The President of the Chartered Institute of Bankers of Nigeria, Mr. Bayo Olugbemi, in this interview stresses the importance of youth empowerment and advises the federal government to overhaul the country’s educational system. Obinna Chima provides the excerpts:
Youth unemployment has been a challenge for Nigeria, what do you think the federal government can do to address this, challenge?
The recent developments in the country has brought to the fore the need to give priority attention to the subject of job creation and youth empowerment. According to the National Bureau of Statistics (NBS), unemployment figures in Nigeria currently stands at 27.1 per cent. This figure points to the fact while the government is doing a lot considering the various social interventions schemes it has introduced, they are just not enough. Nigeria is blessed with a large youthful population which can be an asset, but if not properly managed, it may turn round to become a liability. Consequently, urgent attention must be paid to tackling this hydra-headed challenge. Here are a couple of options to consider: First, we need to up the ante and enlarge the scope of our diversification of the economy like never before. At present, the oil sector contributes 8.93 per cent to nominal Gross Domestic Product (GDP), while agriculture contributes 23.92 per cent; manufacturing 11.79 per cent; construction 6.83 per cent; real estate 5.3 per cent; finance/insurance 3.76 per cent; arts, entertainment and recreation 0.18 per cent. To create employment for our teeming youths, relevant authorities must focus on sectors such as agriculture, solid minerals, ICT/Digital economy, creative industry, sports and all other sectors that can productively engage the youths. It is often said that, “an idle hand is the devil’s workshop,” when the youths are properly engaged and productive, the menace of juvenile delinquencies and youth restiveness will fizzle out. Also, there would be enough for the domestic market and the rest can be exported to enhance the nation’s foreign exchange earnings. Another very important area that must be given priority attention is improvement in the educational system. The educational system in Nigeria requires a systemic overhaul. The kind of education required by our youth, is one that should prepare them for employment and entrepreneurship in the digital age. Only an informed and empowered youth can act responsibly. Our educational curriculum should be reviewed right from primary to tertiary education. It is imperative to mention that we can no longer continue to ignore vocational/technical education as well as the use of “Mother tongue” in our educational system. To creatively engage the youths, we must raise the bar on the quality of our education especially vocational training. This is what some developed countries like Singapore did and they are where they are today. Quality education would enable our graduates compete favourably with their counterparts from other parts of world. We must produce graduates that can contribute to economic development in this digital age and this in turn will enable the country transit from a consumer nation to a producer nation. Also, the government would need to strengthen its mechanism for dealing with the issues of insecurity. Fredrick Douglas, an American social reformer and writer said in 1842 and I quote, “Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.” The current security situation in Nigeria must be taken seriously by the government. No reasonable investor will invest in an environment that is not secure. There must be peace and tranquility in the country to attract investors both local and foreign. Another critical issue that must be given attention is investment in infrastructure. Basic infrastructure such as stable electricity, railway, good road networks and telecommunications are required for businesses to thrive especially small and medium scale enterprises (SMEs) which is the engine of the economy. These facilities are necessity for young entrepreneurs who require stable power (electricity), good roads and running water to sustain their start-up businesses. It is estimated that over N3 trillion is required to close the infrastructure gap in Nigeria. This therefore implies that Nigerian government should collaborate with the private sector in the form of Public Private Partnership (PPP) to provide the needed financing.
As the leader of an institute of bankers in the Nigeria, a critical sector that was affected by the recent civil unrest as we saw how several bank branches and ATMs were destroyed, what advise do you have for the government to ensure such doesn’t reoccur?
The banking community in Nigeria ably led by the Central Bank of Nigeria, the Bankers Committee, the body of Banks CEOs and CIBN the umbrella body for banks and bankers in Nigeria have done quite a lot and have continued to play significant role as an entity that is economically and socially responsible.
The banks have been the vanguard of financial literacy/Inclusion, propagating and bequeathing individuals with set of skills and knowledge that will empower them to make informed and effective decisions with their financial resources and also catering to the need of the unbanked/under-banked.
Very recently, the Central Bank of Nigeria, the Bankers Committee and the body of Banks CEOs coordinated by the CIBN unveiled a N1 billion Bankers Charitable Endowment Fund for impactful social projects in education in Nigeria. This project is targeted at empowering the poorest in the society and lifting them out of poverty through education. As you are aware, banking is a service as well as a business and just like every other business, it thrives in an environment that is secure and safe. The banks suffered colossal loss due to the recent mayhem and unrest, as bank facilities and installations across the country were vandalized and looted by unscrupulous elements who took advantage of the #EndSars protest. My candid advice to the government at this point in time is that government must embark on series of engagements with critical stakeholders and keep the public informed. Fake news thrives in the absence of authentic news. So, government has a responsibility to keep members of the public adequately informed. When government engages and informs the public, it will clear the air and dispel tension. Citizens’ confidence in government will also be restored.
The president recently presented the 2021 Appropriation Bill to the National Assembly, what is your assessment of the proposed budget?
The 2021 appropriation bill as presented by the president seems to have set the right priorities with the bulk of capital spending going to Works and Housing, Power and Transport as well as the increased capital allocation to education and health. The budget deficit projected at N5.2 trillion or 3.6 per cent of GDP, is higher than the three per cent threshold stated in the Fiscal Responsibility Act 2007.
This marks the second fiscal year the federal government is exceeding the fiscal deficit threshold due to the unprecedented economic shocks brought by the pandemic. However, this is likely to be the trend going forward, with implications for debt sustainability risks. In view of this, it is expected that the federal government would finance its budget deficit mainly through domestic borrowing from the debt market and the CBN as well as through multilateral and bilateral sources. The relatively high budget deficit may raise average domestic interest rates, and so crowd-out investments decisions and activities of individuals, firms, and associations. Hence, associations and other professions should effectively undertake scenario planning to caution against marked divergence from expectations. The projected recurrent expenditure is still high while new borrowings of over N4 trillion to part finance a deficit of over N5 trillion is worrisome given the already huge amount of N3.1 trillion allocated to debt servicing alone. The 2021 budget is overly optimistic considering the weak prospects of strong revenue collection due to the pandemic and the historical trend of poor budget performance. While the revenue assumptions seem quite conservative, the broader weakness in the non-oil economy would affect collection. It is therefore advised that going by the unstable and fluctuating global oil prices, the federal government should review and strengthen existing policies and incentives to support the growth of the non-oil sector to minimise the country’s vulnerability to macro-economic risks such as production fall, fall in demand and price, and also a run out of foreign exchange reserve.
A reduction in fiscal deficit is necessary since the implementation of the Finance Act 2020 with respect to VAT, stamp duties, PPT etc, should translate to increased revenue for the government. So also, is the removal of fuel subsidy which will free up more resources for the government. COVID-19 notwithstanding, the deficit to GDP should have been kept within the three per cent threshold stipulated in the Fiscal Responsibility Act 2007. The National Assembly is encouraged to consider any amendment within the budget envelope of N13.08 trillion and should not end up jerking up the figure.
The expectation is that the economy will slip in recession in the third quarter 2020 GDP figures to be released in the coming days, what do you think the government should be doing in order for the country not to have a prolonged downturn in economic activities, which actually is a depression?
As you may be aware, this is not the first time the economy will be sliding into recession. The economy went into recession in Q2 of 2016 and the extraordinary measures taken by monetary and fiscal authorities who invoked the appropriate monetary and fiscal policy mix supported a rebound of the nation’s economy during the second quarter of 2017. I am very optimistic that we will come out of a recession as we have what it takes to tackle it. For instance, the Economic Recovery and Growth Plan is an instrument that is readily available. As you may also be aware, very recently, an astute banker and a distinguished Fellow of the Institute, Mr. Atedo Peterside, Founder Stanbic IBTC Bank, was appointed to co-chair the steering committee for the development of a medium-term national development plan, alongside the Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, this initiative will also help to address some of the issues facing the economy. Seriously speaking, to get out of a recession, government must pay attention to the productive sector of the economy such as Agriculture and Manufacturing. Focus must also be placed on MSMEs as an engine of growth of the economy. MSMEs help to put money in the hands of households and with increased household spending coupled with government spending, the economy will gradually reflate and bounce back. Government will also need to block leakages and wastes among other things in order to get the economy back on track.
What is your assessment of the measures/policies introduced by the CBN since the outbreak of the virus?
The response of the Central Bank of Nigeria to the pandemic has indeed been very encouraging. You will recall that the apex bank introduced monetary policy measures to support affected businesses, households, financial institutions and other stakeholders. Some of the initiatives of CBN include: one-year extension of moratorium on principal repayment on its interventions; reduction in interest rate on all CBN facilities from nine per cent to five per cent until 28th February 2021; regulatory forbearance to deposit money banks to restructure the terms and conditions of facilities extended to households and business affected by the pandemic; strengthening of the loan-to-deposit ratio policy; and the introduction of the N3.5 trillion combined stimulus package. All these were put in place to support the private sector and keep the economy running. The Coalition Against COVID-19 (CACOVID), a Private Sector task force in partnership with the Federal Government, the Nigeria Centre for Disease Control (NCDC) and the World Health Organisation (WHO) is another initiative largely led by the financial services industry with the sole aim of combating Coronavirus (COVID-19) in Nigeria. The mandate of the task force is to pull out resources across industries to provide technical and operational support while providing funding and building advocacy through aggressive awareness drives to support efforts of the Federal government in combating the pandemic. The impact of the efforts and support provided by the coalition had been felt across the country and has gone a long way in the fight against COVID-19. You must have noticed that quite a number of our financial institutions are playing frontline roles in the coalition. Another index that speaks to the effectiveness of policies put in place by the CBN is the relative health of the banks. It is important to note that at present, no bank in Nigeria is reported to be in distress. We are still in the pandemic; we hope and pray that with the anticipated release of vaccines the virus will be defeated and we can return to our “normal life”.
The theme of your forthcoming investiture is, ‘Financial Services in a post COVID 19 Environment: Strategic Imperatives.’ What do you think should be the focus of the industry following the outbreak of the virus?
This is a very good question, first I believe banks will continue to strengthen their cybersecurity architecture against potential attacks by fraudsters especially now that traffic has moved to the digital space. Banks will also continue to reinforce their risk management framework in tandem with government policies. I also believe that banks should consider conducting more market research on how customer needs might change in the Post-COVID era. This would inform product development and process improvements. May I inform you that a crop of experts have been assembled to x-ray this subject. As such, other insights on this very important topical issue, will be shared during the Fellowship Investiture Ceremony coming up on Saturday December 5, 2020.
How will you score the level of corporate governance in the banking sector today?
The banking sector is the most regulated industry in Nigeria and the world over because of the crucial role banks play in national economic development. Several aspects of the Code of Corporate Governance as stated by regulatory bodies are being adhered to by Nigerian banks, which is not to say that there is no room for improvement. According to a research carried out by The CIBN Centre for Financial Studies, the research arm of the Institute, Nigerian banks have not met the CBN 30 per cent quota for female representation on the boards of directors of banks in Nigeria. This is an area for improvement, and I would like to encourage our banks to continue in their efforts to meet this quota.
Dearth of manpower in the banking sector has remained a challenge. What is the CIBN doing to address this?
The institute in line with its mandate to determine the standards of knowledge and skills to be attained by persons seeking to be members of the industry and the approved Competency Framework for the Banking and Finance Industry in Nigeria has done a lot in this space and still doing, in order to ensure that the knowledge and skills of persons working in the banking and finance industry is up to date. This year alone the institute produced a total of 677 Associates and 640 Microfinance Certified bankers in addition to the existing 6242 Associates and 5594 Microfinance Certified bankers. It is imperative to mention that the Institute recently reviewed the syllabus of its Banking Professional Examinations in order to ensure that the contents are contemporary and cover emerging relevant issues within and outside the banking and finance industry that have implications for human capacity development. The new syllabus that was developed in conjunction with PwC, brought in a lot of innovation, combining global standard with local content. It also addresses the current market and employers needs and reflects the anticipated future skills requirement. Subjects featured in the new syllabus include: Public Finance (for the public sector), Digital Banking and Fintech, Agency Banking, Enterprise Risk Management, Finance in the Global Market, Agricultural and Rural Banking, Applied Banking, Bank Management and Strategy, Ethics, Corporate Governance & Professionalism to mention a few.
The new syllabus also has an Experiential Learning Module which simulates the responsibilities of a Chartered Banker and focuses on the core activities which employers expect competent individuals in those roles to routinely perform
In addition, in order to deepen knowledge and expertise in specialized areas of banking operations, the Institute also launched fifteen (15) new Certification programmes in critical areas of Banking and Finance. It is instructive to note that apart from Nigeria, the Banking Professional Examinations of the Institute are conducted in other African Countries such as Ghana, Liberia, The Gambia, Sierra-Leone, Rwanda and Zambia. The Institute is providing this intervention in order to help build the capacity of practitioners and also provide safety nets across the continent in line with its Vision to be a global reference point for skills and conduct.
As part of efforts to ensure that industry players are well rounded, the Institute went into strategic collaborations locally and internationally, to enhance the quality of its offerings. Some of the collaborations/partners are as follows: Association of International Certified Professional Accountants (AICPA), UK, Bangor University, Wales UK, Chartered Banker Institute, Chartered Institute of Management Accountants (CIMA), Credit Bureau Association of Nigeria (CBAN), Crown Agents Limited, UK, E-Payment Providers Association of Nigeria (E-PAN), Financial Markets Dealers Association (FMDA), Fintech Association of Nigeria, Global Association of Risk Professionals (GARP), International Finance Corporation (IFC), Lagos Business School (LBS)/Pan Atlantic University (PAU), McKinsey & Company, Nigeria Inter-Bank Settlement System Plc (NIBSS), Nigerian Institute of Social and Economic Research (NISER), PricewaterhouseCoopers (PwC), Retail Banking Academy (RBA), London, Risk Management Association of Nigeria (RIMAN), Chartered Institute for Securities & Investment (CISI),The London Institute of Banking & Finance (LIBF), The Nigerian Economic Summit Group (NESG), US-Africa Cybersecurity Group, West African Institute for Financial & Economic Management (WAIFEM) etc. Permit me to mention that the Institute is also playing very prominent roles in the global space with its leadership of the Global Banking Education Standards Board (GBEStB) where a Past President of the Institute Dr. Segun Aina, OFR, FCIB serves as Chairman. The Alliance of African Institute of Bankers (AAIOB) is also ably led by the Registrar/Chief Executive of the Institute, Mr. ‘Seye Awojobi, FCIB who is the Chairman of the regional body. The Secretariat of AAIOB is domiciled in Bankers House Abuja. These global bodies set standards for the training of bankers across the globe. May I place on record that as part of our capacity building initiative, the Institute has a Mentoring scheme where young upcoming bankers learn from senior experienced practitioners under a structured mentoring arrangement.
This initiative has helped to ensure that the ethos of the profession is passed from the older generation to the younger generation. Also, notable is the introduction of the Professional Ethics and Conduct Certification, an industry mandatory online training and certification programme for staff from Managers down the ladder. It is gratifying to note that over 87,430 staff of banks have subscribed to this programme. These are some of the initiatives embarked upon by the Institute in order to ensure that the workforce in the industry have the requisite skill sets and continues to observe the code of ethics and professionalism.
Generally, what have you set out to achieve during your tenure as the President of the CIBN?
My vision for the Institute is encapsulated in my strategic focus as the 21st President/Chairman of Council of the CIBN. The strategy, which is detailed in my acceptance speech, is essentially to further push the CIBN to be a global reference point. The strategic focus of my administration has been crafted into the acronym, “A-TEAM” which means: A for Accelerated Development; T for Technology and Digital Enhancement; E for Engagement for Growth; A for Accountability and Transparent Leadership; and M for Membership Drive for Value. To achieve this feat, we would pursue creative and innovative ideas, that would transform and propel the Institute into global limelight in line with its vision of becoming a global reference point for skills and conduct. This vision will be executed in congruence with the Institute’s Corporate Strategic Plan (2020 – 2024)
How is the CIBN going to support the federal government in navigating out of the numerous challenges the economy is facing?
The CIBN is committed to supporting the federal government by playing its statutory advocacy role as the conscience of the industry. The Institute has at various times supported government initiatives using the platform of advocacy. It is important to mention at this point that the Institute has a wide spectrum of stakeholders in two broad categories i.e. corporates and individual members. The corporate members of the institute include the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), all deposit money banks (commercial and merchant), development banks, microfinance banks, mortgage banks, mobile money banks and payment service banks. All our corporate members play various roles in supporting the government under the aegis of CIBN. Similarly, the institute is endowed with members who are thought leaders and experts in various fields of endeavour who play critical roles in advising the government on topical and sensitive issues. The institute also supports the government through public sensitisation and enlightenment programmes. Some initiatives of government such as financial literacy and inclusion, sustainable banking, anti-money laundering and counter-terrorism financing, etc, have been supported by the Institute through various knowledge events, seminars, workshops and Consumer awareness programmes. The Institute also makes input into bills at the National Assembly ensuring that the interest of the industry is protected in the larger interest of the economy and public good. In the same vein, the institute collaborates with National Judicial Council to organise Annual National Seminar on Banking & Allied Matters for Judges. This programme has helped the judges understand emerging trends in banking thereby aiding dispensation of justice. From all that has been said, it is evident that the Institute has a tradition of supporting the government at all levels and we will continue to do so in line with our statutory mandate.