Afam Nnaji - Articles

Nigerian Banks are just waking up after a very deep slumber

Posted by Afam on October 25, 2008, 4:49 pm

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One would have expected an unprecedented increase in the activities of the banks after the recapitalization excercise as regards making a reasonable impact in the economy especially where it concerns the small and medium scale enterprises but it seems that some of them bankers are just realizing that banking does not begin and end with corporate customers or accounts.

I was once told to bring money running into millions to enable me open a business account with a bank here in Nigeria some 4 or 5 years ago. Others demanded as much as N500,000.00 for savings account while some insisted on just N50,000.00 or less to open current accounts.

Today, we hear that some banks will let you open accounts with zero balance (meaning zero initial deposit), all that are required these days are just passport photographs, your signature and maybe a fully or partly filled account opening form.

So, what happened? Why the sudden U-turn?

Meanwhile, banks that have hitherto concentrated only on corporate accounts have hit the streets and joined the league of those banks that will chase you even into your room with packages just for you to open an account with their banks. Marketing gone crazy I call this but in reality a lot of bankers depend on how many accounts they convince people to open or how much they are able to bring in regardless of the methods used to keep their jobs. This, in my opinion is unethical and this is destroying even generation of mothers who have no option than to give in to men in some cases to be able to meet the target set for them by their employers.

According to them, they have to meet targets set for them by their employers. I guess this is easier for the men than it is for women who are exposed to all sorts of things especially by men as I know it is not all the time men will simply open new accounts with banks just because a smiling face said so or because the men really want to protect the job of the marketer or banker.

Maybe competition is heating up. Maybe some of these banks really don't make as much as they claim. Maybe the craze for new branches have eaten up a good part of the money they make from COT, monthly charges to accounts whether in use or not, share holders money or money belonging to dead people that were never claimed by next of kins.

Never mind that the ATMs were introduced to reduce the queues at the banking halls the banks really need to build more and more branches so that they can quote the number of branches they have any time they have any opportunity to do so in print, online and other advertising channels.

It does not matter if the new branches are not making profit or if they cannot even sustain themselves.

So, why decongest the banking halls by encouraging the use of ATMs and at the same time embarking on building of new branches?

Problems with access to loans

Had some discussions with 2 marketers from 2 different banks when they informed me in my own office where I was working on my own that they would want me to do business with their banks by opening bank accounts. After making it clear that none of the banks deserved to get any accounts opened and advised them to go look for genuine and very viable businesses they can assist with soft loans that could bring in a lot of money for them they individually answered that most times people collect loans and disappear leaving behind fake addresses.

But do the banks really expect anythng different when they make the conditions to access small loans difficult for small businesses? It is not uncommon for a bank to ask you to get a C of O of a land (amongst other conditions) to access a loan of say N1M or less.

I don't know if the bank executives really take time to analyze these conditions to see how feasible they are before printing them and making their employees repeat these things each time someone wanted to access small funds that could either turn around a business or help expand a business.

Life must go on and as they say when the chips are down desperate people will go to any length to beat the system and this is where the bad guys come in. All they need to do is register a business name, in some cases get a fake C of O, arrange with someone to move funds in and out of the new account for say 6 months to prove that the account is doing well and then fill out the loan application form.

Of course, no background checks are done and as far as the stipulated conditions are met the loan is granted and maybe the guy may have concluded plans to relocate permanently to a country outside our own very continent.

Did I foget to state that one of the marketers actually came to my office asking for someone that gave the office address as his office address and the person has been a customer of the bank for more than 2 years? In fact right there in my office the lady tried the 2 telephone numbers and non went through. Maybe she was able to contact the person via phone but for the duration of the discussion she kept calling the imaginery business owner without success.

I thought banks were supposed to know who their customers were. Addresses are not confirmed, no background checks and when someone disappears with loans they turn around to complain.

I hope that our banks will realize that the average man on the street has enough purchasing power to make a lot of money for any business and those that interact most with the average man on the street is the small and sometimes medium scale enterprise who need the small loans that cannot get to them due to conditions that may not be realistic.

On the flip side, there are big businesses that banks approach to even offer unsecured loans and these are the ones that can afford to owe and not repay without the banks really doing anything while those that need the loans don't get to access them easily.

NB: These are random thoughts from someone. The views expressed here belong to the writer completely and does not represent the views of any individual, group or business. This is just a simple process of putting one's thoughts on paper. Feel free to agree or disagree with views expressed in the article without wahala.

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Nigerian Banks are just waking up after a very deep slumber

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