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Needed Urgently: A Rejigged Financial Markets Infrastructure In Nigeria (1)
Published Mar 07, 2023 IN Opinion,
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MYRIADS of lessons have been learnt from the cash swap and currency redesign experiment in Nigeria in the past few months. As much as a currency redesign should be a routine function of a central bank in any country, it still emerged that such a simple process could become very problematic when combined with other goals – such as curbing money laundering or reduc­ing currency in circulation – not to talk of political imputations. Next time, ad­equate planning would be required, and complexity must be added to planners’ imaginations, not just simple reliance on what may be faulty, academic statistics that have little bearing with reality. In the end, the chief lesson remains that a policy that has adverse effects on the well-being of the people must be quickly amended, squelched, adjusted or gener­ally abandoned. Quick action and reaction are required whenever we are dealing with the populace.

But today, I intend to look at one ger­mane aspect of the experiment. And that is the adequacy or fitness of Nigeria’s financial architecture. Of late, Nigeria has generally moved with the rest of the world in terms of the digitisation of everything. That is great. However, this ‘demonetization’ exercise showed that we may have again put the cart before the horse as we are wont to. Very embarrass­ingly, Nigeria found out that we had more bank branches in the rural areas in 1984 than we had in 2023 – 39 years later. In my part of the country, many rural areas had Cooperative Bank, National Bank, Wema Bank, Savannah Bank, Allied Bank, Societe Generale Bank, Owena Bank, First Bank, Union Bank, UBA, and many more, back in the day, sprinkled all over the old Ondo state – now Ondo and Ekiti. There were many other indigenous banks spread all over the country, in which bank managers did not peer down on their customers like they were vermin. Life was simple and analogue. There were no computers. Accounts were kept in huge ledgers. And the economies of our rural areas saw some growth, no matter how little. Now, those economies are shrink­ing to extinction.

It was General Babangida that bought the western idea of far-right capitalism. Then we started concentrating on what­ever brought the raw profits. In time, we have seen a total abandonment of our rural areas. Our banks have evolved into digital, lean and mean machines that ex­tract money from millions of Nigerians on a minutely basis, through different online charges. Customers of banks have become mere digits, cyphers in the ethers of their psychedelic machines and servers, and of course, the cloud. Nobody owns anything anymore, not even relationships. Billions of dollars keep turning in as profits from these lean and mean banks, most of which end up abroad, as Nigeria itself – with its dying rural areas and crowded few urban spots, have no absorptive capacity for even the huge profits that the banks, oil companies, telcos, and their staff are making. The Nigerian economy became totally externalized. We seem to exist for the sole purpose of pumping money outside to ‘countries that work’, even as our youngest, most privileged, and smartest, are heading out to ‘the abroad’, in torrents.

The ongoing demonetization project (very ill-advised and is different from ordinary currency redesign), exposed that our banking infrastructure is inadequate. Branches are totally non-existent in about 450 out of 774 local governments in Nigeria (60%). Many were closed down because of the same skewed development which led to armed robberies in rural banks. Others were closed down in our many series of bank consolidations and mergers be­cause they made no profits and the new owners were not obliged to leave them open. For this category of closures, what mattered more was that the head office needed to post huge profits and impress shareholders and executive manage­ment. Of course, another victim of this misguided reform are the small bank workers at the base of the food chain. Too many of them have been summar­ily wasted, used and dumped like trash. The financial sector became as usual, a playground of hyenas; chancers, users, scavengers, opportunists, cheats, and bullies.

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