The Senate proposal to abolish the Bank of Industry (BoI) is already raising some dust.
In the place of BoI, the Senate is pushing for the establishment of a new development financial institution, the National Development Bank of Nigeria (NDBN).
Opinions are sharply divided about the necessity or otherwise of the proposed NDBN.
The controversial proposal came in form of a bill which seeks the repeal of the Act of the BoI and the re-enactment of the National Development Bank of Nigeria as replacement for BoI.
Senator Ibrahim Abdullahi Gobir (Sokoto East) who sponsored the bill said the establishment of NDBN is meant to create a robust financial institution that would help to galvanize and fund small and medium enterprises.
The bill has passed the first and crucial second reading in the upper chamber and promptly referred to a committee for further legislative action.
On Monday, the Senate Committee on Banking and other Financial Institutions conducted elaborate public hearing to get the inputs of stakeholders and the general public about the proposed legislation.
Although Chairman of the committee, Senator Rafiu Ibrahim (Kwara South), assured that the outcome of the public hearing would be guided by public opinion, an agitated participant who said he was uncomfortable with the trend of the public hearing voiced out his frustration. “It appeared members of this committee made up their minds before the hearing,” he said.
The body language of the committee members, he said, “gave them out as people who just wanted to fulfill all righteousness in the name of public hearing.” Law making, it should be said, is not a matter of body language.
Senate President, Abubakar Bukola Saraki, who inaugurated the public hearing, described the National Development Bank of Nigeria establishment bill as one of the bills identified as crucial to expend access to finance opportunities in the country and promoting long-term borrowing that is less fragile.
Saraki explained that public hearing is another avenue to seek intellectual and professional inputs from experts in the financial sector to query the framing of the bill.
Experts, he said, should give their honest opinions on such issues as the values to be derived from the merging proposed in the bill, especially as it affects other Small and Medium Enterprises (SME) financing institution and the advantages or otherwise of seeking a one-stop-shop special purpose SME financial entity.
For Saraki, the Senate has remained unflinchingly committed to using substantial legislative time and energy towards economic reforms with major focus on reducing the cost of doing business in Nigeria as well as boosting enterprise development.
The bill, he added, has also been identified by the private sector as an integral unit in the institutional restructuring of the banking sector that will enable better SME financing.
Although Saraki spoke glowingly about the bill and its intendments, the man who seemed to be in the eye of the storm, the Acting Managing Director of BoI, Waheed Olagunju, was emphatic that the bill was ill advised.
Olagunju took time to articulate the dangers inherent in going ahead with the proposed legislation.
The BoI boss underscored the fact that the abolition and scrapping of the bank will not be in the interest of the country. He was passionate in his presentation against the proposal, marshalling reasons on why the move to scrap BoI should be halted.
For him, there was no doubt that BoI, as presently constituted, was already fulfilling the mandate envisaged in the proposed legislation. What is lacking, he said, was due capitalization to further empower the bank to perform even better.
Olagunju told the committee that instead of duplicating functions by creating new DFI, steps should be taken to further strengthen the BoI through capitalization to carry out its functions.
Apart from funding, which he described as critical, Olagunju raised the issue of lack of capacity by most SMEs to transform.
He wondered how the proposed new bank could engender rapid development without capitalization. Capitalization of DFI has failed substantially because corporate governance is lacking.
He listed the Central Bank of Nigeria (CBN) Ministry of Finance, Ooni of Ife, Aloko Dangote and others as BoI viable partners to buttress the fact that the bank is on course.
The Finance Minister, Mrs. Kemi Adeosun, who was represented by a Director in Ministry of Finance, Christopher Gabriel, supported the bill.
Adeosun said the proposed legislation is in tandem with the economic reconstruction of the Federal Government.
The Central Bank of Nigeria Governor, Godwin Emefiele, represented by Joseph Nnanna, a Deputy Governor on Financial System, said the CBN has no objection to the proposed bill.
“We have no objection, we welcome this development, the more the merrier, we have challenges facing the economy, and the biggest challenge is capitalization,” Emefiele said.
The popular thinking among major stakeholders is that going forward, the Senate must do due diligence on the intendments of the bill.
As important as widening the scope of SMEs may be, it may be necessary for the promoters of the bill and the National Assembly in general to consider the challenges of BoI. If in the estimation of the promoters of the bill the BoI has not performed as expected, the question should be why it has not performed. What is the guarantee that a new development bank by whatever name called, will do better?
For the BoI, to be or not to be, is the question the Senate will answer in the days ahead.