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THE FUTURE OF BANKIN AREWA

Started by neozizo, September 12, 2005, 06:11:05 PM

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neozizo

The CBN has directed all banks wishing to continue ding business in Nigeria to raise their paid-up capitalization from N2B to not less than N25B (a 1200% increase) before Dec. 2005.The banks were expected to achieve this feat in just 18 months!

Considering current state of MOST of these banks and their failure to live up to their expected role as catalysts in promoting economic growth and development in the country, this is a welcomed and in my view, long overdue development.

From the way the directive was given and is being implemented, it is evident that the CBN considers all banks to be of the same capacity, level of development and growth and are therefore all expected to respond on the same par. This assumption is far from the reality of what the actual situation is, especially for Northern banks.

Only 16 out of 89 banks are Northern owned prior to Dec. 2005, and from all indications it is expected that the number will dwindle to even a smaller proportion after the deadline.

In a bid to ensure active and productive Northern participation and representation  in the banking sector, the 19 Northern state governors have quite commendably taken measures and have shown commitment to ensure the survival of the premier Northern bank BON.

The CBN has countered this noble move by barring the state governments from investing more than 10% of entire shareholding in BON or any other bank(either collectively or individually) add further directed them to liquidate part of their equity to a size of 10% or less.

Considering the history of interference by these governments in the running of the bank (and lots of other enterprises), with its resultant deteriorative effect, for furtherance of selfish political and other interests, the CBN?s 10%-ceiling investment policy is justified.

But one will have to wonder if this constrictive policy is not a part of a grand design by the CBN,and by extension the present administration to relegate to the background Northern participation in the banking sector and consequently the private sector (apparently the economy of the nation is being transformed  to be more of private sector driven than by government thus the control of the nation will ultimately be in the hands of those who control the private sector).Also the fact that the CBN is yet to (whether by omission or otherwise) direct southern and south-western sate governments to curtail their stakes in certain banks gives credit to this argument. It is a well known fact that these other governments own substantial equity in banks like WEMA and National Bank.

I concede that a conspiracy theory asserting that CBN has designs against the north seems/is far-fetched bearing in mind its recent writing-off of huge amounts of debts owed by BON and some other ailing banks.

As the main problem the BON faces with the SGs is of interference in day-to-day running of the bank, one would have hoped that the CBN formulate a policy/legislature curtailing their (SGs) managerial rather than financial involvement ,as the northern governors? decision to come to the aid (Yet again) of the BON was in recognition of the importance of the bank in the positive development  and well being of its people.

The people of the north have largely themselves to blame for the present unacceptable and dismal level of participation in banking, and other equally vital sectors of the Nigerian economy. Even in the on-going scramble to source for funds to recapitalize, we in the North, have been/are lagging behind (only 2 banks have so far emerged as Northern influenced with none yet to be Northern dominant ).we refuse to invest our money in banks and even the few who have the foresight have sunk their funds into southern/western banks.

This disastrous trend will result in loss of wealth, jobs, access to banking services and credit to northern businesses and interests not to mention anything of the political and economic relevance of banking in the new Nigeria. Another very important reason why there is the need for Northern banks is the establishment of Islamic based banks and banks that will be in tune with our social, geographical and cultural needs.

mlbash

what a great foresight post, it's now north-omega, this means in the whole northern nigeria,no single indigenous bank exists! what a big shame manyan arewa! :(
t is my intention to make the neglected aspect of our societies viable

neozizo

Thnx malbash,
not too many people feel that there should be a core nothern bank
....which i think is a pity.
But i hope Ja'iz will fill the vacuum.

mlbash

Quote from: "zizo"Thnx malbash,
not too many people feel that there should be a core nothern bank
....which i think is a pity.
But i hope Ja'iz will fill the vacuum.

mr. zizo there was a time one old man called me, you know what he told me? he said he has seen how i used to conduct myself, always talking of how to move arewa forward and etc,he told me to forget about it, that if i disturb myself, i'll pick blood pressure and die at young age! in his own words " rabu da shegu, ba wani arewa, duk wanda kaji yayi zancen arewa, tafo shi akayi"
so my guy, it is indeed a pity, but what do the common man like you and myself can do? just ALLAH ya isa
!
t is my intention to make the neglected aspect of our societies viable