emefiele

Apparently, with recent changes that removed some of the old avenues for profiteering, the banks declared war on their customers, and this led to the call for boycott. But I insist that we were looking in the wrong direction. The spread is where the problem is. That is not to say that inexplicable and rampant charges on customer accounts are justified.

I didn’t support the ‘Boycott your Bank’ campaign launched by CAFON (Consumer Advocacy Forum of Nigeria) during the week because it sounded odd to me. I’ve never heard it before for customers to boycott banks. Do customers not need the banks more than the banks needed them in our kind of setting? With all the new channels by which one can do banking these days, will the banks feel the boycott? Will the customers listen to CAFON and not go to the bank even if they have to? Those were my thoughts. The news report was that customers defied the boycott and went about their banking businesses as usual.

It is important when planning these things to think deeply and find how we can make serious impact. People can’t boycott banks FOR NOW, because of many challenges:

1. A person looking for loan for his business, rent, or children’s school fees will not boycott the banks for any reason;

2. Anyone trying to do a foreign transfer for goods, services, school fees or sundry important items will not boycott the banks;

3. Many transactions are now done online and cash withdrawals via ATMs, so you will not see people in the banks except when necessary anyway;

4. People are broke. Broke people are on permanent boycott of banks already. But anyone who gets sent small money from anywhere and needs to go to the bank will not join any boycott. Matter of fact, such people form the majority of those who throng banking halls these days (small withdrawals from savings accounts, and small deposits, etc). People who have real money in the banks, stopped visiting a long time ago anyway. Only a few cavemen like me, who are resisting this online banking craze, still bother sometimes.

So what was that boycott of banks all about? Was it wired to fail from the beginning? I hear the boycott was called just for the symbolism. But can we go beyond tokenisms and symbolisms? Do we really have a case against the banks?

So if we are to protest against the banks, let us forget boycotts. It wouldn’t work. We may try picketing some head offices if we are serious. I’m sure the banks will listen. Nigeria has become an all-man-for-himself kinda country. Only the violent seem to make progress. Terrible, but true.

We need to have a strong case against the banks, and in proceeding, we need to determine exactly how the big ‘ogas’ who own the banks will feel our anger and change. As expected, many bankers awaited the ‘boycott’ with glee. For the guys on the shop-floor in the banks are SUFFERING ALREADY. They get paid peanuts, work so hard, get heaped with insults, live in morbid fear, while the ‘ogas’ cash out dollars in seven figures. It is the ‘ogas’ who need the big charges and this huge spread. Some banks pay graduates N40,000 per month, and if you’re unlucky, you don’t get a promotion for eight years. People now turn 50 years and are still Bank Officers. In my time in the bank it was never like that; though things deteriorated over time.

Our Banks and Huge Interest Spreads

But I bring to you a good reason to protest against the banks. How the protest will be I cannot tell. But PROTEST WE MUST!

In some national newspapers on the March 2, 2016, our banks, in their OFFICIAL RETURNS to their regulator CBN, were bold enough to tell the world how they give their customers 0.5% interest on current accounts, 3% on savings, 5%-7% on Fixed Deposits, but they SLAM the same customers between 26% and 30% on loans! That is aside from other fees like Loan Setup fees, Legal, Admin, and many others, some of which get charged quarterly or half-yearly, raising the minimum effective interest rate for small businesses to at least 35% when you are lucky. Of course the banks have what the call ‘Prime Rates’, which is reserved for the big guys – big companies, many of whom have defaulted in the past and are still defaulting. ALL the loans inherited by AMCON were to those big guns. The banks’ prime rates start from around 12%. It’s a rich man’s world. They get government concessions, get cheap dollars, get cheap loans from sundry customer deposits, and when they declare their billions, they pocket the money; until it is revealed that they are cooking the books. When that is revealed, the bug men get bailed out… with taxpayers’ money! Good job!

So the highest a person with fixed deposit for 90 or 180 days can get in any of our banks – even in this season where money is hard to come by – is probably 5% per annum. This means that for N1,000,000 left in the bank for one year, a depositor will receive N50,000 on top, less VAT, leaving about N47,500. But if the same customer turns around and borrows N1,000,000 from another or the same bank, he will have to pay a minimum of 27% and up to 30%, or N270,000 to N350,000 per annum, asides initial and periodic fees. This is wonderfully criminal.

Nowhere else in the world would making a spread of 2500 – 3000 basis points (or 25% – 30%) on customers be acceptable. But in Nigeria, our sense of proportion is warped. It is the same reason why in increasing electricity tariffs, the government approved 45%! Not 3%, not 9%. In other places you would hear of 4.5%. Things don’t move in leaps and bounds.

And this does not happen anywhere else in the world. I have banking experience in at least four other countries on four continents. It is unimaginable that banks will be ‘wiping’ customers out like this. The joke is on us. Nowhere else in the world would making a spread of 2500 – 3000 basis points (or 25% – 30%) on customers be acceptable. But in Nigeria, our sense of proportion is warped. It is the same reason why in increasing electricity tariffs, the government approved 45%! Not 3%, not 9%. In other places you would hear of 4.5%. Things don’t move in leaps and bounds. But in Nigeria, with our voodooistic mentality, that is the case. Everyone here who manages to hold down a business that works, wants to ‘hammer’!

The CBN crashed MPR (Monetary Policy Rate) recently, now taking excess deposit from banks at 4%, down from 11% or so. The banks crashed their deposit rates in turn, but kept their loan rates at stratospheric levels. This is the reason this spread widened. The CBN is not controlling these banks and everyone seems to be doing whatever they like. Somebody has to keep funding those latest Prado Jeeps, Range Rover Sports/Vogues and other wonderful rides that flood Lagos! Truth is: it has always been this way, but our ogas in the banks should not expect that their racket will continue forever. As all of us are tightening belts, they too should be forced to taper their excesses. Buhari’s era is biting everybody. The big banking bosses cannot expect to largesse forever.

With the wrong rhetoric from government – I mean all the reneging on campaign promises (N5,000 to the unemployed), and the public anger government is toying with, what with the 30% real inflation on staple items that the ‘unofficial’ devaluation of the Naira has brought – it just seems our elites are baiting the poor masses. I wouldn’t want to be there the day the people’s anger boils over.

Since CBN under Sanusi forced the banks to crash COT (Commission on Turnover), some have devised other means of charging customers. Yes, our banks have to survive and I believe they need to charge customers here and there to justify their services. I don’t believe in strangulating the banks or forcing them to perform services for free. But they should be careful to make plain their charges, and to ensure those charges are not in excess such as will kill businesses or constitute a major portion of people’s salaries. Even the president needs to get involved in this issue, because for now, it seems as if Nigerians have been left to their own devices and thrown to the dogs of the banking industry. Buhari needs to know that we see him as a father, but all people have seen since his coming is pain and more pain, whether inflicted by the government, or by private sector players like the banks. Apparently, with recent changes that removed some of the old avenues for profiteering, the banks declared war on their customers, and this led to the call for boycott. But I insist that we were looking in the wrong direction. The spread is where the problem is. That is not to say that inexplicable and rampant charges on customer accounts are justified.

With the wrong rhetoric from government – I mean all the reneging on campaign promises (N5,000 to the unemployed), and the public anger government is toying with, what with the 30% real inflation on staple items that the ‘unofficial’ devaluation of the Naira has brought – it just seems our elites are baiting the poor masses. I wouldn’t want to be there the day the people’s anger boils over.

So if we are to protest against the banks, let us forget boycotts. It wouldn’t work. We may try picketing some head offices if we are serious. I’m sure the banks will listen. Nigeria has become an all-man-for-himself kinda country. Only the violent seem to make progress. Terrible, but true.

‘Tope Fasua, an economist and consultant, is CEO of Global Analytics Consulting.