Raising the capital base of banks in Nigeria, by 1150%, with such a short deadline, is a major economic and political policy issue, which this 21st Annual Director’s Seminar, organised by the Financial Institutions Training Centre, six months away from the deadline, has a national responsibility to address. It appears, of course, that the policy makers in the Federal Government, and the policy implementers in the Central Bank of Nigeria, have made up their minds to enforce this policy, with no serious public debate and deliberations on it, except an effort by Senators, which the House of Representative has stymied.

These people in power under President Olusegun Obasanjo, and his lieutenants like Professor Charles Soludo, Governor of the Central Bank have just decided to ride rough - shod over all the concerns expressed about its broad, short, medium, and long term, implications for this country. But this should, not overawe a seminar of bankers at this high level of the members of the board of directors of Nigerian banks. You are Nigerian citizens, and if you are not, your banks are, what are now called, ‘corporate citizens’ of Nigeria, and are major stakeholders in the economy and politics of Nigeria.

Consolidation and Concentration.

You, here, as directors of Nigerian banks, cannot just accept such diktat and just run around looking around for new niches, here, or, abroad, in which you will try to individually survive and prosper. This country has done a lot for you, and you have put a lot into it in your careers. Therefore, you have a reason, and a duty, to stand up for it and for your children, grandchildren and great - grandchildren, and bring out what you believe to be the truth, and what is best for them.

For, what we are facing, with this current banking reform policy, is quite far - reaching. It is not the consolidation of banking in Nigeria, as the letter of invitation to this seminar sent to me claims, but the concentration of the private ownership, and control, of banking in Nigeria, into a few hands. If we try to run away from the fact that this policy is actually about the concentration of the ownership and control of the banking sector in this country, with all its implications, and hide behind the jargon that something is being ‘consolidated,’ we have to, if we are honest to ourselves, explain, what exactly is being consolidated. Is it the existing Nigerian banking system, with its different sizes of commercial and merchant banks, and a number of community banks, a People’s Bank, and an extensive network of grassroots, person - to - person, household - to - household, saving schemes, still only tenuously connected to these banks, that are being consolidated? Or, is it something else?

If it is the former, how does this policy amount to consolidation? How, exactly, is the existing Nigerian banking system being consolidated by this policy of concentrating ownership and control in it into a few private hands? If it is not, then, are we actually being faced, under the cover of this ‘consolidation,’ with the naiveté and delusion of an attempt to fabricate, by fiat, so-called ‘world - class banks’, and corporate ‘global players,’ with no roots in the real processes of domestic savings by the people of this country and in productive domestic investment into the economic foundations of their lives? What is actually being consolidated? Is it the chaining of our country’s economy more comprehensively, to the machinations of international financial speculators, like George Soros, who is probably financing, the so - called experts justifying this banking reform policy?

Reform or Deform.

Is this a reform policy, we are facing, or is it a deform policy? Is this policy going to reform and advance our economy and develop and strengthen our political system? Or is it going to deform and undermine our economy and cripple and destabilise our political system?

Nowadays, it is difficult to think clearly about, and thoughtfully examine, any package labelled ‘reform’. There is so much dogmatic insistence on what is called ‘reform’, and an intense academic and media campaign in favour of it, directed from the United States and Europe, to the rest of the world, that the legitimacy of political systems, of governments, and of government policies are being judged by the extent to which they are said to be promoting these reforms.

But, what precisely are these reforms? What exactly is being reformed? What are the specific contents of this ‘reform’? Is it really reform, which means to seek to bring about an improvement in a given situation, arrangement, or, structure, in order to enhance its capacity to serve certain purposes and achieve certain objectives? Or, is it the opposite, which is to deform, which means to undermine the capacity of a situation, arrangement, or, structure to serve certain purposes and achieve certain objectives, in order to render it moribund? Let us examine how this particular policy of reforming the Nigerian banking sector by concentrating its ownership in a few hands relates to three of the key areas in which banking shapes the country’s economy, namely, payments, savings and investments.

Payments

It is already widely recognised that one of the limitations of the banking sector in Nigeria is that most daily payments for commercial, and other transactions, involving the overwhelming majority of the population, are being carried out outside the banking sector. This limitation, constricts and stunts the development of the country’s economy, with far - reaching consequences to domestic savings and domestic investments, and for the modernisation of agriculture and of small and medium scale manufacturing, which are essential requirements for self-sustained economic development. This limitation of the economy with regards to payments also discourages many forms of foreign investments, which find very attractive the country’s substantial home market for consumer goods.

This limitation of the banking sector has various causes. But a major one among these is that this sector has not yet adapted its orientation, methods of operation, and whole ethos, to the systems of commercial, and other payments actually operated by the majority of the people of Nigeria in both the rural and urban areas.

In many parts of Nigeria, for some transactions, payments in public with, or without formal witnesses, are normal. But payments for other transactions are normally in private. The banks, as they are now, have not adapted to this. Neither have they adapted to the fact that, almost all over Nigeria, people with substantial sums of money to pay, or to receive, cannot just make these payments, or collect these sums of money, from any Tom - Dick - and - Harry, just because he, or, she happens to be the cashier, or, the manager of a bank. . They will only make these payments to persons they have built some relations of recognition, respect and trust with. As a result, the banking system is avoided for large volumes of transactions, which if the banks had adapted to the moral economy of this country would normally be done through them.

In fact, the banks in Nigeria have not yet adapted their operations to the economic behaviour of ordinary Nigerians, to enable many small shareholders, even their own shareholders, to get their dividends paid to them. The operations of these banks largely excludes these shareholders, even for something as basic as cashing a dividend certificate.

In many parts of Nigeria, the requirements for payments, to and from banks, are not tied to the Monday - Friday - weekdays, and the Saturday - Sunday - weekend arrangements, but to more basic considerations of the rhythms of market - days, festival days, other special days, and of the seasonal variations of farming, animal rearing, fishing, crafts, trading and other productive, or, cultural and religious activities. In some seasons, and during certain periods of the year it is precisely at the weekend that the largest volume of payments to and from banks are required to be made. But the banks have not adapted to these.

Savings

There are, besides these, many other limitations of Nigerian banks, which cripple their capacity to provide adequate banking services, which can propel the economy forward. One of the major areas of their shortcomings is in the limited reach of their savings services. The extensive network of grassroots, person - to - person, household - to household, saving and credit schemes, found all over the country, known as adashi, esusu, and by other names, have up to now not linked up in a sustained, productive, way with Nigerian banks. All the rhetoric about micro - credit from the highest levels of the Nigerian Government, have evaded facing up to this woeful failure of Nigerian banks and of the governments in creatively adapting to, and developing these vital systems of savings and credit.

The main issue is that these saving and credit schemes appear to be based on three main pillars. These are, trust, daily physical contact and flexibility of the credit arrangement. The existing banking system has not adapted itself adequately enough to be able to link up and develop these savings and credit schemes so vital in sustaining the economy as it is today, and with enormous potential of enhancing its capacity for the domestic generation of capital for domestic investment.

Investment

It is widely recognised that savings, by individuals, families, clans, public institutions, municipalities, local, regional and central governments, are key to the rapid and sustained economic progress of China, Korea and most of South - East Asia, over the last forty years. Domestic savings, and not foreign direct investment, has been the crucial factor, crucial in most b earlier cases of successful investment into the modernisation of agriculture and industrialisation in Europe, the Americas and Japan. Nigeria cannot take - off economically into the 21st century unless and until, its banks are capable of raising the rate of its domestic savings and investment to a much higher level.

But investment can only be productive and profitable, if the investor and those financing the investment have a close grasp of the specificities of the factors of production of land, labour, capital and management, in each specific case. Such a grasp is only possible with a knowledge and working experience of the terrain and context of the investment built over the long term. It requires an investment capability built on a network of trustful and reliable customers and contacts.

Obviously, with the policy of concentrating the ownership and control of banks in Nigeria being presently enforced by the Federal Government, even the present very limited capacity of the Nigerian banking sector to promote savings an productive investments in the real economy will be undermined. Where the present 2 billion naira banks cannot reach, the 25 billion naira mega banks will not even attempt to reach and where they attempt their size, structure, and global delusions, will not allow them to reach.

Democracy

But, it is not only saving and investments into the economy which will be undermined by this policy, but also democratic stability. In a country with such a huge population of very poor people like Nigeria and with its complex, and multi - faceted, diversity, the concentration of such enormous economic power of the banks in a few private hands and pockets, will effectively disenfranchise most of the people of Nigeria, and effectively marginalise many areas of the country. This marginalisation of areas where the mega banks cannot, or, have no interest in looking for profits, will undermine the political system at its very foundation, irrespective of whether we have a civilian democracy or a military dictatorship.

With these mega banks dominating the Nigerian economy, elections, no matter how free and fair, will be mere political charades. Nigerians will be fighting over and choosing between different candidates who are all mere stooges of different banks. For, particularly after the privatisation programme currently enforced is completed, power in the country will be in the hands of those who own and control these banks.

This is so, because, these mega banks are not likely to have any strong roots in the domestic processes of savings and investment in agriculture, industry and the real sectors of the economy of this country, outside oil and gas, and beyond their kleptocratic connections. They will be, and are likely to remain, mere extensions of foreign, financial and strategic interests, determined to control the destiny of Nigeria and of Africa. Given the intensity of the concentration of the financial power these mega banks shall be wielding over this country, and given their foreign backing, they will effectively constitute its permanent rulers, elections, or, no elections. Nigerians will just become slaves in this country, no matter how many elections are conducted and certified, by European and North American governments and observers, and trumpeted by the CNN, the BBC, the VOA, and others, as free and free fair.

Conclusion

Therefore, you, the directors of Nigerian banks, have to address the issues of whether, or, not you are faced with the consolidation of the banking sector in Nigeria, or, with the concentration of its ownership and control, into a few private hands, and how this amounts to consolidation. You have to shoulder your national responsibility to thoroughly and comprehensively examine this policy and recommend what banking system is best for this country in this first decade of the 21st century. You also have to face up to the more general question of whether the whole policy is part of a programme aimed at reforming, or deforming the Nigerian economy and polity.