Prof. Segun Ajibola, a Deacon, is the 19th President and Chairman of Council of the Chartered Institute of Bankers of Nigeria (CIBN). The newly inaugurated bankers’ chief for the 53-year old institution, was a consummate banker, who rose through the ranks to the executive management cadre, precisely an executive director, before retiring for a stint at the Federal Inland Revenue Service as a civil servant. From then till now, he has been in full academic work, rising to become a professor of Economics. In this interview with CHIJIOKE NELSON, he unveils his agenda for improving banking practice in the country and am assessment of the ongoing foreign exchange crisis and policy implementation challenges, as well as the implications for the economy.
What is your value proposition as you take up CIBN’s leadership?
CIBN has grown with time from a very small membership of 200 individual members to over 100,000 now. We have all banks in Nigeria- regulators, commercial banks, microfinance banks, mortgage and other financial institutions. It is a body that has made impact in policy dimension, development of members, instilling ethics in members and certification of professional bankers at various levels. So, it is an institution that has become entrenched in the system, but also one that needs to move to the next level.
Under my leadership, we will lift the institution from where I met it. My agenda, codenamed “The Cs” will address every facet of our professional life. The first C is capacity building. We need to build more capacity in the industry to address some skills gap, as well as upgrade our members’ knowledge to ensure continuous professional development. We also need to build capacity in specialized areas in banking and certifying deserving ones fit and proper to practice banking. We already have agreement with some universities through what we call linkage agreement to develop students studying banking and finance and those in the Polytechnics. We also have agreement with local and international institutions to develop manpower in specific areas with the like of the Nigeria Deposit Insurance Corporation. These institutions we are talking about cover trainings on specific areas of need like risk management certification. While we also train and qualify individuals as chartered bankers, which is the second C
The third C is communication. We know that we need to communicate the ideals of the institute to the larger society, even among our members and stakeholders. So, we will upscale our communications as a strategy, with a view to bridging gaps among banks’ clients and users, to know what banking and its practices are. This will also help to reduce the dearth of knowledge outside there. The fourth is Codification. There are some aspects of banking that must be codified- our code of conduct is an example. As a member of the organisation, our law compels banks’ workers to register with us. One of the reasons for that is for us to be able to have oversight and be able to call practitioners to order and enforce ethical standards on our members, as well as ensure sanity in the way and manner banking is practiced in this part of the world. Already, we have a code of conduct signed into by members. We also have to extend this to other banking practitioners, not just commercial banks. We have our Act, which also strengthens our legal capacity and where the need arises, we will also bring to bear some amendments to carry-out our core mandates.
We also talk about constructive engagements for stakeholders. We talk about innovative ideas that can be added in Nigeria’s banking. In this regard, yearly, we have the Judges’ seminar where we bring all the levels of judicial officers with top banking officers to discuss the industry. This is to educate them on the technicalities of banking practice, so that when they face issues on banking matters, they will be knowledgeable and sufficiently empowered to handle such matters. We have a very virile structure through the Bankers Committee sub-committee on Ethics and Professionalism to ensure that banking is practiced with ethical standards in mind. When there are issues among banks and customers, they are reported to the sub-committee for amicable resolution.
Creativity as a goal is another C agenda of my leadership. There could be a goal, but there could be many ways of reaching it. What is the best in terms of creativity and efficiency in reaching it? Also, consolidation talks about getting the best of the institute and membership as a 53-year old body. Having done a lot already, we still need to do more. We need to consolidate on some of the things we have done in the past like getting our members closer to the body to fulfill their obligations, add value to their lives, whether corporate or individual. How do we improve on our physical infrastructures like our library facilities- e-learning platform, bookshops and making our subsidiaries like the printing press, more virile? How do we get more from our newly established thought leadership centre in terms of research and intellectual issues on banking and economy? These are some of the things my tenure will pursue. Already, the institute will host the 22nd edition of the world conference of banking institutes next year and this will project Nigeria further in terms of investment opportunities inherent here. By bringing those who have stake in the movement of funds and harnessing of investments across the globe to Nigeria, we believe it is another opportunity for us an institute to sell the country.
How do you score the corporate governance level in banking industry now?
It has improved tremendously. The banking system that we have today is no longer ‘anything goes’. Every aspect of banking now is in scrutiny unlike many years back. Bankers themselves have signed into corporate governance code, board members know that they have limited time to spend and there are corporate governance rules for workers. Bank customers know that they have responsibilities. The banks as corporate institutions know that they have rules and regulations they must observe. In almost all the banks, individual workers have signed our code of conduct, so it is like saying “I pledge to carry-out my functions in the way and manner specified under the corporate governance rule, failing which I surrender myself to whatever sanction following my infraction.”
But not everyone in banks is a member of CIBN. What happened to the enforcement?
It has also improved tremendously today. You can recall those days when we used to have over 100 banks, the capacity of the institute to enforce was limited. The position of the institute has been strengthened by CIBN Act No. 5 of 2007. Now we are inching close to total compliance.
How do you see the recent development in Skye Bank where CBN had to intervene again?
The CBN has a role to play as a regulator, especially to protect depositors and all the stakeholders- investors, workers and the economy as a whole. So, if there is a parameter set, the moment there is no strict compliance and adherence to the indicators or there are some distress signals, the regulatory body has a duty to intervene before things get out of hand.
What about the situation where bank directors are part of the Non-Performing Loans saga?
Every industry has its own challenges. As long as those who are managing the banks are human beings and Nigerians like you and me, you cannot rule out the possibilities of insider abuse. But what is important is for the set of corporate governance rules to be there to deal with such issues whenever they arise. The issue of insider loans have always been part of the industry for decades and I am not sure it has completely disappeared because some problems don’t go overnight, but maybe, the quantum has gone down very seriously and today, because of there are rules on ground, you don’t do it get away with it. So, as long as there are rules and anyone going into it knows the implications, that is the best that the monetary authority can do. Law is always there and there is no law that will say do not steal, even the Nigerian law will not admonish you not to steal, but will only tell you that if you steal, this is the penalty. This is same in every aspect of our national life. History has always shown that there will always be attempts by few individuals to circumvent the law. So, as long as the rule is there, the sanction should be applied.
What likely challenges do you see besetting the industry?
The challenges of banking industry now arise from that facing the economy as a whole. The first is that we have been a monolithic economy for too long, depending on the foreign exchange that comes mainly from oil, with over 65 per cent of it for our total national income. With the global oil crisis, there are challenges, which the country was not insulated from. Yes, there is no sector of the economy that is not affected now, it is not only the banking sector. You must remember that banking is service and when those you are serving are in crisis, you are automatically in crisis too. You can see that the oil and gas sector of the economy that used to bubble with activities is seriously in crisis, dovetailing other sectors of the economy- manufacturing, general commerce and even government. So as a service organization, the moment those whom you service have a serious challenge, occasioned by global occurrences, then the sector and its linkages face the same. For the banking sector, the challenges include liquidity, as the inflow falls below the usual. There are challenges of loans and advances and repayment, because those affected are not able to honour their obligations. There is also the challenge of staffing, because the revenue streams are shrinking, with low level of businesses. Indeed, the Nigerian banking sector is getting a big bite from the challenges across the border and those happening within.
There are observations that banks neglected their traditional roles to the implementation of the Treasury Single Account. What is your take?
When you isolate banking, you may also ask why are we so vulnerable to fuel importation today?. Then you say it is because our refineries are not working. Isn’t that neglect from certain quarters. Why are we having security challenges? Isn’t that another neglect? There are pockets of problems associated with every segment of our national life. So, banks have their own challenges. For example, you may ask why there is over-reliance on government deposits. But then, a counter question is: what is government’s business in business? It is natural that money flows where there is business. Why won’t government let go the critical segments of its businesses? Why is government holding on to ownership of the Nigerian National Petroleum Corporation? What is government’s involvement in the Nigerian Ports Authority? In economies where things work like in Europe and America, even some parts in Asia and emerging economies, governments’ responsibility has been to provide enabling environs and ensure law and order. The moment government involves itself in business, bankers know that money will flow to and from that business and they will chase it. That is what they are in business to do, yes to chase money wherever it is. But if these businesses are left in the hands of investors and the private sector, there will be less interaction between government and banks, other than setting of rules. It is a complex web of issues, which needs holistic approach to resolve.
What do you make of the recent foreign exchange regime?
Again, the main challenge here is not peculiar to Nigeria. Market forces regulate prices. If you are a supplier of yam and I am a buyer, it is in the market that we will meet, because there is where the invisible hand will play out, that is, where we will determine the exchange terms. We do not need pronouncements from any quarter for us to get to acceptable terms. But the moment you try to hold the invisible hand down by any manipulation, there would be problem. This is the story of foreign exchange all over the world.
Why exactly is the forex challenge hitting the economy this hard?
It is hitting us hard because of our heavy reliance on all other parts of the world for majority of our necessities. Almost all the basic necessities of our lives are from other countries. We don’t have rice from Thailand today, everybody will start shouting. The fuel that we produce its raw material- crude oil, is imported. Our clothes, food we eat and the furniture in our offices are imported and these are all about foreign exchange. So, we are exposed to the vagaries of the foreign exchange market that without it. Unfortunately, the major foreign exchange earner is in crisis, so we now have reduced inflow and that is what is tasking the authorities as to how best to ration the ones available. Now in effort to ration, the invisible hands were obstructed and that affected the market system. This led to subsidy. But economic history has long thought us that where there is subsidy, there would be racketeering and arbitrage running between official and unofficial markets. There would be rent-seekers, like in banking parlance, they are called “round-trippers”. These are the consequences of market interference, which hinders the operations of the forces of demand and supply. Now the authorities are trying to leave the intervention by the new policy.
People are accusing CBN of not doing enough to ensure forex liquidity. Is there a way CBN can increase the supply?
CBN cannot print dollar, it can only see to the modalities that would help in allocating what is available to us as a country. We, as a country, can only, through what we do and what we don’t do, either generate more foreign exchange or conserve the ones we have. Sincerely, as a people, we are yet to reach that level of discipline where we can all ask: why Thailand rice and not Abakaliki rice? Why made in Japan shoes and not made in Aba shoes? Where I come from, there is Igbima rice, which tastes better than Thailand rice, but because nobody has encouraged the people to grow that rice in commercial quantity, we don’t have it in the market. So, that is why I say that every stakeholder has a responsibility. If we have the enabling environment where Abakaliki and Igbima rice can be grown three times what they are produced today, both of us need no campaign to know that the imported ones are of no use. There are other things we can grow and export as a people to generate foreign exchange with the country’s export strategies, but we are either not doing that or not doing it sufficiently. There are imported items we can discard. For example, we do not need imported biscuits. What are we doing with imported toothpicks in this country for God’s sake? These are the areas where we waste foreign exchange and when we conserve that, we help to make life easy for the authorities and ourselves.
Do you see government’s inactivity or insufficient one in terms of implementation of policies, like the diversification which is almost turning a mantra for successive regimes?
If we step back a bit, as a Professor of Economics, I have read all of Nigeria’s development plans, from the first national development plan of 1962-68 to that of 1970-74; 1975-80 and other documents like the Vision 2020; Millennium Development Goals; and the current Sustainable Development Goals. Go through all these, they are replete with ingenious recommendations, but the area of implementation has not been successful. So, there is no export development plan that anybody will bring on the table today that going through our development plans since the 60s till date, that you will not have a better one there. But the question remains: what is the level of implementation? It is left to us as a people to implement what we believe will help us as a country and economy. As a result, we are still where we are, talking about export promotion and import substitution nearly 60 years after independence. This is why we are still exposed to foreign exchange crisis and vulnerable to global shocks, yet relying so much on our reserves to survive as a people. If we can implement our plans, I am confident we will not be where we are today.
Generally, what in your opinion is the way forward?
Everybody has a role. I don’t know the number of Nigerians that can lay claim on sleeping well today. From the government quarters, the responsibility of providing the enabling environment through well-thought policy direction is sacrosanct. But it must ensure that the apparatus for faithful implementation is put in place. Each sector of the economy has a role- being transparent in the way and manner businesses are conducted and ensure that Nigeria as a country is in the picture in whatever they do. As individuals, we must tame our consumption habits and move a step back to embrace what is ours- “Made-In-Nigeria” commodities. For those saddled with the responsibilities of making policies, they must not take advantage of the loopholes, but help plug it. We all must key into the Nigerian project and know that only when the country is at peace- socially, economically and politically, that everyone of us will be at peace too.
