Odunze : Nigerian Banks Can Do More


Having worked in the banking industry for 25 years,  economist and lawyer, Eustace Odunze, now offers pro bono services for human rights violations through his family law firm, Odunze and Odunze. He spoke to Omolola Itayemi on how Nigerian banks can do more to grow the economy, the need for government to concession more infrastructure to the private sector but with the sanctity of contract, among other issues. Excerpts:


 Having been in the banking industry for over 25 years, now that you have veered into the legal profession, how has it been?

Interestingly, every day in my banking life, I see legal issues come up and what that does is that you cannot divorce yourself from yourself. So even in my normal banking job, the lawyer in me is still coming out. Most times I review agreements but because I’m not employed as a lawyer, I am compelled to pass it to the legal department. There is really not much difference because law covers every aspect of life including banking. Both complement each other. For me, I have ended one career that lasted for twenty five years and I have just started another one. I am now doing it full time and purely from a charity point of view. But for me, it’s also a way of giving back to the society. After twenty five years of banking, I don’t think collecting money from these types of clients will do anything for me financially. I joined the family law firm to be able to actualise this.


You offer free legal services for people seeking redress for one violation or the other bothering on human rights.  Why do you think your services will be an advantage to these set of people?

It’s no secret that Lagos legal services are expensive and a lot of people are dissuaded from pursuing redress just because they are unable to afford the lawyers service and most times these cases are sustained in court for a long time. They are unable to afford it both from a financial and duration point of view. Most go home and suffer in silence and are very disappointed. We see that there is some need that people have and cannot pursue because of the reasons I mentioned.


How has it been so far?

The response has been huge; as a matter of fact we are controlling it. The need for this kind of service is huge. We also have issues with the judicial process, most of these cases are not expediting because some of these cases have been on for several years and people lose interest along the line and give up these claims. So it is very huge but we are approaching it gradually, dealing with most important issues bordering mainly on human rights. It is service we think we can give and continue to give to the extent of our abilities and resources.


As an economist and a lawyer who has cognitive experience in power, infrastructure and oil and gas banking, what do you think of the situation we are in with these three major industries and is there any hope soon of getting out of the unsavoury situations related to these industries?

Yes, it’s so unfortunate that a country like Nigeria will be grappling with things like this; we are endowed as they say. But, I think we have issues with organising ourselves as a country to deal with these issues, take for instance, power. I was in South Africa recently and I took a tour of the key power generating companies and found out most of them rely on coal, they don’t have as much gas as we do. Gas is cheap, clean and environmentally friendly and we have so much of it, yet we cannot produce electricity. It is worrisome. But I don’t think the problem cannot be solved, all we need to do is decide that we have to solve the power problem, the same thing with infrastructure. I will say one of the projects I have done whilst I was in banking is financing airport concession, road projects and power projects. The thing is we need to sit down and properly organise ourselves. I led a team that financed Lekki toll road, here in Lagos and it’s a success. If we set politics aside and do things the way they are supposed to be done all over the world, we can grow our infrastructure and that’s very key. Trust me without power, there is not much industrialization that can go on, and without this, who will create the jobs. And once people don’t have jobs, the economy suffers. You see it’s a continuous chain and when you trigger development it runs on its own. We need to break those chains that are stopping us from triggering the process of development. So, with good organisation and right policies the private sector will come in and deliver on basic infrastructure.

The concession idea is very good, I can vouch for that; airport, road, railway and power concessions. The concession process looks to me like the most ideal for Nigeria but there are key things that must be put in place such as sanctity of contract. If the government has concessioned a project or an asset to a private developer, government must not under any circumstance turn back on those contracts. This is the key so people can develop confidence in the whole essence of government contracting. Once a state or federal government reneges on the stipulations of the contract signed, it discourages private sector and nobody will want to do that again. Then government will by this way saddle itself with all kinds of infrastructural development projects that they ordinarily should not get involved. Government should just purely get involved in making laws that facilitate investment and then deal with social issues and problems and leave the private sector to come invest in key infrastructure, then both sides work together. You’ll be amazed at the result of such partnerships, we will get so much private sector money both local and international into the economy and our infrastructure base would have increased. More people will have businesses and will be employed. Believe, you me, that N100 they have to pay at the toll gate will not be a problem. We need to get it right.



We are a dollar-reliant economy that is also an import nation, the US dollar and other foreign currencies are at an all-time high with prices of goods skyrocketing?

It is true Nigeria is a dollar-reliant economy and that should not be the case. In every scenario where there is price the key things that drive it are supply and demand, this is elementary economics. Once demand goes up for any product, the tendency is price will follow as long as supply remains. Now, therefore to change price to what you expect, you must simultaneously deal with both demand and supply. So, because we are an import economy, the demand for dollars which is what you use to import will continue to go up. What the Central Bank is doing unfortunately is trying to manage demand but because if the type of economy we have, demand continues to soar. It’s a problem because they have to work on the supply. The question is how you work on supply of foreign exchange. How do you increase foreign exchange availability into the country? The government is talking about diversification, I agree. You need to diversify away from import dependent. But you see that is long term, in the immediate and short term, central bank can increase supply of foreign exchange in the economy by raising long term debts in foreign currency, however you must invest it in productive projects that can bring back cash flow to enable you pay back in the short or long run depending on the tenure, that availability of that provides additional supply of foreign currency. Secondly, government can increase or support diaspora remittance. Before we had over $20 to $25 billion of diaspora remittances into Nigeria, now I understand that is reducing largely because some of the Nigerians that used to remit money no longer have jobs. But over and above, the problem with remittances is political and economic instability at home. Nobody wants to bring in money where there is so much instability. These are all sources of supply of foreign exchange. When things were a bit stable, Nigerians in diaspora were all over the place looking for business opportunities to invest in; buying stock, properties and investing in the economy and so monies were coming in through MoneyGram, Western Union and others but now all they send is money for family upkeep. They have no confidence in the economy again. All of that has been cut short therefore the supply of foreign exchange is dwindling.

Now our major supply is oil. We sell oil as a commodity and we take the dollar and we sell at the market rate. The government needs to intensify efforts that there is peace and calm in the Niger Delta where oil is comes from, that is very, very important because I know that  before we were exporting 2million barrels a day but now it’s just about 1.2million barrels, if not less. And then, the price has come down, that is partly why the dollar is selling at N500 and it’s never been like this before.

In the short term, while diversifying and growing the economy in a way that over time, we will reduce if not completely remove our dependence on imported items. We must encourage manufacturers locally to manufacture, we have no business importing some of the things we import once we provide incentives as a matter of deliberate policy. We can do it through fiscal means like taxes or direct support to people that are involved. I think that there are some initiatives on the part of government to deal with some of these things but then in the immediate we need to increase supply.

I have been saying for instance, who said we cannot refine here, all of the 2million barrels we produce. I have asked that rhetorical question and nobody seems to have an answer for me. I don’t mean, just taking one product and throwing the others away. The process of refining is value addition, do you know the number of jobs that can be created doing this. We will earn a lot more foreign exchange because we have added value. But other and above that, we will cut off completely, the dollar allocated to the importation of refined products. It is over 60 per cent of the so called demand of foreign exchange and its pushing the rate up. Again, it goes to the heart of the matter, there are too many issues surrounding anything that government is involved. What to be done is provide an enabling environment and allow the private sector invest in refineries. Recently, I heard the minister of petroleum discussing with Total Oil in building refineries and you begin to ask isn’t this a little too late. We have three or four refineries in Nigeria; it’s because of issues of government interference their not working. Now Alhaji Aliko Dangote is building a refinery and if he manages to finish by 2019, the major part of our petroleum importation will probably buy from him. If he sells to us in naira, we will cut off nearly 50 to 60% of the demand for foreign exchange and we can use that to either increase the supply and bring down the rate, so that only those things necessary will be imported, so that dollar can come back to N100.

If we build five refineries in Nigeria doing a hundred thousand barrels a day, there will no Nigerian engineer that will be jobless. All we are doing is treating oil like commodity, yes it is one but we need to treat it like it’s more than that. We can add value to the oil, create more jobs and get us out of recession.

What of tourism. I say if we multiply one million barrels by fifty dollars, that is how we sell. In Dubai, if one million passengers arrive and spend $100 dollars, this is the quantum that comes into their economy every day and they don’t have to bother with money from oil even when they have oil. So tourism alone generates in terms of availability of foreign exchange coming into the country even more than oil. So there are several models, which is why I cannot understand why we choose to stick with one. We should put on our thinking caps and do something else. All I am addressing is that there are other ways of generating foreign exchange without necessarily having to kill ourselves because there is oil.

I get so frustrated because it seems there are no people thinking in the right direction as to how we can deal with these issues in the Nigerian economy and become a great nation all of us aspire to be. Turning around Nigeria’s economy is not rocket science?


Are Nigerian banks doing enough to help small and medium scale businesses grow because they have been accused of supporting only big businesses with huge turnovers like oil and gas?

Yes, I agree Nigerian banks can do more. Now currently, the Nigerian economy is in recession. But come March 30, the accounts of banks that will be published i.e. profit before tax will almost be one trillion naira and this is supposed to be a depressed economy in recession but banks are reaping hugely. I don’t begrudge banks; these are private investors tapping into opportunities that exist in this milieu called Nigerian economy. I believe the banks can do a lot more by giving back to the system their making money from. Yes, funding SME’s is one way but they can even do more in terms of human capacity building because banking is a service organisation basically. Banks can put money in foundations and in charities. Bank foundations that you see only plant flowers and other sundry activities. They can use those foundations to do more. At the end of every financial year, banks can put money in a foundation collectively to take up business ideas and opportunities from young people that don’t have money and collateral security to borrow money but are generating ideas. That pool that Nigerian banks can contribute too can leverage on these monies Nigerian banks have put together to give these pool of ideas opportunity. Nigerian youth are bubbling with ideas but they don’t have support, nobody to help them. You don’t have money and if you borrow interest will kill you, interest is high because of a lot of factors that I don’t intend to discuss here. You invest in some of these ideas and they become a success and help develop the entrepreneurs of tomorrow, it shouldn’t be Tony Elumelu Foundation alone helping SME’s grow. I look forward to something like this. And ultimately the banks will benefit, after all banks thrive on businesses.

I think they need persuasion, they need to be sure. If I own or manage a Nigerian bank, I will drive this process. We need to continuously sustain this economy. I dare say 20 per cent success of this will go a long way.


Let me take you down memory lane, what was 25 years of banking like?

It was very exciting, trust me, it was and I enjoyed every bit of it. You know, banking gives you high profile in the society, just largely because they pay you compared to other sectors of the economy something that is reasonable. As a young person with a good degree, first upper, in economics, I was bubbling with ideas, so banking was the only industry that could have trapped me. I read Economics in the university of Port Harcourt and Law in University of Lagos.  I saw it as exciting because in Treasury department where I started from I was dealing with everyday economic issues. It caught my attention and held me down for twenty five years. But when I was going in, I never thought I was going to stay for that long. It was a combination of being excited about the job and worth my while. It was also stimulating mentally.

After twenty five years of banking, I was still waking up at 5am to get ready for the day before I realized it’s not necessary again. So I go back to sleep and wake up like 6am or later and I am fine.

Banking is very challenging and I have seen virtually everything, there is no part of the economy I have not related with. Over the years that I worked, I developed competence in my career. There is a great level of satisfaction that comes with seeing a project you worked on flourish. MM2 airport concession, Lekki Toll road and Tinapa Tax Free zone are some of them.


Really, Tinapa? Isn’t that a failed project now?

I can talk about the Tinapa project for a whole day, very sad, because a lot of things that should have happened did not happen. Opening up of Calabar port so people can bring in goods, the access road that connects to Aba, the airport to international standard, these were some of the conditions that were going to drive the project but have not happened. So you have all those warehouses and shops, where are they going to bring their goods from. The port is small vessels cannot come, the airport is small, big planes cannot land. I can talk about why Tinapa failed but as an idea it is brilliant.