – the loot from public and civil servants they had designed an elaborate scheme to hide and the illicit inflow from rogues in the private sector they launder, not to mention the list of obnoxious and arbitrary charges slammed on hapless customers, to be able to declare those paper profits – will require some miracle.

There are no indications that one is in the offing, with the government not relenting and customers increasingly becoming more aware of their rights and willing to stand up for the fight against extortion. Yet, many of the banks are resisting change. They are not thinking outside the box. Some are still building their castles on the shoulders of the young ladies, who they recruit and sack at will, expecting them to turn stones to cash. Many of the banks insist on doing things the same way, yet expect different results. Miracles no longer come that way, or so I think.

I spent over one hour of Monday morning in a meeting with one of our bankers, who were gracious enough to visit us. We travelled back and forth for one hour, exploring all the options for support of our business, before we came to a sober realisation of the futility of the meeting itself. The point is – nothing is really available on the table for the small business, especially one without landed property in Lagos or Abuja to pledge or one willing to tie its request to the acquisition of machinery. Knowledge-based businesses have a hard task raising funds to expand operations, irrespective of prospects.

A bank cannot arbitrarily slam charges on the customer, just because it can… It only takes knowing the rules and making it clear to them you are determined to explore all options for protection against extortion.

Not even the funding available through the CBN window for SMEs Fund can be accessed without an Abuja or Lagos collateral. Yet we want small businesses which employ most Nigerians to grow – how? We understand the need for some comfort for lenders and for funds not to be frittered away, but the banks, with the insistence of the CBN on that policy, are ever ready to take a risk with one billion Naira for one individual or venture but are unwilling to spread that risk on 100 small businesses with 10 million Naira disbursed to each.

If you are a small business, which over 90 percent of businesses in Nigeria are, you are used to receiving no form of support from the banks, in any way or form, over the years. The best we came up with, at the meeting with the bank, was an offer for a facility tied to per annum fixed deposit with the bank whose value must be at least 120 percent of what is requested for. In other words, you are pledging a fixed deposit (from any customer) which the bank is paying 5 percent interest on, for you to obtain a loan, for which you have to pay an interest of, at least, 23 percent. Our banks believe in magician, I tell you! A margin of 18 percent on your own money is fair enough, won’t you say? That is why it is almost a waste of time talking to the banks, except for some comic relief.

Now, there is this other bank. In anticipation of the removal of COT, the bank in December last year introduced a monthly charge of N250 on every current account. I received that debit notification at the end of the month. I protested, but they ignored me. They already had in place a N1000 monthly charge on the business account, as well, which they had been faithfully debiting us. One would think that with the advent of the zero-COT regime, they will stop, but they chose to continue with it. A flurry of debit alerts came our way at the end of January, and that prompted a response commensurate with the audacity of the robbery. The guidelines are clear. These debits are unknown to the circulars by the CBN. Only debit transactions from current accounts (excluding salary) attract charges. A bank cannot arbitrarily slam charges on the customer, just because it can. The bank in question was smart enough to find a means of putting out the fire, at least for us. Debits have been reversed. Apology offered. It only takes knowing the rules and making it clear to them you are determined to explore all options for protection against extortion.

The banks have refused to grow the real sector, so they have very little to fall back upon. Of course, the task is only partially theirs, but they have the muscle and influence to push in that direction, if they really want to. If only they will understand that it is in their interest, on the long term.

The banks are desperate, we know. They are desperate to latch on to anything to justify the arbitrary charges being slammed on customers. They are reading into the circular what is not there. They are getting creative in interpreting the rules, but that can only continue if customers allow the. The guidelines on charges are usually placed before the Bankers Committee and agreed upon before the CBN releases them. So, no bank can claim to have been caught off guard, with the removal of COT. It was a gradual process they all knew was to lead to a zero-COT regime by 2016. Most of them are simply lazy or too complacent to plan ahead for a day such as we are in, right now. Did their risk analysis not capture the implication of a Buhari Presidency, given his anti-corruption record? Did they not see the oil crash? Did they bother to plan with this in mind?

The banks have refused to grow the real sector, so they have very little to fall back upon. Of course, the task is only partially theirs, but they have the muscle and influence to push in that direction, if they really want to. If only they will understand that it is in their interest, on the long term.

The banks are either refusing to think of how they can help small business or simply unable to do so. Yet, between them and the CBN, they need to realise that without a plan that truly addresses the peculiar challenges and needs of small businesses, they are only deceiving themselves into thinking banking can truly become inclusive.

The Banks are struggling today because those who could have been an alternative plank of support are suffering. All that comes to them is how to play a smart one on customers with crazy charges. We are only a small business, yet only on this week, we had to cough out N2,650 for a letter of reference from the bank, to confirm we have an account with the bank. We are a small business. This week, the bank has charged us over sixty thousand Naira in fees to transfer forex sourced from the parallel market to clients abroad. Imagine having to pay simply for a bank to write a one-page letter to confirm that you run an account with the bank. We paid the bank, simply because we have no choice, in the matter.

The banks are either refusing to think of how they can help small business or simply unable to do so. Yet, between them and the CBN, they need to realise that without a plan that truly addresses the peculiar challenges and needs of small businesses, they are only deceiving themselves into thinking banking can truly become inclusive. The deposit and withdraw function is only a rudimentary thing, effectively being done by the Thrift Collector around the corner, that cannot be the main reason why banks exist. You cannot set up all these imposing structures and function as a poor imitation of ‘Alajo Somolu’. Banking is much more sophisticated than simply funding importation of petrol and conspicuous consumption. Are the banks thinking? Do they have knowledge desks in the establishments? Can they see the future? Are they feeling the buzz? Still thinking at the level of hardware when software is powering massive disruption? What is their plan for the start-ups presently mushrooming? What is their plan for tomorrow? Banking in an ocean of poverty is delusional, they need to know. We are not able to help our banks simply they have refused to help us. We cannot help them, even if we want to.

Simbo Olorunfemi works for Hoofbeatdotcom, a Nigerian Communications Consultancy. Follow on Twitter: @simboolorunfemi