Central Bank of Nigeria
That noisome pestilence, also known as the Nigerian govt, has come again.
This morning I saw this report in the papers as to how the Nigerian govt is planning to add a National Identification Number (NIN) to the list of requirements for opening a bank account in Nigeria. The jokes that one can make with this ‘NIN’ of a thing are too numerous and too easy so let’s move on.
Whenever policies like this are trotted out, my first instinct is always to ask the question – what problem are these people trying to solve? A chap called Dipo Fatokun who works with the CBN presumably, tries to explain
As part of CBN’s efforts to bolster the banking industry and the entire financial system, the Bank in the recent past commenced steps to overhaul the KYC processes in banks, including the recently concluded customer account verification exercise
Now we know that we have a serious problem of lack of access to financial services by the vast majority of our population. Only 22m Nigerians out of a population of 160m people have bank accounts by the latest widely available statistics. For a country with designs on becoming a serious global economic in a few years, this is a crisis and one which you’d imagine would be at the top of any policy maker’s list of things to tackle head on.
So I’m scratching my head here wondering exactly how adding another layer of paperwork to the process of opening a bank account is going to alleviate this problem? But then again, maybe we shouldnt be surprised given that Nigeria’s oil production has been around the 2m bpd mark for a decade or more now inspite of all evidence showing that we could easily raise this to 4m bpd with a little bit of seriousness. Our govt officials find it easy to get comfortable with mediocrity as long as the ‘other one’ is flowing…
There is a certain arrogance to all of this course, something that Nigerian policy makers are not short of. Govt believes that once it has deemed something good, it must by extension be good for everyone else. Anyone who’s read Hernando De Soto’s Mystery of Capital wont be surprised at how easy it is for govts in developing countries to design policies that end up shutting out the majority of the population who find it cheaper and easier to exist outside of the law.
According to the latest available (2010) UK govt stats, only about 3% of the UK population do not have any form of bank account. I remember when I moved here in 2004 with no credit history or any kind of address verification yet I neded to open a bank account. I was pleasantly surprised when on my first day at school, NatWest bank officials from a branch down the road came to our class to open accounts for us. I was also given a credit card with a £250 limit (I still have this card). And I hadnt been in the UK for 6 weeks yet. I had no form of ID whatsoever beyond my Nigerian passport. Isnt it interesting that this same passport which is not enough to open a bank account in Nigeria is good enough elsewhere? Today I’ve got at least 3 UK bank accounts and even an American current account even though I dont live in that country. No, having an ID card does not automatically mean that you wont try to defraud a bank.
Now the point here isnt to compare Nigeria’s banks with that of the UK, rather it should be easily clear that banks in any society are such a vital utility that they must reflect the society in which they operate. So in the UK where even illegal immigrants need a bank account to get paid, you can expect banks to be ubiquitous. Not so in Portugal for example where a large chunk of the population still gets paid cash in hand (which means the govt there doesnt get to collect taxes on the money….which explains why that country is the P in the eurozone’s PIIGS).
But even with this level of penetration of banking in the UK, I can easily name 3 banks that payyou, the customer, for keeping your money with them. There’s HSBC’s First Direct which pays you £100 for joing them. There’s also a Halifax account which pays you £5 every month as long as you deposit £1000 monthly via salary or anything else into the account regardless of whether or not you are overdrawn. And then there’s the rather interesting Santander 123 account which pays you 1%, 2% and 3% cashback if you pay your utility bills using their online banking platform or by direct debit.
You only get stuff like this when banks are in real, as opposed to imaginary, competition with each other. But instead what we have here is that rather than let the banks go out and fight for their lunch by winning over the vast army of the unbanked in Nigeria, the govt has ‘intervened’ by reversing the dynamics…such that we are the ones who will now go to them to submit our biometrics so we can have these wonderful bank accounts that have been so life changing for the 22m Nigerians who already have them.
Yes, we will now have to go to the bank to queue in the hot banking hall because PHCN would have struck and the ‘gen’ wont be working. We will also get into heated arguments with each other because some smart alec will always try to jump the queue leading to an uproar. And of course after queuing for 2 hours, when it’s almost your turn, you will be asked to come back on Monday because, yep, their ‘server is down’. All that is left is for govt to link this NINcompoop of a thing to something more vital say like driving a car and the incentive for the banks to actually come after you as the customer would have been completely turned on its head – they will only need to open their doors in the morning and desperate citizens will file in to submit their details just so they can live their lives in peace.
This is the thanks we get for stumping up $21bn to bail out our banks. Those who work in our banks will protest this charge, but the reality is that even to a casual observer, the Nigerian banking system is incredibly inefficient. Everywhere you turn, it is one story of misallocation of resources after the other. Our banks have decided that a large chunk of the population are not worth their time so they’d rather go on empire building sprees in Rwanda or Ghana and pretend that the job at home is done.
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But there’s something even more sinister that should worry any lover of liberty and freedom out there – the Nigerian govt’s sudden thirst for so much of our personal data. In January 2011 we handed over our biometrics to INEC in the name of avoiding dodgy elections. Sounded like a good idea at the time even with the billions it cost…except that it didnt quite stop us getting dodgy results in certain places of course. Then a few months later we handed over our biometrics to the telcos to verify our SIM cards…because the INEC one was for INEC alone and they and the telcos dont talk to each other. And now finally we have this one…one ID number to rule them all. Not to forget that in 2003 or so, we handed over our biometrics for the National ID scheme under President Obasanjo which was inevitably derailed by – cliche alert – ‘scandals and mismanagement’ in the contract award.
So now we have this agency called National Identity Management Commission (NIMC) that will be populated by the usual apparatchiks, busy bodies and jobsworths who will ensure that no billion allocated to them is left unspent.
And of course the first ID card no. 000000001 will be launched by Mr President himself, just like Mr President before him, live in front of NTA cameras amid much back slapping and eating of cassava bread. And then there will be speeches by the usual govt ministers declaring how this new ID card will eradicate polio and malaria in the country.
Meanwhile for the millions of people who remain outside of the banking system, Jesus continues to be their insurance as they leave their money under their beds or inside their bra. Afterall why bother with a bank account when you will be hit with 3 different charges just to move money online?
And yes, on a bright and sunny day not too far into the future, our ‘amiable’ Central Bank Governor, Mallam Sanusi Lamido Sanusi will jet out to London (first class) where he will give the keynote speech at a Pan African conference headlined ‘Tackling Low Banking Penetration in Developing Economies – The Nigerian Experience’. A lot of people will clap for him during his speech because he would have spoken very ‘eloquently and cracked a few candid jokes.
Plus ca change, plus c’est la meme chose.
In the final analysis, the real problem at hand – millions of people who have no bank accounts – will remain there untouched like the first wife in a house of 5 wives competing for the attention of the man of the house. Only for the next CBN governor to express shock, dismay and surprise at the sheer number of Nigerians who remain unbanked and then vowing to leave no stone unturned in ‘tackling’ the problem.
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Young Nigerians who are in the habit of rising to govt’s defence in matters like this because the policy sounds good on paper need to think long and hard about what it is exactly they are supporting. A policy does not automatically have merit or deserve support simply because it was put out by govt. Governments, especially the Nigerian one, do incredible damage and are a cog in the wheel of progress more often than they actually solve any problems. Some restraint on their part wont go amiss. What we need to be asking these rampaging bulls in a China shop is how exactly does this NIN ID card get millions of Nigerians into the banking system just like Eko Bank in India is doing?
Until these questions are answered, we are merely fooling around.
FF
No crystal balls were employed in making any of the above predictions into the near future.