…why not deploy consequence management principles in our regulatory space? It would (and which is a welcome thing) force regulators down from their current Olympian heights, where most seem oblivious of the needs of the industries they supervise, and more alert to the sensitivities of any government in power. While describing clear goals for their activities.


All of last week, the conversations I took part in were fixated on how the banking sector had adjusted to the central bank’s recent tariffs reduction without as much as a whine. All were agreed that this would be a torrid year for the industry, squeezed as it would be by both new entrants and its regulator’s depression of prices. There was the part of the talks, which interrogated the rationale for any central bank’s fixing of the industry’s tariffs. Why not, instead, concentrate on measures that will boost competition, and allow each institution to determine its prices on the basis of its relative costs? If nothing at all, two current trends support this line of argument. First, the embrace by central banks across the world of macro-prudential regulation renders the Central Bank of Nigeria’s continued focus on the artisanal bit of the industry increasingly difficult to explain conceptually. Second, given the different cost structures of non-bank institutions expected to play bigger roles in the industry, a regulatory cap on prices is likely to tilt the ballpark capriciously.

With the deployment of artificial intelligence and machine learning threatening to adjust the price of banking services per customer, and to move prices up or down in real time as new information is received, does a cap on banking services not vitiate the goal of using a competitive operating environment to drive the cost-to-serve down? Choice, or rather, a regulatory structure that aims to guarantee a variety of options to the banking public ought to be the regulatory goal in these circumstances. And lower switching costs for the banking public, the main route to this goal. There are conditions, though, in which customers may plumb for the service provider with the highest prices. But few regulators should fret over this. If the value from experiencing a service increasingly counts for more than that from its consumption, then even the way by which prices for goods and services are arrived at, and how customers respond to the signals they bear, will change.

For some, the bigger education need is for industry operators, especially those masquerading as “captains of industry”. How to persuade them that an industry is best served by competent operators able to take on their regulators in the design of the architecture of their operating environments?


Is there, then, a case for continuing customer education schemes. You just need to understand how financially illiterate the mass market is to get why most persons I talked with dismiss this as a no-brainer. And how about strengthening customer complaints processes? Most agree this is a critical part of the positive feedback loop that undergirds an effective consumer education scheme. It is usually agreed that the deposit insurance arrangement, at least, protects depositors at the retail end from losing their shirts — that is, when all else fails — while allowing the responses of savvier consumers to price signals to change market outcomes. Most at the discussion table agreed with this reading.

For some, the bigger education need is for industry operators, especially those masquerading as “captains of industry”. How to persuade them that an industry is best served by competent operators able to take on their regulators in the design of the architecture of their operating environments? Consensus was that industry fails in the country on this score across all sectors. Government shuts the borders, and the fast-moving consumer goods sector wakes up to the realisation that parallel exports by its key distributors is a major component of domestic demand for their products. Afraid to rub government up the wrong way, the sector pinches its nostrils and swallows hard before cheerfully joining the bandwagon of praise-singers extolling the sundry virtues of the border closure.

Arguably the most interesting of the solutions put forward to deal with this let, was the one that proposed designing a ranking of regulators. Essentially, it is proposed that along all measures of efficiency in industry…our regulatory universe should be assessed annually.


What to do? It is easy to describe a process that ends up aligning consumers’, industry operatives’, and their regulators’ interests. But irrespective of how this ends up looking, it will be too blasé a response to the problem at hand. But even more than that, as a medium- to long-term fix, it fails to acknowledge the huge costs that governance failures have imposed on us as a developing economy. Arguably the most interesting of the solutions put forward to deal with this let, was the one that proposed designing a ranking of regulators. Essentially, it is proposed that along all measures of efficiency in industry — including the amount of support from the public coffers (the lesser the better), degree of competition (the more the merrier), the absence of regulatory support for prices (the lesser the more acceptable), etc. — our regulatory universe should be assessed annually. And the heads of the regulatory bodies bringing up the rear in this annual ranking will be replaced.

In other words, why not deploy consequence management principles in our regulatory space? It would (and which is a welcome thing) force regulators down from their current Olympian heights, where most seem oblivious of the needs of the industries they supervise, and more alert to the sensitivities of any government in power. While describing clear goals for their activities. One big problem did, however, stick out as the conversation headed down this path. Regrettably, it wasn’t a new one. The Roman poet, Juvenal, posed it more pithily aeons ago. My discussants couldn’t agree on “Who will guard the guards themselves?”

Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.