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Social Responsibilities For Nigerian Banks By Christopher C. Eke

October 18, 2012

Someone described insanity as doing the same thing the same way each time and expecting a different result.  As for Nigerian financial institutions, they have being downright insane, irresponsible and a safe haven for corruption.   Sad to say that in Nigeria, banks and insurance companies have not always demonstrated above average standards expected of depository institutions when carrying out their fiduciary duties to enhance, preserve, and safeguard customers’ financial instruments, especially their cash.  

Someone described insanity as doing the same thing the same way each time and expecting a different result.  As for Nigerian financial institutions, they have being downright insane, irresponsible and a safe haven for corruption.   Sad to say that in Nigeria, banks and insurance companies have not always demonstrated above average standards expected of depository institutions when carrying out their fiduciary duties to enhance, preserve, and safeguard customers’ financial instruments, especially their cash.  



Frequent travelers to most parts of the world will notice that the choicest real estates in major cities, including those in major Nigerian cities, are owned by banks and insurance companies.  While these magnificent high-rise structures adorn the skyline of major cities across our globe, they also provide important values to their area economies when the business leaders who occupy their suites make the right decisions on how to manage their enormous wealth.

With this thought in mind, here are some social responsibilities for Nigerian banks.  Wouldn’t it be a great idea for the big Nigerian banks to take a leading role in partnerships with schools, local and state governments to pursue an investment in the development of young minds, by devoting a small portion of their enormous market capitalization to granting yearly scholarship and loan programs for higher education?  That is, offer higher education opportunities to high achievement students who are poor and otherwise will be unable to further their studies without such assistance.
 
Even though a few states might already have free education at every level, majorities of states are poor and unable to invest much in education and must rely on the private sector to help them bridge their gap in education.  Clearly various governments in Nigeria could easily accomplish this role; however, governments in Nigeria are notoriously inefficient in allocating scarce factors of production.  Instead, they are net consumers of these scarce resources because of their many layers of bureaucracy, famous for corruption and pushing papers in every direction, often resulting in no real value added to wealth creation.  
 
The details on how banks can provide scholarships, and in some cases, loans for further education in Nigeria can be worked out within the framework of this suggestion for banks to form partnerships with schools, local, and state governments.  As an eternal optimist, this can be done where the will is right; as a probabilistic individual, it can be done with strong leadership support; and as a believer in possibility, it can be done with the right kind of political philosophy!  No doubt that the social environment and the corrupt nature of Nigeria wouldn’t make for an easy process in implementing this proposal, but it can be done if the collective will to proceed exists.
 
Only the private sector can make significant and rapid contribution to the expansion of Nigeria’s economy, but it must rely heavily upon good, functional, and the right type of education to do so.  Therefore, this committee of one is hereby suggesting that the banks also consider an emphasis on STEM (science, technology, engineering and math) education as one basis for granting such proposed scholarships or loans.  The reason Nigeria struggles with insanely high unemployment is because it doesn’t have high paying manufacturing jobs.  Real wealth for a country is usually created as well as sustained with a vibrant manufacturing sector.

High paying manufacturing jobs tend to, better finance other manufacturing jobs, place upward pressure on the service sector to expand more rapidly, especially true for ancillary services, and make it also easier for the government to develop credible social institutions.  As is the case now, Nigeria has a significant portion of its population engaged in commerce on goods produced overseas, with little or no value added to the local economy.  And this is the result of our insatiable appetite for goods manufactured overseas.  The long term prospect when we buy most of our consumer and durable goods from overseas is that we inadvertently elevate the standard of living of oversea citizens since we hand them right back the foreign exchange we earned from exporting our crude oil.

It’s terrible to continue to play political football with education by allowing it to become an exclusive privilege of the few.  The cost of higher education also shouldn’t be a deterrent to getting good education.  That’s why Benjamin Franklin, America’s foremost thinker coined this phrase, “If you think education is expensive, try ignorance.”  Besides when a country fails to educate the majority of its citizens, it under achieves and is plagued by narrow mindedness, insecurity and a low standard of living and wide spread poverty.  However, education in Nigeria needs both the curriculums and the educational systems to revamp quickly because they have been producing incompetent graduates, narrow minded, and grossly lacking in creative thinking.  

Back to banks behaving badly, Nigerian banks haven’t always been transparent, just and righteous in their practices.  They have been a safe haven for corruption, by knowingly preferring not to ask serious questions about the source of funds customers’ deposit.  These financial institutions are notorious for perpetuating hostile work environments in which many of their staff works extremely long hours and weird schedules and female employees are subjected to constant sexual harassment.  They have also constantly abused, in prevalent ways, young attractive female university graduates, they hire, by giving them unusually high quotas of deposit instruments they must meet toward bank capitalization as a condition for promotion or retention of employment.  Such policies have contributed to the debasement of some of these female employees who often resort to prostitution with prospective bank customers as a means to meet their outrageously high quotas on deposits and avoid losing their jobs.  

One of the ways to begin to rebuild their battered image and regain public trust is to embrace important social responsibilities in the manner that I’m proposing here.
Therefore, I’m convinced that Nigerian banks can help create more opportunities for poor kids willing to emancipate themselves into a vibrant workforce and in turn contribute to rapid economic development for everyone’s benefit.  However, opportunities must come with responsibilities for those who obtain scholarship or loan from the banks.  As part of the details to grant scholarships or loans, the recipients must pledge to do their part when they finish schooling.  For starters, it might be beneficial to the banks if they set aside each year a portion of their available vacancies, both in banks and in their other business interests to their scholarship or loan recipients, who would then for a period of time, surrender a portion of their monthly salary to repaying their loans.  This will allow for the replenishment of the loan funds as well as to provide the banks with a better-educated workforce.

The local and state governments’ role must be to ensure that all bottlenecks associated with things like the identity of loan or scholarship recipients are at all times known and their pledges to repay loans at the end of their schooling are properly monitored and administered.  The risk reward ratio in administering such loans or scholarships program can emphasize areas where the national or state economy needs the most talent and technical know-how.  That is why I believe that emphasis on STEM education is the right way forward.  The basic difference between developed economies and emerging economies has to do with the over-abundance or chronic shortage of heavy equipment, machinery, forklifts; unlike emerging economies, advanced technologies allow more economic goods to be produced with fewer people, and conversely, less goods and services produced with manual labor.

To lay the ground work for success and to contribute to the fight against corruption in the right way (better than just having most Nigerians imprisoned for corruption), banks must exact pressure on schools in Nigeria to update their curriculum to include, at all levels of education, compulsory courses in ethics and anti-corruption.  Schools will be incentivized to comply with this pressure since they are the likely recipients of any loans or scholarship funds the banks will dole out.

In order to evolve a just and egalitarian society, Nigeria needs new perspectives and must modernize its ideas faster.  Here is one example to illustrate this point.  It is the story of a driver of an eighteen-wheeler traveling through an unfamiliar route in a suburb.  The driver was yapping away on his cell phone and wasn’t paying much attention to the traffic condition ahead.  In his distractions, he failed to read a height signage warning posted on the side of an overpass or a bridge before trying to go through it and his trailer abruptly got stuck in the underpass.  Emergency personnel were called out to the scene.  So, every one of them was trying to find ways to free this massive vehicle.
 
A policeman blocked further traffic along this road and due to the commotion, which ensured, and for safety reasons, he commanded pedestrians gathered around to leave the scene, except for one little boy on a skateboard who insisted on talking to the police officer.  He said to the policeman, “sir…but sir…” The policeman interrupted him repeatedly and ordered him to leave the scene or risk being arrested.  This young boy insisted, and the policeman finally said to him, “what…?”  The little boy said to the policeman, “has anyone thought about taking the air off of all the eighteen wheels so that the height of the trailer can be lowered?”  The policeman said to the boy, “okay, thanks, now, you leave!”  The policeman went and asked the others to deflect the tires to lower the vehicle’s height in order to free it.

It didn’t matter so much that the idea on how to free this massive vehicle from the underpass came from a little boy riding his skateboard; and it didn’t matter that the policeman may not have given proper credit to this little boy for his idea.  What’s important is that the problem was resolved so that everyone can go about his or her business, peacefully.

Talk right back at: [email protected] and please follow me on twitter @christopherceke
 

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Topics
Corruption