The goals which the on-going reform policies of the federal government set to achieve have price tags. By the time the curtain fell on the first lap of the bank consolidation agenda, the success of the programme had become a chorus. At the recent investiture of Prof. Charles Soludo, Governor of the Central Bank of Nigeria (CBN) as the African and Global Central Banker of the Year 2006, it was said that the CBNs consolidation programme achieved results that came at the lowest cost recorded anywhere in the world. However, it is doubtful that computation of the cost included over 9,000 jobs loses in the banks, stagnation of the real sector in the last 18 months and what initial opponents of the programme referred to as absence of consultation with stakeholders and dictatorial coloration of an agenda that, in actual fact, have many alternatives.
In our past reports, we pointed out the achievements of the bank consolidation programme, even quoting extensively the interim progress reports and outcome of the consolidation programme as issued by the CBN Governor. However, the flip side of the programme is real. One pattern which is commonly observable in this governments reform programmes is the immediate delivery of the negative side effects of its programmes. The banking consolidation programme has occasioned over 9,000 jobs loses in the banking sub-sector alone. These employment cuts are across the various cadres of management and lower positions.
At the roll out of the consolidation agenda, the CBN Governor had maintained that jobs loses would be limited to top management positions. Recent compilations actually show that there have been more job cuts at the lower rung of the ladder. Even when accurate statistics are hard to come by regarding the unemployment figures in Nigeria, it is palpable that a greater percentage of the Nigerian workforce including university graduates is without employment.
It is well considered that before the consolidation agenda was announced many banks were reportedly terminally unhealthy. But the larger economic situation is a lot more depressing. With the heavy job loses in an economy that is not growing the employment rate, real growth is in jeopardy. The string of dependants which characterize the extended family system in the country raises higher the cost bar of the CBNs induced bank consolidation agenda.
Last week, the Chairman of the Ikeja branch of Manufacturers Association of Nigeria (MAN) Mazi Sam Ohuabunwa expressed concern that the manufacturing sector looks set for another round of bashing as banks return to the capital market to raise funds. Already, Zenith Bank Plc is out with a public offer intended to raise N50 billion to bolster the banks shareholders fund. The MAN chief who also is Chief Executive Officer of Neimeth Pharmaceuticals Plc complained that during the first phase of the banking consolidation programme, much of disposable incomes went into buying shares of the re-capitalizing banks. This is at the expense of patronage of manufactured products. Consequently a lot of manufacturers had problem selling there stocks and incurred high cost of warehousing.
It was expected that the real sector would ultimately benefit from the new era of big banks in the economy. In the mega banking dispensation, it is believed that banks would make credit more available to the productive sectors of the economy, while interest rates are expected to crash. But Dr. Teriba, a Lagos based economist, debunked this as an unfounded optimism. He said that the banking reform agenda was wrongly headed using capitalization as the driver of interest rates. On the other hand, he argued that deposit mobilization is a better strategy to use to grow loanable fund by the banks.
It is significant that the voices of opposition to the CBNs consolidation agenda when it was announced in 2004 have petered out. Seeing that the CBN was only going to listen to itself as far as the subject was concerned, public debate on the issue was stifled. Many stakeholders in the banking sector who had initially voiced their disagreement with the banking reform programme as dictated by the CBN became silent. Pluralism of ideas is indicative of how open a society is. Concerning the banking reform agenda, stifling of voices of opposition is a high cost that should be strange in a constitutional democracy.