From the onset the name and shame campaign by the Central Bank of Nigeria (CBN) sounds too ordinary to come from such a technocratic organization. The phrase lacks sophistication and sounds and reads like something coming out from die-hards of a political party wanting to get even with their rivals. Reducing a matter as serious as debt recovery (running into hundreds of billions of naira) to mere emotional expression reveals the weakness of the banks and the regulatory authorities.
Although it would be wrong to say categorically that the programme is politically motivated, it will also not be wrong to argue that the phrase is in sync with the current political mood in the country. Coming at a period when the new regime is making a song and dance of anti-corruption and fraudulent economic and financial practices, there can be no doubt that Nigerians will be more interested in its political implications than the economic. And that is the danger, albeit the fact that the final objective of the name and shame exercise is laudable.
Not unexpectedly, the exercise has already sparked off so much controversy bordering mostly on rebuttals by the affected organizations and individuals of their inclusion on the name and shame lists published by some banks. As it is, almost every company or director named in the lists has denied owing the banks. Although it is tempting to say that such denials are to be expected, the overall result is that beyond the “Political Effect” of the publications, the CBN and the banks might have failed, at least for now, in achieving the initial objective. For, in the face of the denials, the onus of responsibility now lies with the banks to prove that they are owed by the organizations concerned. And since the mere publication of names does not make the debtors culpable, it means that they will remain innocent until it is proved otherwise. And if the matters ever get to the courts, then we should forget it.
In my view, a situation where almost every so–called debtor has put up a vehement denial shows that the lists published might not be error-proof. But they should be, given the assumed sophistication of the banks and the implications – political, social and economic – of the exercise. For me, it would be quite unfortunate if any of the banks published any of the debtor organizations and their directors without being 100 per cent sure. Yes, 100 per cent, because there should be no room for such laxities in that sector. That disputes have already arisen shows that the sector has, either by design or default, become part of the pervasive malaise in the Nigerian system. It is something we can ill afford.
As I noted at the beginning, the first sign that the exercise might have been poorly conceived is the appellation given to it. Shame? Shame who? Shame who you do not have an incontrovertible evidence against? Agreed, the banks may still come up with such (fool proof) evidence but that may take some time. As things stand, it would not be out of place for critics to accuse the CBN and the banks of playing to the gallery. The idea might have been mooted before the current political dispensation but the apparent tardiness of which the banks are being accused has given room for critics to see some political contents, however marginal, in the exercise.
In spite of the haziness of the exercise so far, it should be hoped that it will overcome the initial setbacks to go ahead to realize the objective for which it was embarked on; which is to sanitize the banking system. Still, something tells me that the name and shame exercise might have been conceived as a one-sided effort. If we assume, at least for purposes of argument, that so much rot exists in the banking system, then it is proper to ask the following questions: Where were the banks? Where were they when things were going from bad to worse?
We understand that most of the debts are accumulations of unpaid interests on the principal money borrowed. But that also raises the question as to whether the businesses where going concerns. Where the companies operational and at what capacity when the loans were granted? At what point did the banks notice that the facilities had become non-performing?
If a company has ceased to carry out the business for which it obtained a loan, should the bank still go ahead to charge interest from a non-existent business ? How thorough were the appraisals before the loans were granted?
There is no attempt here to teach the bankers their job but we believe that given that the banks also operate in a larger environment that has been be-devilled with several flaws, it would be wrong to assume that they (the bankers) cannot share in the blame. In any case, stories of sharp practices amongst bankers are quite familiar. Not too long ago, some bank chief executives were jailed for presiding over the granting of loans to companies in which they had huge interests.
The point being made here is that while the overall objective of the name and shame exercise may be theoretically attractive, it also offers an opportunity for the banking sector to re-examine its modus operandi.
There is this story that one of the cases involved arose because a certain bank manager was fond of dipping his hands in the money of his customer. He had approved an overdraft (OD) but each time the customer came to draw from the OD, the manager would also take out from the money and prepare the documents to read that it was the customer that took away the extras. Eventually, the bubble burst. A dispute arose over the figures and inevitably, the facility became problematic. Curiously, this particular debt is among those listed by the bank in the ongoing name and shame exercise.
