MUCH ADO ABOUT WORLD BANK REPORT ON NIGERIA BANKING SECTOR

The recent World bank report on Nigeria especially that of the robust financial sector has been received with a lot of criticism by the Nigerian government that does not want to face the fact. The report explained that the high return form investment in the banking sector was not a true reflection of a balanced well functioning system. The criticism by the government through the deputy CBN Governor Mrs. Sarah Alade that the basis of analysis employed by the World Bank and it conclusion was based on outdated fact that are no longer in use to determine how an economy is performing is baseless. We all known that progress has been and we now have a robust economy but how many Nigerians are feeling these progress.
If we are to look at this report objectively, we have to conclude that it is absolutely right in its conclusion. Nigerian banks are declaring huge profit after tax year in year out with little to show for it contribution to the economy where they are operating. The corporate social responsibility of these banks is nothing to write home about compare to the jumbo profit they always declare every year. Their main priority is how to outdo each other in profit and capitalization.
The Central Bank of Nigeria has done a good job in the repositioning of the financial sector to becoming the toast of investors all over the world with the attendant increase in the nation GDP. Let take a look at some of the banks and how they have performed since the repositioning started. First Bank of Nigeria Plc recorded a profit after tax of N17.4bn for the year ended March 31, 2006 while the figure increased by over N3bn to N20bn in March 31, 2007. Zenith bank on the other hand has already posted a profit after tax of N15bn for the nine month ended March 31, 2007 which translate to an increase of 70 per cent above the N8.866bn recorded in March 31, 2006. UBA’s half year result is already N10.109bn from the N4.599bn recorded in March 31, 2006. Guaranty Trust Bank first quarter profit after tax result was put at N3.465bn which is 66 per cent increase form the N2.086bn as at may 30, 2007. This are just few of the mega banks, other banks declaring jumbo profit include Intercontinental Bank Plc, Oceanic Bank Plc, Access bank, and First City Monument Bank.
These mouth watering figures by the banks were rubbished by the World Bank report for not translating to a developed and well balanced society and also offering little credit to the society and I stand to fully support that motion. While these banks continue to grow in leaps and bounds, the main sector of the economy continue to degenerate largely due to lack of access to funds for developmental programmes.
Furthermore, we need to ask these questions, how many Nigerians mega banks has or had embarked developmental programmes in any part of the country? What has been their contribution to various foundations across the country? A dive into their annual report will reveal that most of them have no ongoing and completed community project anywhere in the country despite the huge profit they are declaring every year.
The impact of these jumbo profit are not been felt by the masses. 60 per cent of Nigerian are living below one dollar per day while the smallest Nigerian bank is making over N1bn as profit after tax every year. The truth need to be faced, the huge return in the banking sector is not a true reflection of a well functioning system.
Another claim also rubbished by the World Bank report was the claimed that Nigeria had one of the highest returns on investment in recent times and maintained that there were low returns on investment in Nigeria and explained that it is as a result of low ability of the private sector to appropriate and access returns.
What reason can one give for this rather lackadaisical attitude of Nigerian Banks towards their social corporate responsibility? We need to look at the fact that most of the profits they are making are primarily from foreign exchange transactions and investment in government securities and not from lending to common man on the street or deposit form ordinary Nigerians which hold little interest for them. Another excuse that might be given is the high volatile economic environment of Nigerian which makes the country a risky environment to operate business and lead to an increase in the transaction cost of doing business in Nigeria. But these factors has not stop them form declaring billions of dollars as profit every year, therefore the excuse hold no water.
No doubt the Nigerian Banking sector has experienced a boom in the past three years and the phenomenal economic progress recorded so far has been impressive but the sector and the government need to transform the growth into reality. Nigerians need to feel the impact of this growth, we don’t want to hear it on the radio or see it on the television we want to feel it.
The government with the banking sector should not always try to make things rosy when in actual fact they are not. They need to come together and fashioned a way to transform all these growth into reality for the ordinary Nigerian to feel it.
Dividend of democracy must be felt and not heard and see, it must be clearly evident in the citizens lives. The banks should wake up to their corporate social responsibility; they have not been impressive. Anything short of all these is unacceptable.