THE RETURN OF BANK OF THE NORTH
THE RETURN OF BANK OF THE NORTH
By:
Nurudeen Dauda
August 8,2017
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To begin with, no country will develop without a sound Banking Industry whether conventional or Islamic. No Economy will grow without access to both capital and money markets. The Banking Industry Is very important to every economy, It collects money from the "Surplus unit" of the Economy Inform of "Savings" and give It to the "Deficit unit" of the Economy Inform of "Credit" for It to be Invested In order to create wealth and employment.
The 19 Northern states governors have kick-started a fund raising drive to reinvigorate the Bank of the North which was merged with some financial institutions about a decade ago. In my understanding, It is a good step in the right direction. We do hope that this time around the attempt to reestablish the bank will go beyond political statements. You need the banking sector whether commercial or Islamic or microfinance banks to benefit from the federal government Intervention funds. Unarguably Northerners have benefitted with little or nothing with the Federal Government Invention Funds due to Financial Exclusion.
"The North had 18 out of the 82 banks in the country, which was about 20 per cent, but gradually, we lost out. Out of the 23 that emerged, it is only the Unity Bank, which is a combination of nine banks, that we can say is northern..." Alh. Falalu Bello( Daily Trust, Sunday ,April 23, 2017). Permit me to say that out of the 23 existing Commercial Banks In the country none of them has its highest shareholders by Northerners no even the Unity Bank. The Economy of Northern Nigeria will remain underdeveloped as long as Its peoples and their businesses lack access to credit.
"We totally lack investment culture in this part of the world, and that is the problem. Honestly speaking, it is not just a question of the rich; we don’t have an investment culture..." Alh. Falalu Bello (Daily Trust, Sunday, April 23,2017). In my humble opinion, With all the rich men in the North and the then serving 19 Northern Governors we were not able to raise N25 billion to maintain the structure of at least one bank. The Investment of N1.3 billion by each of the states would have raised N 25billion. Running a bank has a huge potential.
"I went round and talked with whoever was resourceful because I was privileged to be on the Board of Bank of the North, I was chairman of Intercity and on the Board of First Interstate Merchant Bank, three of the nine banks that came to form Unity Bank. I went round and talked to many people, but we just didn’t want to invest." Alh. Falalu Bello ( Daily Trust, Sunday, April 23,2017).
A lot of towns In Northern Nigeria lack even microfinance Banks let alone, Commercial Banks. What does it take to set up a micro finance bank? It is only N25 million. Our state governments should encourage the establishments of Microfinance Banks. Our Rich men should also establish Microfinance Banks in order to promote financial inclusion. As important as the Banking Industry Is many Northerners, for numerous reasons perhaps religion or lack of financial literacy are unbanked and lacked access to formal financial services. A lot of Northerners are Financially excluded. Northern Governors should be organizing seminars and other enlightenment programs for Financial literacy.
A 2013 CBN report said: "Only an average of 18% of adults are Banked in Northern Nigeria. The North -west has the lowest rate of population that keep their money in the banks with only 13 percent. The North- east followed with 15 percent and the North -central has 27 percent of the formally banked population. CBN said the financial exclusion rate is worse in the Northern part of the country, with about 68 percent of the population excluded from financial services in both the North- east and North -west regions" (CBN report Daily Trust, December, 27,2013).
Some of the reasons for the low percentage of the financial inclusion in the North is attributed to the average distance to Deposit Money Banks (DMB) branches varies widely within Nigeria, from almost 60 kilometres in Kebbi State to less than 1 kilometres in Lagos State. Educational levels and financial literacy are also Included.
In my humble suggestion, the new Bank of the North to be established should be run professionally as a purely Business Enterprise. Public sector Investments In Nigeria have bad records of performance and survival. Furthermore, the most profitable Government Investment is the Nigeria Liquefied Natural Gas (NLNG) simply because It Is being run purely as a Business Enterprise. NLNG is unarguably the country’s best success story. The company was owned by four shareholders: the Federal Government represented by NNPC (49 per cent), Shell (25.6 per cent), Total LNG Nigeria Ltd (15 per cent) and Eni (10.4 per cent). We could adopt this approach by Public- Investment for its success.
We do hope that the idea will work this time around.
May God bless Northern Nigeria!