Roughly 1,500 Nigerians in the financial services sectors have in the past couple of weeks been relieved of their jobs. This comprise of 200 from Skye Bank; another 200 from Diamond Bank and 1,040 from Ecobank, just to mention a few.
Without the threat to withdraw the licence of institutions that go ahead to sack employees by the Minister of Labour and Employment, Chris Ngige – an intervention the Nigeria Employers Consultative Association aver is illegal – more bankers heads would have rolled as First bank which suffered 82% profit loss in the last financial year, had plans to lay off much more than 1000 employees.
Since banks are the custodians of the funds that make the economy go round, when financial institutions are wobbling, the whole economy goes lame. This is evidenced by the trickle down effects such as factory closures and associated workers layoffs that are now the increasingly overbearing scenarios in Nigeria.
But what’s responsible for the upsurge in the mass sacking of staff in the banking sector in the manner that they scramble with each other for customers juicy money deposits, one may ask. It’s partly because of the introduction of the Treasury Single Account, TSA, by the present administration.
I believe that First Bank’s unprecedented massive profit loss in 2015 financial year is proportional to the size of government’s funds in its treasury that has been returned to the CBN vaults through TSA.
This is without prejudice to First Bank’s credit impairment which spiked from about N26bn in 2014 to nearly N120bn in 2015, and also partly accountable for the drop in profit.
As a close scrutiny has revealed, the less the amount of government funds in a bank, the less staff they are likely to lay off as reflected in the case of Skye and Diamond banks which are third tier and only laid off 200 staff apiece.
Compare that to Ecobank which is higher on the echelon, and it sacked over 1000 just as First Bank which is next only to the CBN in the hierarchy of financial institutions holding public funds, could have laid off much more staff than 1000 if government had not ordered a stay of action on staff rationalization.
In the light of the foregoing, there is credible intelligence that if funds now held in TSA domiciled in CBN are not urgently returned to the deposit money banks, DMBs, where they are traditionally meant to be via payments to contractors, the threat to seize banking licences by government or NLC/TUC picket warning alone, will not be enough to deter the sacking of at least 10,000 bankers before the end of 2016.
The Central Bank of Nigeria, CBN, itself has in a recent report admitted that bank deposits dropped by about one trillion naira in the period between April 2015 and 2016. That obviously confirms reduction in banking activities which would also compel staff redundancy that underscores the need to downsize.
Sometimes, a purge becomes a compelling line of action to be taken by an organization for survivability. This ranges from reasons of inability to sustain existing overhead costs due to paucity of financial resources or to correct image/structure concerns.
Take for instance the sacking of 40 senior officers by the Nigerian army which the military considered inevitable.
While the banks, which is the former, embarked on their right sizing exercise based on financial squeeze the army which is the latter, purged itself of ‘politically tainted’ personnel.
The rhetorical question arising from the two scenarios depicted above would be; did the Labour minister or NLC/TUC query or threaten picketing the army for doing what it needed to do due to exigency as they did to banks?
Further background information on what spurred the TSA initiative, deemed to have triggered the mass sacking and labour crisis in the financial services sector underscores the fact that, at the moment, TSA is hurting more than it is helping Nigerians and the economy, is in order.
Before the ascension to power of the present government, Ministries, Departments and Agencies, MDAs in Nigeria cumulatively operated 17,000 bank accounts.
Obviously, it’s government’s funds, in excess of three trillion naira, N3trn that were lodged in those accounts, but now tracked and mopped up into a single account in the CBN that has been buffeting the 21 banks in Nigeria.
With the advent of TSA, banks no longer have cheap funds in their vaults to lend to entrepreneurs and in the process also create employment for Nigerians who are trained to facilitate banking services.
Keep in mind that the nation’s economy is practically driven by government businesses; that’s why each time there is delay in the passage of annual appropriation bill by the National Assembly, NASS, the economy literarily grinds to a halt.
Prior to the advent of the TSA, banks were very liquid because MDAs kept the funds required for daily operational activities like purchasing of office supplies that facilitate the functioning of government business like files, fuel, electricity, telephone as well as water services etc in the banks.
In the private sector, such funds in sundry bank accounts would be deemed to be working capital.
While government had that entire fund, it was not in bulk because they were held in 17,000 different accounts spread across Nigerian and overseas banks – JP Morgan etc.
With such dispersal of govt funds across local and international financial institutions, it was difficult to keep track and protect the funds from being abused from a central position as is now the case through TSA.
One typical way that government funds were mismanaged by MDAs was by lodging the money in banks for little or no interest payment to government, while government borrows its own money, as it were, from banks at exorbitant interest rates.
Such impropriety was so rife that often times, salaries and pension allowances of workers were lodged by crooked public officers into banks to earn under-the-table interest income for themselves, and to the detriment of workers whose salaries may be delayed by weeks and maybe months while yields from the pervert transactions are awaited to line the private bank accounts of the fraudulent public and civil servants.
In summary, the proliferation of bank accounts operated by MDAs was a veritable platform for corruption by public officials in Nigeria until TSA was introduced to plug the loopholes. As the old saying goes, for every action, there is a reaction.
With 100% compliance, the effect of the implementation of TSA on the economy was like draining a human being of blood because deposited funds in banks are their life lines and comparable to the role of blood in humans.
No matter how resilient and vibrant the financial services sector maybe, the withdrawal of a whooping three trillion naira from an economy with a mere GDP size of $530bn could not have resulted in less shock and associated collateral damages hence banks are currently stretched to their brims and maybe in distress if quick remedial actions are not taken by the authorities sooner than later.
That’s also why, Nigerian economy that was expanding at a galloping speed of 7% barely 24 months ago is now contracting at a rate that Nigeria had not recorded in over 24 years.
We all are now familiar with the nation’s misery index mirroring the deplorable standard of living in Nigeria, so it bears no repetition, but could the nation have avoided the ensuing socio-economic paralysis? The answer is a resounding yes, if the TSA policy was calibrated.
It is worth recalling that TSA is not the brain child of the current government but it was originated by the previous administration which failed to implement it.
Goodluck Jonathan regime’s decision not to implement the TSA policy was to avoid the dire consequences now being suffered by Nigerians.
At the point of attempting to introduce the policy, social impact assessment was conducted and it was discovered that it could create shock waves that would unhinge the economy and result in distress in the banks that would lead to mass sacking of staff which could cascade down the line to closure of businesses as currently being witnessed.
To avoid such calamitous consequences, it was agreed that TSA would be implemented in phases. Which means that it was decided that a stage by stage mopping up of funds off bank vaults in small doses would be more tolerable, than one fell swoop, which is the method adopted by this government and the economy ended up in a bind.
Ostensibly, for failing to achieve the desired transformation in the fortune of Nigerians, Jonathan’s regime was punished by being voted out of office on March 28th 2015.
Similar to TSA was the now infamous Steve Oronsanye Committee which was set up to rationalize the over sized public service through reduction of MDAs by the outgone regime.
The implementation of its recommendations was also stalled owing to the fear of undesirable fallout outs like jobs losses which could have created social upheaval and which Goodluck Jonathan’s government could not bear.
Co-incidentally, the outgone government and the new one had the shared vision of implementing TSA and downsizing of MDAs, but one demurred by not taking action, while the other took the bull by the horns and damned the consequences.
This is the reason that contrary to the care, caution and restraint applied by the previous government, the current regime in the bid to bring the change that was promised Nigerians during campaign appear to have thrown caution to the wind and delved straight into implementing TSA and rationalization of MDAs.
Typical of politicians, the national auditor of APC ,George Moghalu has railed at banks for laying off workers and dubbed it a ploy to sabotage the new ruling party and President Muhammadu Buhari’s government. But, he is wrong.
Rather, the downsizing of staff in banks is a direct consequence of the TSA policy which the new government rushed into implementing.
For obvious reasons, banks and bankers can’t defend themselves for fear of losing their licences and such trepidation is justified in view of the stern nature and low appetite for dissent by the government currently in power.
Interestingly, the NLC/TUC-comprising of senior civil servants who were involved in the policy formulation-that should have prevailed on government not to implement the policies due to obvious unpalatable consequences failed to do so then and are now threatening to picket banks for disengaging redundant staff when they should have encouraged government to only implement the TSA policy in phases.
Make no mistake about it, l’m not by any stretch of imagination condemning the introduction of TSA and reduction of MDA’s policies of this government.
They are like malignant tumors that needed to be surgically removed but there was no surgeon bold enough to take on the job because the tumor was located too close to the heart of the patient, requiring methodical surgery until Buhari’s government took the bull by the horns.
As there are two sides to a coin, there are pros and cons to the introduction of TSA and reduction in MDAs. However, only the pros have been highlighted so far which has compelled me to bring to the front burner in this article the cons, with a view to getting the authorities to address the inherent short comings of the TSA policy.
Of course, benefits derivable from the TSA initiative such as reining in corruption in the public sector and having a pool of funds to augment the current budget as opposed to borrowing from banks to conduct government activities at exorbitant interest rates and sundry benefits are the most common.
However, the less obvious flip side is that as a result of the TSA in the past one year, N3trn has been sterilized in CBN vault which is contrary to and a negation of the principle of the function of money which is supposed to move from areas of surplus to areas of need to facilitate commerce and industry and in the process keep the wheels of production turning.
This is analogous to the parable of three talents (funds) given to three servants by their master who was embarking on a long trip as told in the holy Bible. The one who buried the talents that his master gave him for safe keeping while he was away was condemned while the ones who traded with their talents and earned more talents which they presented to their master upon his return received encomiums and gratuitous rewards.
The lesson in the foregoing analogy is that money should always be put to work as opposed to the current case of literarily burying the money in the past one year, through TSA.
Arising from the above, it is the combination of failure to harness the value of TSA funds trapped in CBN and the tumbling of crude oil price that are now manifesting as distress in the economy and debilitating hunger and starvation in the land.
Although at a grievous cost, the demon that the previous government failed to confront, the present government has taken on frontally and it is now wrestling with the ghosts -corruption- which if dexterously prosecuted would be buried, hopefully sooner than later.
In an article titled; ‘100 Days Of Buhari: Political Paralysis or Policy Crisis’ published on September 23rd in Businessday newspaper and several online platforms, I alerted the authorities about the probable negative consequences of policies that do not pass through the crucible of critical thinking.
Perhaps due to the misalignment derived from the tunnel vision encapsulated in the short term mission of fighting corruption as opposed to long term view of quickly delivering democracy dividends to long suffering Nigerians by this administration, the TSA addressed the immediate challenge of corruption in the public sector, but in the process created the problem of economic paralysis that Nigerians are currently grappling with.
In defense of President Buhari, the national leader of APC, Bola Tinubu before the celebration of 100 days in office of this administration, had admonished critics in an article published in The Nation newspaper by asking a rhetoric question “May 29 was when this president was sworn in. It is a norm: there is a honey moon period, at least a minimum of 100 days honeymoon. And you won’t allow honey moon at all”?.
One year after assumption of power, the 100 day honey moon period advocated by Tinubu is definitely over, so it’s time to deliver to Nigerians democracy dividends, recovered loot.
Without much ado, I would like to urge the authorities to jettison uncertainties in the economy emanating from inconsistencies in policies and programs which have incredibly assumed the dimension of being the policy thrust of this administration. It should replace it with the attitude that indicates that critical thinking is invested in policies and programs that this administration is governing us with.
Having achieved the objective of channeling all government revenues into the CBN where officials can now have clear view of all government financial resources, as promised, authorities should immediately re-inject into the economy, the bulk of the TSA funds it scrubbed from banks to stimulate growth and get Nigerians working again.
Perhaps, Mr President’s economic team, especially the Finance minister, Kemi Adeosun, who is an economic stimulus enthusiast, should read Eric Rauchway’s book ‘The Money Makers: How Roosevelt and Keynes Ended the Depression, Defeated Fascism and Secured a Prosperous Peace’. The author’s insight would be invaluable in their struggle to return Nigeria to the path of prosperity.
As Andy Stanley, Atlanta Georgia, USA preacher who was invited to preach during U.S President, Barack Obama’s inauguration church service noted some four years ago, “Leaders who don’t listen will be surrounded by people who have nothing to say”.
I personally don’t believe that is the case with the present leadership, but without concerted efforts to prove skeptics wrong, onlookers may jump to such an absurd conclusion.
*** Magnus Onyibe, development strategist and futurologist, was a former commissioner in Delta state and an alumnus of Fletcher school of Law and Diplomacy, Tufts University, Massachusetts, USA.
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