Mobolaji Lawal: Devaluation of Naira is Killing the Economy

Mobolaji Lawal

From Akintola Williams and Co where he qualified as a chartered accountant in the 1970s to his foray as a general manager with Guaranty Trust Bank in the 1990s, Mobolaji Abdulfatai Lawal, a banker-turned-educationist understands how integrity and corporate governance can strengthen the nation’s financial system. As he turns 70 recently, the erudite banker, speaks with Funke Olaode about finance, politics and economy

How do you feel turning 70?

I feel happy. I feel great that I am following in the footstep of my father and grandfather. My grandfather lived for 97 years while my father died at the age of 85 years and I hope I will surpass them. In a way, longevity runs in the family. And the secret is simple living, simple lifestyle, doing things in moderation.

A chartered accountant turned banker and now an educationist. How did it begin?

I began early education at AnsaruDeen Primary School in Iseyin in Oyo State and later proceeded to Oranyan Grammar School in Oyo Town; from there to Federal School of Science in Lagos. I had a brief stint at Yaba College of Technology. From Yaba Tech, I embarked on Certification of Association of Chartered Certified Accountants (ACCA) of the UK. After certification, I came back to Nigeria and joined Akintola Williams and Co. after my National Youth Service on August 1st, 1977.  After the firm was affiliated to an international organization,   I was sent for an 18 months international exchange programme in New York, America where I was exposed to industry practices in petroleum, oil and gas as well as finance. I came back to become a manager. I spent five years with the firm and in 1993, I joined Guaranty Trust Bank as General Manager. From there, I moved to the oil and gas sector, a privately owned firm where I spent a few years before joining a firm of consultancy where I am still relevant till today.

At what stage did you develop a passion for accounting?

Ironically, I set out to be a medical doctor. In fact, when I was considering going to the College of Medicine, I had a vacation letter of employment to College of Medicine in Lagos and was in Pathology department but it didn’t work out due to various factors. It was during the military era of Gen. Yakubu Gowon. Gen. Gowon had issues with the resident doctors and gave the order to vacate within 24 hours. That experience put me off medicine. Again, some of the friends I made at the Federal College of Science and their brothers were into accountancy and architecture. Fortunately for me, the opportunity to do accountancy came and I embraced it. Again, I wanted to go to Michigan State University in the United States to study medicine and when I got the paper, it stated that I was going to spend up to 12 years. I looked at it and was like I had numerous siblings to look after and decided to go for accountancy. In those days, if you opened newspapers, especially daily times, they always advertised for the position of Financial Controller with N12, 000 and architect N10, 000 per annum. It was an era when professors were earning N5, 000 per annum. That was how I switched to accountancy. And I never regretted the crossover.

You were in accounting before you crossed over to banking. What is your view of the banking system where loan defaulters are gradually killing the banks?

Well, to be realistic banking industry today is far better than when banks were owned by state governments. And political intervention was so much that most of the banks failed to deliver. The fact that those banks are now owned by the public makes things better. Again, the kind of business we are talking about in the past is not the mega business we are doing today. Indeed, the case of Skye Bank being taken over by AMCON, when you look at the causes you can’t divorce politics from the problems as many of the people who borrow money from bank these days work directly on government contracts, and when government fail to pay at the right time the banks will not stop accumulation of interests on the principal. Mind you, the government will not pay interest on the outstanding claims. Another problem is the continuous depreciation of Naira in the last 20 years. For instance, if you borrow money at N150 to a dollar and overnight there is a depreciation of Naira in the exchange rate with the dollar being exchanged at the open market at N360 to a dollar, that means overnight the liability to the bank has increased, meanwhile, you have done your contract on a fixed sum. Invariably, you are not only losing your gain in that contract but also your investment. At the end of the day, the banks will be at the receiving end. And if you look at the case of Skye Bank, most of the people who borrowed money from the bank actually invested in some key sectors of the economy such as oil and gas, telecom and energy. Now, AMCON will run after those borrowers, capture those assets. And that is how AMCON will recover the money that CBN has used to bail out the banks.

Looking at the scenario you just painted, for a country striving for economic growth; don’t you think instability can drive away Foreign Direct Investment?

You see some banks have problems based on their practices and the competence of their management. The Skye bank has a new management now, who didn’t create the problem. We have what we call corporate governance where you must have checks and balances in an organization but where there is a weak governance structure, you are likely to have a problem. You know a situation whereby the key officers of the bank could directly borrow beyond the limit. Again, you have to look at roles of CBN examiners before things go wrong. Nevertheless, there are still good banks that are still running efficiently for their owners and shareholders. FDI means you are part and parcel of this economy and you have invested for good, unlike Portfolio investment where you can put your money in the secondary market and at the slightest provocation in the economy, you dispose your shares and move back to your country. So there are still viable businesses. In fact, Nigeria is still a good destination for foreign investment because telecom is growing, oil and gas etc.

Don’t you think the regulatory authorities have failed in carrying out their responsibilities?

Before you can wield a big stick as a regulatory body, you need to go to the bank and call for CBN examiners reports.  Nigerian Deposits Insurance Corporation (NIDC) also does oversight functions on banks.  It is just a buildup and not that they are keeping quiet. The way it works, you won’t go to CBN or NDIC before giving out a loan. It is only when the loan is not performing that it comes to the notice of the CBN or NDIC.  That is why internal management is put in place. You have the board of directors and management executive teams that are supposed to be running the business.

But the duty of the Credit Bureau is to there to give reports or assessment of individual or corporate organisations before you can give out loans?

Yes.  There is credit bureau that will analyze and give reports on whether a certain individual or organization is credit-worthy or not. But mind you, business is a risk. The individuals that are forming these companies that are borrowing at mega volume from those banks are men of notes in the society. So, when they present their proposals they look credible. As said earlier,   unstable of exchange rates and government who is a big spender in this economy must be a good partner in economic progress. When they give out a contract or contracts, they must fulfill their obligations. Again, corruption has its impact on this. If a person takes a contract, for instance, N100 million and a group of persons say ‘come before you execute this projects you must give us N40million as kickback, meaning you only have N60 million for the job. Now the money you have is not enough to carry out the job. And if there is a change in management that doesn’t buy into your project ideas, then there is a problem. You have borrowed money from the bank and the interest has started escalating.

The 2018 budget was passed mid-year and government is now talking about acceleration move. What impact do you think this will have on the nation?

Well, you have to recognize that the current government had to contend with internal strife within the party right from day one. And that is why it took President Buhari almost eight months to announce the cabinet. And again, when the National Assembly converged for this dispensation there was a strife where people scheduled for a particular position jettisoned it and new alliances were formed to move into those positions like the position of Senate President that has been a trauma for the APC administration. Otherwise, if the APC is in tune with itself, that budget could have been passed. Again, if you delay the passage of the budget that means there is a limit to which the government can go in terms of accomplishing its capital projects which require time to execute such as roads, bridges, etc.