Banks battle to stem Forex round tripping

With reports of foreign exchange round-tripping rocking some commercial banks in the country, most banks have evolved strict processes for customers to secure their Basic Travel Allowance and other foreign exchange needs.

Continues here.

NIGERIAN ENTERPRENEURS SCARE: GOVERNMENT POLICIES THAT DESTROYED BIG-TIME BUSINESSES

Only the naïve entrepreneur in Nigeria is excited with the contemplation of floating a manufacturing concern. The wise ones, schooled in the experiences they have had to contend with in the ever changing dynamics of manufacturing and other investments tasks in the production lines have fled the scene to the shelter of trading and merchandising. This, for good reasons. The challenges of conducting manufacturing and related production activities in the country, though, besetting, are however benign when compared with the ease with which government oft volte-face on policies and action stamp out the promises or existence of a once upon-a-time manufacturing plant.
In this review, we track some of the celebrated industrial concerns that had been heckled into non-existence by government policy summersaults over the years, official actions or inaction that have become the scare of entrepreneurs.
Presidential Initiative on Cassava Production
In 2002, cassava suddenly gained national prominence following the pronouncement of a Presidential Initiative. The intent of the Initiative was to use cassava as the engine of growth in Nigeria. In the ordinary sense, the perception is that cassava is indigenous to the country, official statistics claim that Nigeria grows more cassava than any other country in the world with a production capacity of about 34 million metric tones a year.
The Presidential Initiative on Cassava production and export was initiated in the year 2002. The goal of the initiative was to promote cassava as a foreign exchange earner in Nigeria as well as to satisfy national demand. The challenge of the initiative was to make Nigeria earn 5 billion US dollars from value added cassava exports by 2007. The objectives of the Presidential Initiative on Cassava was to expand primary processing and utilisation to absorb the national cassava production glut, identify and develop new market opportunities for import substitution and export stimulate increased private sector investment in the establishment of export oriented Cassava industries, ensure the availability of clean (disease free) planting materials targeted at the emerging industries, increase the yield, productivity and expand annual production to achieve global cassava competitiveness, advocate for conducive policy and institutional reforms for the development of the Nigerian cassava sector and integrate the rural poor especially women and youths into the mainstream of the national economy.
The federal government under Chief Olusegun Obasanjo backed the initiative with funding support while encouraging banks and other government and multilateral agencies to drive the initiative through funding support.
Suffice to say that in response to the government drive, an industry revolving around cassava plantation and processing started emerging. Opportunity seekers were encouraged to invest because of the obvious outward flourish of government. The signs were obvious too, under the Presidential Initiative on Cassava, Nigeria mandated millers to integrate 10 percent cassava flour to wheat flour in making bread, a percentage mix of ethanol in refined petroleum motor spirit (petrol) in the nation’s refineries. These were moves aimed at increasing the utilization of the tuber crop.
Other statistics pointed to the profitability of entrepreneurial engagement in cassava related activities; the domestic demand for cassava starch is about 130,000 tonnes per annum and 200,000 tonnes per annum for high quality cassava flour. The domestic demand for ethanol is 180 million litres – all ethanol is imported In Nigeria. None of these markets are being satisfied by local supplier even till today in Nigeria.
Individual entrepreneurs were attracted into the field and the buzz made the rounds of great things happening in cassava production in Nigeria. Unfortunately, the fancy was just for a time, even before the exit of the Obasanjo’s regime, there were obvious signs of government distancing itself from the clarion call to cassava farming and processing, soon after the assumption of office of President Umar Musa Yar’Adua, immediate successor to Obasanjo, federal government articulation of the cassava initiative lost its din.
The lacklustre enforcement of the policy of mandating flour millers to integrate 10 percent cassava flour to wheat flour in making bread and other confectionaries were altogether abandoned. Of course, the idealism of the refinery blend of ethanol with petrol had been a mirage according to entrepreneurs that had found their ways into cassava processing. “The nation’s refineries only functioned epileptically, rather, the bulk of refined products are being imported from foreign refineries, so the idea of the ethanol could not have worked out at all.” A cassava processor said
The government of Yar’Adua nailed the fledgling sector by abandoning the ethos of the Obasanjo initiated presidential initiative on cassava initiative. Importations of cassava processed by products and all have been allowed in the country with import tariff of 20 percent value.
“Apparently, this has sounded the death knell for that endeavour.” Another cassava processor said. “Local conditions have made it difficult to produce and process cassava, the thinking was to protect the industry until such a time that it would be able to compete favourably with importation but I understand that government decided to make this reversal because of the need to mitigate increased food prices. But then, we think that it would have been better to strengthen cassava production and processing in the country to boost food supply and to earn more income for government through export.
In the final analysis, the fact is that most entrepreneurs have had their investment and efforts gone up in smoke, another promise subverted by inconsistent government policy shift.
NIGERIAN LAMP PLC
One of the outstanding business endeveavour the recently demised Chief Beyioku Adebowlale of the Adebowale Store fame would be remembered for is his Nigerian Lamp Industry Plc. A courageous indigenous effort to play in the main stream manufacturing sector, when Adebowale built the Nigerian Lamp plant in his native Epe in Lagos State, it was reported to be the first of its kind in Africa. The plant was equipped to manufacture light bulbs and fluorescent.
It is reported that Adebowale was encouraged to make a foray into the manufacturing effort away from his electronic products trading concern in the Adebowale Electronic Store by the positive outlook of government incentive for indigenous manufacturers to commit to the economy in the 1980s.
Unfortunately, by the time the plant came on stream, it was like hitting dirt on first day of commission, government had made a reversal on policy, rather than protect local industries, government lifted the restricted importation of bulbs and fluorescents tube and other lamp forms. The market place was immediately flooded with Asian and Far East Asian countries bulb brands, which were cheaper though low in quality.
Nigerian Lamp, unfortunately, had become a publicly quoted company, Nigerians had subscribed to is initial public offer, but with the influx of cheaper products and brands into the market, the company’s operation became blighted and soon after became literally comatose. The company that never took off for operation eventually was placed under a receiver manager. This officially announced the demise of the once upon a Time promising company.
ROKANA INDUSTRIES PLC
Rokana Industries, had, back in the late 1980s caught the attention of the dentistry world with its production of the uniquely styled Jordan tooth brush. The market penetration of the Rokana brand of tooth brush was fast and quite domineering. It is reported that in its first year of introduction, the Rokana brand had pushed other imported brands to the back of the shelves. Jodan tooth brush was, considered the authentic Nigerian brand though the brand is a British franchise.
The dominance of the brand won’t endure for long however, because the Federal Government felt no need to specifically outlaw the activities of importers who would rather import fake Jordan tooth brush into Nigeria than to import other brands.
This more or less killed the vibrancy of the brand in the market place, it is however to the credit of the endearing qualities of the brand that it still subsists till day despite the continuous import of its counterfeit. The limitation is that Rokana, the producing company which is also a publicly quoted company floated by the immediate past commerce minister in the Yar’Adua’s cabinet Mr. Charles Ugwuh, has remained more or less moribund on the stock exchange’s price listing as investors ignored it even when the stock market was upbeat.
DOYIN INDUSTRIES
Doyin Industries is still a flourishing concern, this would not have been so if the man behind the manufacturing concern had not been well grounded in the ways of manufacturing in Nigeria. Of course he had been badly burnt from his engagement with manufacturing.
Samuel Adedoyin, the man behind Doyin Industries started out in business as a trader and he made quite a success of it that he diversified into manufacturing of household and food items and body care products. By 1996 he mobilized credit to build an awesome factory to manufacture his company’s range of products, and he was daring enough to take on multi-national companies. Travails soon ensued, electricity limitation to power the factory and the credit sourcing for funding the factory project became a burden, the market was also flooded with cheaper products from Asian countries.
The operations of the company soon became hamstrung, credit issues from City Express Bank became a public embarrassment for the Kwara State born industrialist, eventually, a production line of the industry had to close down and workers lay off.
DUNLOP
Dunlop Nigeria Plc is the latest of once buoyant companies to hit the dirt. The company had endured the harsh economic environment and had over the years returned impressive earnings to investors in the company being a public quoted company a greater majority of 95 per cent of the company’s shares belongs to several state governments, public companies and no fewer than 93,000 private Nigerians.
In 1991, it acquired majority shareholding in PAMOL (Nigeria) Limited, a rubber producing company to ensure uninterrupted supply of the right quality natural rubber, a major raw material in tyre manufacturing.
The company pioneered the radial car tubeless tyres in West Africa; produced the first crossply tyre in tubeless in Nigerian market; was the first Nigerian tyre company to hold the E.C.E 30 Certificate, an export requirement for car tyres to Europe; and first manufacturing company in Africa (beside South Africa) to hold the ISO 9002 certification.
It would soon be revealed during the former minister of commerce visit to Dunlop factory late last year that the company was merely struggling to stay afloat. The managing director of the company had complained about infrastructural deficiency, especially energy (electricity and recently, gas outages) and import duty regimes, inconsistent tax regimes which combine to place local manufacturers at significant disadvantage.
A major gripe of the company was its N8 billion expansion into the Heavy Truck Radial segment which was frustrated by reversal of government policy on tariff for imported truck/bus tyres from 40 per cent to 10 per cent at the beginning of 2007. This according to the company’s officials, created unfair and inequitable advantages for importers of finished tyres.
The dichotomy between tariff for car tyres (50 per cent) and Truck/Bus tyres (10 per cent) is said to have been abused by importers, both in terms of tariff and haulage evasion.
The situation confers undue advantages on importation rather than local manufacturing, now, the company has declared its incapacity to continue manufacturing activities in the country. Unofficial source said it would resort to tyre importation with grave implications for the rubber from its subsidiary, Pamol.
FAMAD (FORMERLY BATA) PLC and LENNARDS NIGERIA PLC
Before the introduction of the Structural Adjustment Programme, Bata’s ubiquitous outlets were the ultimate in foot wear shopping for all ages, Bata with its lesser cousin, Lennards Nigeria Plc. After 1986, the promise of flourishing was effectively shut out of the footwear manufacturing outfits. Government could not stem smuggling activities.
Synthetic shoes from Dubai and other Asian countries and high quality leather foot wear from Europe smuggled large scale into Nigeria particularly suffocated indigenous production. Ironically, the nation’s export in their raw forms the materials needed for footwear manufacturing. The products are exported, refined, recycled and packaged abroad to be sent back to Nigeria as import.
Till date, no appropriate government policy has addressed the inadequacy in the sector that has turned FAMAD (BATA) and LENNARDS into moribund companies.
VOLKSWAGEN AND PAN NIGERIA
In the 1970s Nigerian was the centre of attraction in the African continent with its hosting of the Volkswagen and Peugeot Automobile Nigeria plants. Nigerians, before the economic deluge of the last quarter of 1986 were sure of brand new cars proudly assembled in Nigeria. The assembly plants were supposed to be transitional in the nation’s march to becoming a full fledged vehicle manufacturing country.
The dream was cut short by government policy. Government steel rolling mills could not produce an ounce to support the desire to attain full production capacity, just as the value of the naira had suddenly depreciated in the years running to the close of the 1980 decade, and government back in the days, unofficially gave the go ahead for the importation of second hand vehicle (Tokunbo) at outrageously low tariff without consideration for age of vehicle to be imported.

OCEANIC BANK, BANK PHB AND STERLING BANK GET CBN LIFELINE

L-R: Cecilia Ibru, Oceanic; Francis Atuche, BankPHB; Yemi Adeola, Sterling

Nigeria’s version of the global credit crunch might have crystalised into a reality that may not be easily wished away. Reports from sources inside the Central Bank of Nigeria asserted that three banks in Nigeria have been given lifelines to shore up their liquidity standing. These banks according to the source are; Oceanic Bank Plc, Bank PHB and Sterling Bank. With the exception of Sterling Bank that secured a N90billion lifeline, the other two got N100billion funding in what banking industry analysts said is akin to a financial bailout for the banks.

This is coming on the heels of a meeting of chief executives of banks held on Tuesday, 15 October 2008. The high point of that meeting was the decision by the banks’ chief executives to formally request the Federal Government to intervene in the nation’s financial sector to forestall the effect of the ongoing global financial crisis on the system.

The committee of banks chief executives also agreed at the meeting to request the Federal Government to intervene in the nation’s financial market through a package of measures similar to those introduced in developed countries and that the Central Bank (CBN) should continue to support the interbank money market.

Reports indicated that the bankers would have preferred the United States of America and Europe’s option where government directly intervened to inject funds into selected crisis ridden banks and, in some cases, nationalizing the financial institutions that were strategic to the main-stream banking public but whose liquidity profile had become moribund.

Sources inside the Central Bank of Nigeria informed that the CBN Governor rather opted for the fiscal management approach. The CBN, had, before the meeting of the banks chiefs, granted the banking industry a concession through a circular directive of October 2, 2008 to restructure some of their capital market exposures to December 31, 2009. Interpreted, this concession allows banks not to make provision for non performing loans and other facilities that had gone into the nation’s capital market that had taken a dive for the deeps since March, 2008.

“Apparently, the concession was not enough to stave off the simmering threat of illiquidity banks were experiencing.” The CBN source said. “In response to the appeal of the banks chiefs, the CBN offered the option of an expanded discount window operation. The key elements of the expanded discount window operation provided the opportunity for banks that need to assuage their liquidity problems to use short term financial instruments, like overnight standing facility, treasury bills, federal government bonds and non-federal government securities as collateral to secure long term funds from the CBN. You know the CBN conducts liquidity mop up of the money market by selling treasury bills and also sell bonds to financial institutions, normally, treasury bills are due in 30 days while bond are due in period ranging from 90 days to 180 days. Now, to help the liquidity problems in the banking sector, the CBN, with the expanded discount window, allows the banks to present these short term instruments which the CBN will use as collateral to provide funds for them for repayment period of 365 days.” The source explained.

This option does not seem to have been effective, the Nigeria Inter Bank Official Rate, the rate at which banks lend themselves money, have continued to increase, spiking to as high as 21 percent last week. This may not be unconnected to the fact that just a few banks are in the position to lend money to needy banks. Fortune&Class Weekly reported last week that many banks chief executives continued to troop to First Bank Plc, to negotiate and secure funding to keep their operations going.

INVESTMENT EXPERT SAYS BANKS EXPANSION TO OTHER AFRICAN COUNTRIES IS ANOTHER RAT-RACE

An investment expert, Mr. Jide Ogunleye, has questioned the rationale of Nigerian banks newly found fervor for expanding their operations into African countries with low economic generation capacity. Ogunleye, who is the Chief Executive Officer of Denaro Capitals, said the acquisition and establishment of Nigerian banking brands in countries in West and East Africa lacks appropriate investment judgment.

“I believe that the establishment or acquisition of Nigerian bank brands in these countries is simply an ego tripping by most of Nigerian banks that want to join in the feel of internationalizing their operations. It’s like another rat race to determine which of the banks can boast of establishing its brand outside the country.” Ogunleye said.

“But sincerely, I don’t think it makes investment sense to spend so much money to construct a bank branch in a country where the Gross Domestic Product is not up to that of Lagos State. This is beside the fact that most of the citizens of these countries have been shown by reports to prefer their own banks. I can tell you that a new branch in any urban centre in Nigeria will yield better returns for the banking brand than those outposts they are establishing in the other countries.”

“I am not saying that there is something generically wrong with establishing branches in other countries, but in the case of most Nigerian banks, I feel the choice of those countries do not make a good investment decision. I do not know how the Nigerian bank brands want to take on the indigenous financial institutions in those countries with their solitary single branch. This is beside the regulatory hurdles and fees they have to pay to get the branches established.

“Now, if the argument is to serve the needs of Nigerians resident in those countries, we would need to know the population of Nigerians in the countries, and I can tell you that with the exception of neighbouring Benin Republic and to a little extent, Ghana, the population of Nigerian residents in these countries does not provide for a flourishing bank branch.

“If a Nigerian bank opens a branch in London, South Africa or in the United States of America I think that would be understandable because of the obvious dynamics available in these countries. The population of resident Nigerians are not only appreciable but given the natural inclination for Nigerians to identify with their home brands when they are in the diaspora one can easily conclude that such branches in these countries would be beneficial to shareholders of the banks and Nigerians in those countries.” Ogunleye argued.

BANK MDs TROOP TO FIRST BANK FOR BAIL-OUT…FINANCIAL INSTITUTIONS REJECT SHARES AND PROPERTY AS COLLATERAL

First Bank of Nigeria might have become the unofficial lender of last resort for many banks currently experiencing liquidity problems. A bank is said to experience liquidity crisis when it can not support its short term obligation to its customers by itself. Thus to continue to serve the needs of its customers, the bank may have a recourse to another commercial bank which may lend it the short term fund, usually for a period of between seven days and 90 days.

Traditionally, the Central Bank of Nigeria is supposed to be the lender of last resort for banks and other financial institutions, but FORTUNE&CLASS cross checks in the banking industry showed that rather than many commercial banks approach the CBN to augment their liquidity position, most of the banks managing directors opted to seek the support of the management of First Bank to provide short term funding support for their operations.

“I can tell you that most of the banks managing directors, these even include so called first tier (banks that are supposed to have more than a billion dollar capital base) troop to First Bank to negotiate funding support.” A banking industry insider said.

The option of adopting First Bank in the rather unusual role of a lender of last resort might not be unconnected with many commercial banks efforts to shy away from the official channel of funding provided by the CBN so as not to be labeled as desperate to survive and consequently provide ammunition for the de-marketing campaigners that are going around the sector, insinuating the parlous state of health of some banks on account of their liquidity position.

“It is easy for bankers to know who is applying for what with the CBN.” A senior banker said. “But negotiating and securing funds from a colleague banking institution has all the trappings of confidentiality and utmost secrecy. So, I think, these other banks would rather prefer to relate with First Bank on the inter-bank lending platform. At least, there is nothing illegal about that and as far as they are concerned, other practitioners and the public are not privy to these negotiations.” The banker explained.

Though the inter-bank lending platform is an organic relationship channel in the banking industry, however, concerned members of the board of directors of the bank are becoming quite uneasy with the load of demands from other banks.

A source in First Bank informed that the bank is becoming more serious with risks control measures.

“This is not a recent development. First Bank has been experiencing a deluge of demands for lending from other banks over the last six to seven months. I think that at one of the board of directors meeting, board members directed the management team to be more circumspect about their lending to these other banks.” A First Bank insider revealed.

The irony of banks seeking out bridging funds for their operations is not limited to beseeching First Bank, the industry is already abuzzed with banks chasing after deposits from the banking public in preference to approaching the CBN. The unofficial explanation for this action has the same texture with the one given by insiders for the First Bank option. Banks, industry sources said, would rather prefer to go after deposits in the public domain than to approach the CBN where data of their application for funding could be used against them when the CBN make public such data.

On the whole, nerves are gradually getting on the edge in the banking industry as interest rates and other related data show an escalation that are, increasingly becoming alarming signals.

“Even the illiterate can read the signs.” Ori Adeyemo, a forensic accountant said. “These banks are chasing after deposits with tempting offers beyond the market rate, they are not bothered with the implication for the cost of funds both to their operations and to the borrowers. Of course, we know that they are only interested in making their liquidity position look good as their different year end draw to a close. Despite the figures the CBN make public, you won’t believe that interest rate and other charges for loan in many banks are adding to about 34 percent of the loan offered. And that is where the borrower is lucky to get a bank to provide the loan. The simple truth is that lending activities have reduced significantly. That is a fact.” Ori argued.

The general impact on the liquidity position may have been further indicated with the considerable increase in the Nigerian Inter Bank Offer Rate (NIBOR) (the NIBOR is the rate at which banks lend short term funds to each other) CBN data on the NIBOR as at the preceding week, released last week, showed that the 7-day NIBOR at the inter bank market transactions increased by 123 basis point to close at 18.14 percent from the week before figure of 16.92 percent.

The 90-day NIBOR also closed higher in the same period from 17.42 percent to 17.96 percent.

“Is it not clear that there is a situation in the banking industry if banks are lending to themselves at these high rates? You can imagine what rate they will lend to their customers. Even at that, it is becoming increasingly difficult for some banks to secure funds from the inter-bank lending platform because the strong banks are considering exposures to them as highly risky.” Bisi Iyaniwura, a lawyer with specialized practice in banking and corporate law said.

Meanwhile, it has been revealed that some financial institutions now reject collaterals in the form of shares and property and even treasury bills as securities for loans.

“FORTUNE&CLASS gathered that a second tier bank had approached a discount seeking its (discount house) assistance to secure a N150 million short term fund for its operations. However, after the discount house which is a subsidiary of a another first tier bank sought the position of its principal, the first tier bank rejected all the traditional forms of securities like shares, treasury bills and property the fund seeking bank was willing to provide.

“This, ultimately, foreclosed the funding negotiation.” A source privy to the negotiation informed that the discount house demanded for trading securities.

“They said they would prefer collateral that can be easily turned to cash like goods in warehouses and some other strange stuffs.” The source informed.

NCAM: A DAY OUT WITH AUTO SALES LEGENDS OF OUR TIME IN NIGERIA

Even though there is no business existence without its challenges, there is one particular line of business in this country that takes lots of guts and down to finger pushing to get it off the ground. It is even more stringent due to the saturation of the market, even though some players belief otherwise.

The business of auto dealing is one of the most lucrative businesses that is gaining attention in the Nigeria corporate terrain. Although most auto dealers try engaging in popular brands to boost sales and recuperate the investments in the short run, it still needs the ability of a good marketing team to devise creative strategies in getting even an unwilling customer to order for the whole company!

To this end, a forum on the happenings in the auto world, tagged National Conference on Automobile Marketing, where the legends in auto sales and marketing in Nigeria would be gathered to bare out their minds, and share their success stories with budding and up coming auto marketers.

The one day event, holding at the Golden Gate Restaurant, Ikoyi, Lagos on the 26^th of November 2008, will feature a platform to chat with the big shots in the industry, interactive session and a paper lecture titled ‘the Magic of Volume Sales’.

The get together which commands the presence of the likes of Chief Michael Ade Ojo, Chairman, Toyota Nigeria Ltd; Chief Molade Okoya Thomas, Chairman, CFAO Group; Alhaji (Dr.) Sanni Dauda, Chairman, Peugeot Automobile Nig Limited; Chief Williams Anumudu, Chairman, Globe Motors, Dr.(Mrs) Diezani Allison-Madueke and Prof Bamidele Badejo to mention few, is primarily targeted at auto marketers, banks and insurance companies.

With full support from the federal and Lagos state governments, the event promises to be an epoch making one.

FINANCE MINISTER PETITIONED OVER CBN REVERSAL OF BANKS’ UNIFORM YEAR END

A corporate lawyer, Mr. Roy Bassey Ukoh and a forensic accountant, Mr. Ori Adeyemo, have, in a joint petition forwarded to the Minister of Finance, protested the reversal of the adoption of common year end by commercial banks as earlier directed by the Central Bank of Nigeria.

The two petitioners said they were compelled to write to the Minister in the overall interest of the banking public and asked for the reversal of the cancellation of the uniform accounting year end for banks in Nigeria which, according to them should have started in December 2008.

Describing the earlier directive contained in CBN Circular No. BSD/DIR/CIR/GEN/VOL2/008 issued on August 25, 2008, as laudable, the petitioners insisted the CBN Governor made an unpardonable somersault of his laudable policy of making December 31 of each year, the uniform accounting year end for each bank starting December 31, 2008.

Stating that such change of policy is not in the best interest of the general public but a compromised attempt to serve the parochial interest of the banking cabal, who are the Managing Directors of the 24 banks operating in Nigeria in other to cover their apparent lapses, the petitioners argued that CBN rationalizing the cancellation of the directive to the desperate mobilization of deposits and which led to the hiking of interest rates by banks, according to the two petitioners is not accepted and grossly untenable.

“We consider both excuses given by the CBN Governor as totally unacceptable and crassly untenable. It further goes to confirm our unassailable conviction that the Nigerian banking industry is not only weak, in dire state of distress but also desperately needing surgical operations to survive irrespective of the spurious splendid financial results that these fraudulent banks churn out from time to time (in active collaboration with the CBN) all in order to continually deceive the gullible unsuspecting Nigerians to invest their hard-earned money in the thrash shares of these sinking banks.” The petitioners reasoned.

Making further assertions on the impropriety of the cancellation of the common year end for banks, the petitioners asserted that: “It is a classic endorsement that the consolidation of the banking industry which the CBN carried out on December 31, 2005 has irredeemably failed if after telling Nigerians that it now has mega-banks; these same banks are still in hot pursuit of deposits at whatever costs not also minding the fact that these same banks had gone to the capital market times without number to mobilize funds. The question now is: what has happened to all the billion of Naira mopped up by Nigerians banks from the capital market from year 2004 to date? Nigerians need to know.”

“The CBN Governor has always been aware that Nigerian banks have been defrauding their customers through the passage of spurious and illegal bank charges into the accounts of innocent customers thereby leaving behind unpaid debts leading to the deceitful foreclosures of collaterised assets of the customers or the settlement of bogus debts at extremely high costs. For the unfortunate ones, it has always been a tale of woes leading to the collapse of businesses, ill-health and sometimes paying the ultimate price of untimely death. To worsen matters, whenever a report of the nefarious and illicit actions of the banks is brought to the attention of the CBN; an illegal referral is made by the CBN to the committee of Ethics & Professionalism which is a sub-committee of the Bankers’ Committee made up wholly and exclusively of bankers with nobody protecting the interest of bank customers thereby making banks judges in their own case.” The petitioner further asserted.

Making further allegations, the petitioned observed that: “Another very important point to deliver is the fact that the CBN Governor is in the knowledge that banks have surreptitiously been stealing Federal and State Governments funds through non-remittance of 10% Withholding Tax on declared dividend as well as interest on deposits, 5% Value-Added-Tax (VAT) as well Personal Income Tax yet have blatantly refused to call them to order knowing fully well that by virtue of Section 3.2.5 of the CBN Monetary, Credit, Foreign Trade & Exchange Policy Circular No. 37 of January 02, 2004, it is the responsibility of the CBN to collect these deductions from the banks for and on behalf of the Federal Government of Nigeria within seven days of collection. The various excess and spurious bank charges clandestinely laid into the accounts of both arms of government all in a bid to defraud in billions of Naira cannot also be wished away.”

“As investigative accounting consultants, we are in the knowledge that the books of these Nigerian banks have all along been cooked and spiced accordingly in order to present fake excellent performances. A veritable way of doing this is to aggressively mobilize deposits at the adopted scattered year ends and also to temporarily put a stop to lending when the accounting year end of banks is near.

“The banking cabal has also made it a point to be shifting deposits among themselves in order to help out each other and they are aware that a uniform accounting year-end will put a final stop to this unwholesome malpractice.

Alluding to one of the reasons the common year end would have done the banking industry some good the petitioners observed that: “Nigerians will recall that prior to the announcement of the uniform accounting year end for banks; every bank in Nigeria was always celebrating any achievement that they can think of from the mundane to the unimaginable. At that time, it was commonplace to find banks celebrating best bank with highest deposit base, the first bank to deploy certain banking software in Nigeria, the first bank to hit the trillion Naira asset base, the bank with the highest turnover and all what not. However, we note that with the announcement of the common accounting year-end, all this rubbish has stopped.

“We must not forget the so-called compromised ratings given to banks by the foreign rating agencies based on the falsified financials published, which these banks would then celebrate as if they have won the football world cup. It was either the banks were awarded A+++++ or AAAAA or some stupid figures by their collaborating foreign rating agencies without looking at facts behind the figures published.

“We wholly support this uniform accounting year-end for banks since it will enable Nigerians and the whole world to be able to separate the chaff from the grains but this laudable and well-thought-out policy by the CBN is being killed before it is born and therefore every attempt must be made to stop the unwarranted and self-serving shift or cancellation of the uniform account year-end.”

“It cannot be disputed that the capital market in Nigeria has lost over N3.5 trillion due to depression with the Nigerian banks accounting for over N2 trillion thereof. You will also admit that this was what led the CBN to issue a guideline allowing the banks to reschedule margin accounts by at least one year. We sadly note that even with this understanding, the CBN is yet to fully inform Nigerians as to the extent of the loss incurred by the banks as a result of their participation vide gambling with depositors and investors monies in the capital market.

“Our submission is that with the full implementation of this uniform accounting year-end policy by the CBN; Nigerians will be able to know the healthy banks from unhealthy or dead-woods because as things currently stand, the adopted scattered year-ends gives latitude for fraudulent and creative accounting manipulations, which undoubtedly amounts to corrupt malpractices which the CBN is now advocating and encouraging through the back door.

“It is an understatement to say that if you are allowed to have your way by shifting or out-rightly canceling the uniform accounting year-end of these banks, you would have succeeded in postponing the doomsday, which would eventually come considering the whole lots of unwholesome and unprofessional malpractices being daily perpetuated by these banks unrestrained.

“We cannot but state once again that the financial state of these banks is in sordid state and the earlier that the CBN and the banks come clean to tell Nigerians the truth the better.” The petitioners concluded.

WESTERN UNION MONEY TRANSFER: CBN TO PENALISE BANKS FOR WRONG PAYMENTS

In response to the torrent of complaints and petitions against commercial banks that had wrongfully or by default paid money transferred to beneficiaries through the international fund transfer platform of the Western Union Money Transfer, the Central Bank of Nigeria has issued to commercial banks, additional information requirements and directive on Western Union Money Transfer operations in Nigeria.

The banking industry’s regulatory authority in a circular forwarded to commercial banks in the country acknowledged the absence of a fool-proof means of personal identification of beneficiaries of money transfer, to safeguard against the many incidences of payments of money transferred to identity thieves, the apex bank directed that bank should put in place additional safeguards that will ensure that payments are only made to the correct beneficiaries:

 

One of the additional requirements is that funds transferred shall only be collected in the designated town for payment and nowhere else. In addition, commercial banks are now required to investigate customers’ complaint within one week before referring the beneficiary to the sender for onward complaint to Western Union Money Transfer International.

 

The circular signed by the apex bank’s director of banking supervision, Mr. OI Imala, also requires that the copy of beneficiary’s photograph forwarded by Western Union Money Transfer to the banks should be personally produced by the beneficiary at the point of collection before payment is made.

 

The CBN warns that in cases where these safeguards are not strictly applied, banks will be held liable and shall be made to refund any amount paid to wrong beneficiaries.

 

A Central Bank source explained that the circular was meant to find a lasting solution to the continuous complain of banks customers that petition the CBN over the wrongful payment of money sent to them but wrongfully paid to some other people.

 

“Some of these customers actually alleged that the mistaken payments were made in connivance with some bank staff and identity thieves.” FORTUNE & CLASS source said. “The CBN had to insist in that circular that banks investigate claims of customers before referring the customers back to the senders from whom the fund emanated so as to ensure that the wrongful payments were not deliberately contrived within the bank.

 

“The basis of the proof of identity is the new requirement that the sender must provide a copy of the passport photograph of the beneficiary here in Nigeria to Western Union Money Transfer which will now forward the photograph to the paying bank. Now, before payment is made to anybody, the person laying claim to the transferred money must provide a copy of the photograph at the point of collection before payment is made.”

 

The CBN source added that with this requirement, it will be easy to identify who the true beneficiary of fund transferred is and if a bank refused to adhere to this guideline strictly it would show that it breached the process, so rather than make excuses and refer the customer-beneficiary to the sender, the CBN will deem the bank culpable and shall be made to make refund to the true beneficiary.

REVELATION OF CBN’S DISTRUSTS OF NIGERIAN BANKS

They say the Nigerian banking industry has some of the finest brains in the whole of the black African continent. Nobody should dispute this, if those white goons of the departed apartheid regime had not stayed longer than required, those South African banks that strut around telling who cares to listen of their grand size all would have paled into insignificance.

Okay, concede size and operating finesse to the South Africans, for Nigerians, our banks are getting bigger so much that account books sniffing sheriffs at the Nigerian Accounting Standard Banks, would informally tell you that it’s a most exerting task reviewing the books of the banks.

One tells of how some banks usually play the smart card on auditors:

“The bankers know that auditors can only work on figures provided for them, so besides traducing the figures, they may even confuse the entire process for the auditors. This they do by suddenly changing accounting software.

“We have seen banks that were using Globus, a banking accounting package, over the best part of a year only to suddenly change their software to Finnacle weeks before the external auditors assume. What the auditors meet on ground is certain to be absolute chaos because of the incompatibility of these two softwares. Eventually, the auditors are left to the mercy of the figures the banks wished them to see and treat.

You won’t believe which institution holds the banks in greatest suspicion? The Central Bank of Nigeria!  It is said that the CBN is so circumspect of banks’ figures that it makes a tradition of slashing the figures presented under some account headings. For instance, the CBN has over the past years made it a rule to slash any figure presented by banks under its total assets column by 70 per cent because the CBN believes that such figures are always over-inflated.

A case of connyman dies connyman bury am. (a dead dubious person would be buried by an equally dubious person)