The need for an ethnography of the Nigerian financial sector

Anthropologist Karen Ho carried out a seventeen-month-long fieldwork on Wall Street, interviewing and observing investment bankers. She first started out working as a rookie management consulting analyst in a hybrid investment and commercial bank. She planned to first work in finance herself for a while before going back to graduate school to study and write a dissertation on Wall Street culture. She got laid off after six months into her job. That experience of being laid off became one of the central things she studied during her fieldwork. The fieldwork formed the basis for her dissertation, which was published in 2009 as Liquidated: An Ethnography of Wall Street.

The book is not so much an indictment of Wall Street as it is a presentation of the way the Street understands its place in the scheme of things. She highlights the self-understanding of investment bankers as ‘being’ the market, an understanding that goes as far as to justify, on the one hand, receiving insanely huge bonuses, and on the other, being very liquid individuals themselves. The rate of staff turnover on Wall Street is extremely high.

Perhaps the most instructive point is the way Wall Street has changed corporate American culture in the past 25 years. Corporations, which were seen as part of the welfare capitalism of the post 2nd World War era, gradually lost their status as social institutions. Shareholder value has become naturalised as the sole reason for the existence of corporations. Therefore, anything that can improve shareholder value, no matter how short that increase in value lasts, is encouraged. This sometimes includes hostile takeover, and almost always demands massive job cuts and downsizing. Once corporations are no longer seen as social institutions that provide jobs and care for customers, those are rather easy things to do.

The emphasis on shareholder value has led to short-term thinking and has often robbed corporations of the ability to make long-term plans. Here is an example. If a group of investors buys up a company by leveraging that same company on the junk bonds market, with the plan to cut jobs in order to ‘improve’ the shareholder value of the company before selling it off, why would they make long-term plans for such company? This could happen to corporations that are healthy, all things – including shareholder value – considered.

This leads me to what is currently happening in the Nigerian banking industry. As we all know, the Nigerian Central Bank took over five banks last August. Shortly after, the Central Bank published a list of the banks’ debtors. One thing that has been under-played is the corporate practices of those banks during the Nigerian stock market bubble.

Actually, the practices of the banks were what created the bubble. Increasing their own shareholder value became the main job of the banks. Of course, in a weird way, this is understandable. Wall Street could claim to work on increasing shareholder value of corporate America; in Nigeria, the banking industry is corporate Nigeria. As Abimbola Agboluaje noted in his column in this newspaper a few weeks ago, banks were granting loans that were then spent on stocks, including theirs.

It is not by chance that it was after the bubble burst that the Central Bank took over the banks. Before then, the profits banks were declaring, plus their shareholder value, were highly manipulated figures that bore no relationship to the actual conditions of the banks. Now, they have to find a way to reconcile their balance sheet, somehow. The current cry in the Nigerian banking industry is that banks are laying off staff in droves and closing up branches. Those who are not laid off have to endure pay cut.

However, a lot still remain unclear. Once it seemed like a few heads had rolled the public felt pacified. The feeling of schadenfreude among the public was very palpable after the list of debtors was published. That is understandable, but the point is that the banks are not in trouble simply because they gave out too many bad loans.

One of the biggest strengths of anthropology is that anthropologists have a penchant for asking basic and simple questions, questions whose answers are sometimes assumed to be known, until they are asked. That was the attitude Karen Ho directed at Wall Street. Wouldn’t it be interesting to turn that kind of attitude towards the Nigerian financial industry?