Sufuyan Ojeifo
30 September 2008
Abuja — Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Senator Nkechi Nwaogu, has decried the high interest rate charged by banks on credits, saying it was stultifying competition in the productive sector of the economy.
Nwaogu, in an interview in Abuja , said the high pricing of credits obtained in the nation's banks was worrisome.
According to her, "The pricing of credits obtained from Nigerian banks is nothing but calamitous. It makes nonsense of the achievements that have been recorded in the banking sector.
"For instance, how can we be a service industry as the banks are now and the pricing of our credits has hit the roof? People are paying as high as 27 percent per annum on facilities and apart from that, there are all manners of spurious charges attached to these credits such that at the end of the day, you find out that the cost of funds are as high as 30 percent.
"It makes the productive sector uncompetitive because it makes their products outrageously expensive".
It makes Nigerian products not to be competitive with the products that are brought in into the country," she said.
She expressed worries that banks have gone haywire in terms of the pricing of their credits, stressing that "If truly our deposit base has grown as largely as we are made to understand, it is expected that the forces of economics of large scale should operate.
"The volume of deposit in the system should make supply to be in abundance which according to law of economics should bring down the cost of credit, " she added.
Nwaogu disclosed that the Committee has received several petitions from corporate organizations and individuals who "have been given credits by some banks only to end up looking for arbitration and I don't think we should allow this to go on."
She also kicked against the treatment of staff members by banks who, according to her, were exposed to harsh conditions in a bid to meet high deposit targets set for them by the banks.
According to her, "Another area that has been a cause for concern has been the bank's treatment of their staff, casualisation and unreasonable target setting.
"You only need to go to these government hospitals and private hospitals. The majority of corporate patients in these hospitals are banks' staff members suffering from hypertension and all manner of sicknesses as a result of pressure.
"I know so many female bank staff members who have had miscarriages; I know so many male bank staff members who are now having marital problems as a result of unreasonable target setting by banks to their staff members."
She continued: "If we are copying other countries you cannot see in Britain or in any other part of the world where bankers or bank staff members are sent out in rags, in T-shirts as if they are selling detergents.
"They (our banks' staff members) wear Ariaria market dresses, wandering aimlessly on the streets, female bank staff members being tempted to get into unholy behaviours just to get deposits.
"We cannot allow that to continue. There are still so many products that these banks can develop whereby these bank staff members can utilize in order to get about improved profits.
"From one bank you will see ten staff members approaching you for deposit. That is not it; it is not correct," she added.
She also advised banks that have not consolidated the local markets against venturing into offshore banking.
"Today, most of these banks are venturing into offshore banking when they have not consolidated the local market. I can say that this is even running before you learn how to walk.
"I think that there is something wrong in the system and we have to call on the regulatory body to do their work properly, not to be accomplices with this very odd behavior as we are experiencing it in the banking sector," she stated.
Nwaogu disclosed that plans were afoot by the Senate Committee on Banking, Insurance and other Financial Institutions to amend certain laws including the Central Bank of Nigeria (CBN) Act of 2007.
According to her, "We have to strengthen the CBN a little bit more and, of course, exert and exercise a lot more control from the legislature than what we have right now."
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