Banking with tears in Nigeria

Jide Osuntokun


Some years ago, there was a negative advertisement about the difficulty of banking in Nigeria. This advert showed a man with his mat and pillow entering his bank and when asked why he brought a mat to the bank, he retorted that after taking a number he would be able to have a nap before it was his turn. This was before the liberalization of the banking sector by the Babangida’s administration in the 1980s. From what is going on in the banking sector now, we seem to be back to the past when banking was a burden to be avoided. This is what Covid-19 and the inability or unwillingness of banks to respond appropriately has caused Nigerians. The practice in the urban areas now is for people to wake up and go to the banks to queue up in the wee hours of the morning and to take call numbers so that when operations begin one may go in early to transact one’s business and go away to do normal chores. But since most people have other things to do to earn a living, they find people to go to the banks to join the queues so that when the real people come, they will yield their places to them for a fee. In fact, a business has developed around the inconveniences created by the banks on the excuse of following coronavirus protocol to prevent infections. It is now clear by the size of the crowd assembled each working hour of the banks, that Nigeria is seriously underbanked. Only God knows how much money is kept in the informal banking sector under the beds and in people’s farms, gardens and attics by market women and men and petty traders and the petite bourgeoisie generally because there is just too much hassle going to the banks.

There is also this unrealistic expectation by the young people running the banks that people should conduct their banking transactions electronically. Because of this, a popular bank like GTB has relatively fewer branches than its competitors. Instead of GTB opening newer branches, it even closes some of its branches for up to week which it runs alternately with other branches for no clear reasons. It cannot be due to shortage of staff in a country where graduates are roaming the streets in search of jobs. GTB merely publishes on weekly basis which banks it will open and which it will not and tells its ever growing customers to go to its ATMs which most time never work because of pressure on the mechanical devices.  Some banks limit to N10,000 the amount of money one can withdraw from the ATMs. The result of this is disenchantments with a popular bank that if people have the alternative, they will quickly close their accounts and move on. Unfortunately there are few alternative options because very few people will go to the old antediluvian banks that existed in colonial days that have found it extremely difficult to innovate in their old fashioned dilapidated banking halls equally manned by elderly folks in their Victorian frocks and trousers and oversized jackets.

I will be the first to commend any institutions or commercial houses that respond scientifically to the Covid-19 or coronavirus pandemic. But the response must be measured so that the medicine does not kill the patients. There is growing hostility to banks by those who are not able to access their monies in the banks or even to deposit the sales of the day because of the multitudes besieging the banks. It is not every bank that has this problem. For some reasons people prefer to keep their monies in the banks of their choice and I think any bank should be happy to welcome as many accounts as possible and respond to people’s banking behavior and not force even illiterates into electronic banking in which they could be easily defrauded. Certainly, banks can afford to spend from their annual humongous profits on expansion of branches to alleviate the suffering of their customers now and after we would have overcome the coronavirus pandemic.

The banks must through services provided justify the huge profits they make annually. The CBN itself seems to have ganged up with the banks and their shareholders in ripping off the public. Following CBN’s directives, commercial banks suddenly decided not to accept TERM DEPOSITS thus forcing depositors to move into savings accounts and interests on savings were suddenly reduced to one or so percent! I am not an economist, but I also know economics is common sense and everyday science of income and expenditure, production and distribution of goods, investments, loss and profits and so on. The reason why the countries of Southeast Asia have succeeded very well in recent times is because of their thrift, industry and savings built up through the Confucius ethics prevailing in China which then found expression for investment in Southeast Asia and the rest of the world including China itself. Now there seems a deliberate determination and decision by the CBN to discourage savings in Nigeria. How does one explain a policy of paying savers one odd percent while banks lend out as loans at double digits? Is the governor of the CBN who is a commercial banker trying to increase the huge profits of his colleagues who take depositors’ money at little interest and lend it out at huge interest rates?


Is the CBN looking at what operates in America and Europe where interest rate is very low and sometimes even below one percent? There was even a time when serious thought was being given to a policy in England where depositors might have been asked to pay the banks for their fiduciary role of keeping people’s money in trust. Nothing came out of such esoteric consideration of the role of banks. But it must also be asserted that lending rates abroad were always very low and as small as 3 or 4 percent. There were also alternative investment windows and portfolio such as stocks, bonds, commercial papers and so on in which depositors could put their money into. We don’t have such options in Nigeria. I agree that the previous rate of interest on deposits and loans in Nigeria and other developing countries is too high. If there is depreciation of interest paid to depositors, there should be corresponding decline in interest on loans.  This is not so in Nigeria. A situation in which the rate of inflation is 13 or so percent while rate on deposit is one percent does not make economic sense and it is a disincentive to savings. If people are encouraged to save, perhaps our government instead of rushing all over the world to borrow and mortgage the future of our children, would be able to borrow at home depositors’ money sitting idly in the vaults of commercial banks or at the CBN. Pensioners who live on their savings are seriously affected by the vagaries of unstable interest rate regimes. I know also that tertiary institutions are also seriously impacted.

A few years ago, I authored a book on Chief Samuel Festus Okotie-Eboh, Nigeria’s first minister of finance. I advised Dr ‘Dere Awosika, his daughter to endow a prize for  best graduating student with a PhD in economics/finance in the University of Lagos and she graciously agreed and gave the university millions of naira to award a generous prize in perpetuity on the basis that the interest earned would suffice for eternity. My late brother, Professor Oluwakayode Osuntokun left a bequest in his will for a visiting chair in Neurology/Ophthalmology at the University of Ibadan with the hope that the interest on the money will be adequate to support his wish in perpetuity. When I left the Redeemer’s University Ede, I left money for prizes in my name and that of my late wife Abiodun to be funded from interests of the money I left behind. I did the same thing in Ekiti State University where I was  for a while pro-chancellor  and chairman of council for prizes to be given across several faculties  and in the College of Medicine in my name and in the names of  my brothers, Chief Oduola Osuntokun and again  in the name Professor Oluwakayode Osuntokun from money contributed by me, my family and a friend of the family, Chief Dele Falegan. The whole idea was that the money so left will earn interest that would suffice to keep the prizes going in perpetuity. But from this unstable economic policy of the CBN, those of us who plan, seem to plan in vain and it is not right that in the most important part of a country’s life, its economy, there is no stability and predictability. This is just not right and this is one of the reasons why the naira in our pockets is increasingly worthless and not more than just colored paper. The banking sector is probably too important to be left in the hands of bankers alone without the input of serious economists