Category: Saturday Magazine

Folorunsho Odutan John, an astute banker with over two decades experience in the industry, sits atop as the Managing Director/Chief Executive, Tag Nigeria Limited. FOJ as he is fondly called by friends and associates has served in various capacities in top flight banks and was until recently the pioneer Managing Director of First Bank Bureau de Change, a subsidiary of First Bank Plc. In this interview with Ibrahim Apekhade Yusuf, he shares his views on sundry issues affecting the nation’s banking sub-sector 

As a major player in the nation’s banking sub-sector over the last two decades how would you assess the industry?

From my own experience, the banking industry has gone through so many challenges, some of which were caused by the bankers themselves and some by the regulatory authorities. For instance, because of the craze for competition, a lot of things evolved in the early 90s and I can tell you that also caused some of the problems we have in the banking industry and the collapse of some banks in the mid to late 90s.

When we started banking there wasn’t rush for deposits and so on. But because of competition created by CBN a lot of banks started advertising. I’m very sure you must be aware that these days you see in front pages of newspaper something like, “we are the largest depositor; we are the best bank in terms of credit, assets” and so on. Thus, this attitude created distortion in some of reporting lines in banks. A lot of banks started doctoring their reports so that it will look good in the eyes of the public by just posting profits, and their balance sheets cannot even support the profit they are declaring.

And the media was awash with a lot of advertisements from the Nigerian banks and even from some unrecognised award givers in Europe and America. And when you see many Nigerian banks going abroad to receive one award or another, the question you should ask yourself is why are the likes of HSBC, American Express Bank, Barclays and others, how many times have you seen them winning awards?

But so many awards were created by those institutions over there because they wanted money from Nigerians and because we love publicity. So, that exactly contributed significantly to the failure of banks in the mid 90s. Banking is supposed to be conservative. In our time when you see a banker you will know this is a banker because of his attitude and way of life but this not so any more.

The CBN has said banks should divest all their equities from their subsidiaries. Is this the way to go?

I agree 110% with that because from the onset we got it wrong. For example, I worked in Ritz Bank in Washington, in the early 90s and what I could gather from American banking system is in terms of unit banking.

We wanted to introduce that into Nigerian market about some 15-16 years ago when Magnum Bank came in and were doing what we called franchise banking, and that is exactly the American model. You can never see an American bank with 560 branches; you can never have such.

The Ritz Bank, where I worked in Washington, only operates in a county in America, you know like what Magnum was trying to do. They were selling franchise to some people. Let’s assume you want to open a unit bank in Maroko, you are only entitled to operate within that Maroko; you get what I’m saying. That’s what we call unit banking. A situation where you now have a bank having about 560 branches, it’s crazy, and that is why the cost of operating the banks are so high that banks have come up with a lot of funny charges.

It’s only in this country that you have C.O.T or commission on turnover. I have travelled very wide and have never seen any bank that they charge you commission on turnover. In fact, it’s a parlance that is only operating in Nigeria.

So because of the cost of operation, it has made some banks to start charging some frivolous and unacceptable charges and that’s why the public don’t have confidence in the banking sector again.

So do you think the model chosen by the CBN is in order?

Coming back to your question, whether the banks should adopt a model as put forward by Sanusi, I agree like I said 110% because one thing banks should face the business of banking. What led to the capital market failure is because some banks have subsidiaries and the subsidiaries were even buying the shares of those banks and making the banks look good in the market and in the process the banks were taking undue advantage in terms of determination of the price in the capital market.

The question you should ask yourself is that when the banks are declaring billions and billions in terms of profit what’s happening to the real sector? That’s one fundamental economics that a lot of Nigerians have not been able to come to terms with.

What is happening to the likes of the Dunlop, the Michelin the PZ the Unilever, Cadbury, where are they today? In my elementary economics in the University of Ibadan, I was taught by one of the best and renowned economist, then in Nigeria, Professor Aboyade, and he always emphasised a point and students then in the early 80s we had that memory about the equation of Nigerian economy or early economy of the whole world.

I left university about 30 years ago and the thing still reverberates through my brain. We have a problem of equation of the national income. You know Nigeria we have been boxed into a corner because of the oil, and we have lost even the middle class; the middle class is supposed to generate that savings that we need to invest, but how many of them have savings now?

People now take their investments out of Nigeria. And that’s what we have not been able to address fundamentally: the inability to develop that culture of savings.

And how do you develop it? It’s simple. Without the power sector running there is no way you can industrialise. Most companies in Nigeria today have gone to Ghana; some have gone to South Africa. I learnt that even one company has now relocated to Togo. Look at Togo’s population; it’s not more than half of Lagos.

Until we are able to solve the power problem and have able leadership in terms of policies things will not change for the better.

What’s your assessment of the bureau de change sector?

Look at the operation of the Bureau de change today, you and I know that the mallams you see out there are illegal traders because to trade in foreign exchange you must have a trading license. What I’m saying is that government knows that these people are handling an illegal business. And we have a government that is not even aware of what they are doing then we have a problem as Nigerians. I feel so bad that you have an economy that is funding bureau de change and I have said it so many times even to the CBN governor when we had a meeting in Abuja and I told him that this is the only country in the whole world where CBN funds bureau de change. I don’t know but somebody told me that it was to control exchange rate. But even then, you don’t control the exchange rate by funding bureau de change. That’s an artificial funding. You generate foreign exchange through production.

The issue of bureau de change, I say it and I want anybody to challenge me, the people running bureau de change today are speculators because we have turned bureau de change into another commodity, and when you turn your currency into a commodity it will be subjected to trading. And no currency is being traded except commodity.

Alhaji Muhammodu Lawal Kaita is a former chairman of Nigerian Maritime Authority (NMA) and was governor of old Kaduna State from October 1st to December 31st 1983. A North-west Peoples Democratic Party (PDP) leader and die-hard supporter of former Vice President Abubakar Atiku’s presidential ambition, the octogenarian has seen the good, the bad and the ugly in governance. He bares his mind on contemporary issues in this encounter with our Katsina Correspondent, ISah Idris.  

Nigeria has just celebrated its 52nd Independence. What were your expectations at independence as regards the country’s leadership? Have these expectations been met?

By and large, whether we like Nigeria or not, whether we like its leadership or not, we can say Nigeria has progressed by leaps and bounds in the last 52 years. It has improved tremendously compared to the pre-independence time. Like in many places where there were no roads, today we can see them. We went to the college in low rates. There were few roads with coal tar, but today we have them.

When I was in Kaduna College, we came to school by lorries, and even in the college there was no proper accommodation – with students lying on bare mats. Things have changed and so, we can say there is tremendous improvement.

What other things can you say are the fundamental successes and challenges facing the country after 52 years today?

Well, there are so many challenges, some have been solved or resolved. If you talk of Boko Haram, if you talk of Maitasine, they are all challenges. I know in Kano, Maitasine was there; fully trained young men were ready to die, killing people and so on, but the problem was resolved and peace returned to Kano. So there are some of these challenges and crisis that we faced after the 1964 crisis.

You can recall the electoral crisis of 1964 when Northern Peoples’ Congress (NPC) contested elections and won. There was boycott and that created crisis between Action Group (AC) and NPC, but it was successfully resolved because of maturity and sincerity. This was because every one of the leaders then was after the success and wellbeing of Nigeria as a country – not to make money for himself unlike the situation we find ourselves in today. Now, everyone is to himself. So there is a wide difference between the situation then and today. Now, everyone wants to make money (laughs). But then those leaders we inherited governance from were not interested in that, they were only interested in the wellbeing of the Nigerians, the wellbeing of ordinary people.

What brought all this excessive greed, I believe, is the unfortunate military intervention. With the military intervention young, immature, inexperienced officers from nowhere, not trained, now seized power. That was the beginning of troubles for Nigeria.

Before then, before you became somebody as a leader, you must have been groomed by somebody. Even in party membership, like in Northern Element Progressive Union (NEPU) where I was, before you become a member, you must have been groomed for years. People didn’t just mischievously jump to power as you have it today. This is what we are doing today. Today everyone can just become leader at any highest level without learning or understanding what leadership entails. All the language they understand now is how to steal money; how to amass wealth that does not belong to them but to the common people of Nigeria. So, all is not well with Nigeria any longer.

We were told by some elder statesmen who witnessed the lowering of the Union Jack and the hoisting of the Nigerian flag at Tafawa Balewa Square, Lagos on October 1st 1960 that, as a leader, if you were offered bribe, the money was thrown back in your face, ethnic and religious tolerance was at its peak, security was guaranteed, until crude oil was discovered. What is wrong with Nigeria? is it oil?

I have told you my understanding that what brought about indiscipline and corruption and so on, was the intervention by military officers in Nigerian politics and the sudden change of power. You can imagine, Tafawa Balewa as Prime Minister was a teacher for twenty years; he was a councillor. He was groomed. He knew all the intricacies of power. Then, suddenly, Gen. Aguiyi-Ironsi came in and took over power from a village in Ibo land. Not that I belittle him, no! I don’t belittle him but because as a very young man, very inexperienced except to hold the gun, he killed this man, took over power, without the knowledge of how to use that power.

He was equally surrounded by very young gun-totting officers who did not understand what leadership meant. How do you expect stability in this situation? That was the beginning; the problem is not oil. Oil could be part of the problem but not the real problem. Of course, after the military intervention and sudden change of power the young officers, they didn’t know how to use the power to the benefit of the Nigerian people; they mismanaged the proceeds from oil to enrich themselves.

There was no problem when oil was discovered and explored. When exploration was to start, the southern states had no money, so we resorted to use the resources from groundnut, cotton, cocoa, coffee and so on to explore the oil. But suddenly, people began to feel this is their own not our own, after the bastardisation of the system by the military boys. This continued up till the movement of federal capital from Lagos to Abuja, which itself produced elitist leaders who now partitioned to themselves the resources and wealth of this country and dumped the common man to his fate. This is the system now in place.

I want to tell you that oil money was just a contributory factor to indiscipline and corruption. If you haven’t gotten money, there is no way you can use it to corrupt people. So, money was there aplenty during the oil boom in the early 70’s, and it was part of the problem but not the strongest influence.

You can imagine a young man and a friend of ours, an army officer then who was a military administrator, solely got a contract worth one hundred million naira then. A young man without experience of what to do with that huge amount of money was playing around with such money. At times, he would come to us with one hundred, two hundred, three hundred and four hundred thousand naira in his pocket. I knew some of them. He was not even married then, but he got this plenty money suddenly. This has been so all over the country. Imagine, young officers – they were young friends, to make such plenty money was shocking then. And that was how they encouraged all sorts of things.

I am not saying a young man should not have money, no! But they are not experienced at handling such huge amounts of money without indirectly causing havoc to the society. It is fair and better for you to go through the decent process of getting this money. If you go through the decent process of getting this money, you will respect it. But as a young man without a wife, without responsibility and you come across hundreds of millions of naira, what do you do with it?

Obviously, you will squander it, you will spend it recklessly. You will go after cheap girls, drinking and so on. All they want is playing around the whole country with reckless livelihood and that is what we do today. That is the greatest problem we have in Nigeria today.

If you are talking of leadership or rulers, we have two different kinds of rulers. We have the traditional ruler and we have political ruler. To be a traditional ruler, you must be part of the traditional system. You must be born and bred in that system.

In the political system too, the same traditional system bred the political system. People like Sardauna, Ahmadu Bello, Tafawa Balewa, Isa Kaita, Ribadu and so on, were groomed in the same system and they ruled Nigeria with utmost sincerity. All they wanted was peaceful co-existence and to help ordinary people. That was the true system in place then. Now, the systems are totally bastardised.

Now, the political system is entirely different from traditional system. The political system brings in views from nowhere, from unknown, unsound background or unknown sources just like that. No experience, people don’t know what it means to govern or rule people, because, suddenly, some people came and took over power. So, this is part of the problem with us.

Northern leaders have demonstrated severally that they have lost focus after abandoning the ideals and legacies of the late Sir Ahmadu Bello. We are now faced with insecurity and threats to lives and properties, Almajiri now flood our streets, and people are now picking bullets instead of groundnuts. Any hope for a responsive northern leadership and a secure north?

What happened in the North was quite unique really. North was very disciplined, loyal, hardworking and obedient but suddenly these collapsed. You ask me why?

Well, this total collapse came in the last few years; because there is total collapse now such that, virtually, north has no leader. Nobody is highly respected today that he can dictate or direct others in the region. Nobody! Before from Waziri, Isa Kaita, Hassan Usman Katsina, these people could collect the people in the north and they would come and listen to them, but today, nobody.

The collapse came in the last few years because of the effect of money and the naira in particular. What I am saying is that greed and money politics has destroyed the discipline we once had in this country, and especially in the north. A young man without food, without a penny, you give him five thousand naira, ten thousand naira to go and do this and he will do it. Go and abuse this man, go and harass this man, he will do it for you in the name of politics and he will even kill and many instances abound. This crisis has continued to play out itself for over some ten years now.

So, money politics has destroyed the discipline in every society in Nigeria. Once you give money or naira, you can be assured, everything you need will be done for you. Everybody now, even the traditional rulers are now suspected to be induced by money. The judiciary itself, the last hope of the common man, is accused of accepting bribe and corruption. Don’t talk of police.

Unfortunately, they are now exposing the very heart of the nation – the army – to corruption. They are on the streets stopping cars and vehicles, begging for bribe money. So, after this stage, the entire system that we inherited from our founding fathers will collapse because of money. Other means of livelihood have been dumped for bribe money and quick money making.

For instance, a Katsina man used to live virtually on farming and smuggling. Easy money has taken over hard money. When you go to farm and get money, it is hard money. If you get money through smuggling and other cheap sources, you dump farming. You are now saying why go to farm to work and get one hundred thousand naira when you can get five hundred thousand naira a day through cheaper and mischievous ways. So, all these things continued to multiply until we found ourselves in this mess.

The government which makes and executes laws failed to stop this. All the agents of government instead become part of this corrupt practice system, and there has never been a salvation from the situation we found ourselves. If you start a meeting here now, the government, or somebody, an agent of government will give one million naira to some gang of people to come and scuttle it, because the government is not comfortable with the meeting. So, if you give out money, you can achieve whatever you want, good or bad in Nigeria, because everything is money – nothing else matters.

Take for instance, the last presidential primaries of the Peoples Democratic Party (PDP) between Atiku and Jonathan in Abuja. Atiku is a Fulani man and a Muslim from the North and Jonathan is a Christian and a minority tribe from the south. When votes were cast, we had 150 delegates from Katsina State but Atiku got only 11 votes and Goodluck Jonathan got 137 votes. Is it sincere, is it not a total sell out? Is this the effect of money? (Laughs!)

It is not a conscious effort. Nobody knew Jonathan in Katsina but everybody knew Atiku because he has come to Katsina several times. Did people vote for Jonathan or they were made to vote for him? (Laughs!) You see, this is part of the collapse, when things are not done on their own merit. By this type of action, you are expecting to get something from the presidency in return. You don’t look at the problems we are facing as a society. Everything in Nigeria now is rotten. Is it safety, is it corruption, is it money laundering? Name it.

Nigeria cannot afford to remain perpetually in this mess. As an elder statesman ,how do you think we can get out of the woods?

Obviously, we have to get out of this bad situation otherwise the country called Nigeria will collapse. I think we have various arms that are working towards how we could get out of this wood. There are various committees working now. Government is involved, everyone is involved. I believe everyone in Nigeria today has realised the danger the country is facing, everybody, no exception. Even those who think they have succeeded… may be they have stolen enough money. They are all lying.

Everybody knows Nigeria is in danger of disintegrating, if it disintegrates, nobody is a benefactor, nobody will benefit. Whatever it is, we are better together as one nation. Even the fact that Nigeria is the largest country in Africa is enough to boost your morale. If you are in a country like Botswana, you will know the worth of Nigeria as a country. Since everyone has realised our dilemma as Nigerians now, big or small, I think we are getting somewhere.

You mentioned that the Nigerian military has been involved in corruption. Can you expatiate on the extent of their involvement instead of their being occupied with defending the sovereignty of the nation?

What more do I say? You see it, I see it. You know it, I know it. What do I explain?( Laughs!) As the sole guardian of this nation, the military should not be involved in this beggarly activity. You can see them in the streets, stopping cars of the road users. I can see many road users offering them money, what else, they are being introduced into this money evil called bribery and corruption and that is bad. In those days, if the army came out during troubles, they stopped it and went back to the barracks. Now, they are permanently on the streets doing police work. It is another dangerous trend, a very dangerous situation. It has to be reversed.