NOw that the Central Bank has presented the new picture of the banking industry, stakeholders and the general public can tell those with whom to do business. With only 25 lucky banks scaling the recapitalisation hurdle, the new banking culture calls for what some consumers have tagged “humane, satisfactory and corporate” service. The extent of confidence that has been expressed in the repositioning exercise is such that given prudent management and professional discipline on the part of the new mangers of the banks, such recapitalised banks would lay the foundation for a new economic frontier for the country.

A new project lending profile is also expected – to the release of the entrepreneurial prowess in the risk-taking Nigerian; and building a new, enduring relationship with customers and shareholders. The same confidence is predicated on the management of the unusually huge amount of money in the vaults of the new banks as an instrument to boost the industrial base of the country.

Throughout the recapitalisation exercise, the mean MMR was 17 percent. Some analysts say the cost of borrowing is less likely to notch beyond the current level, partly in consideration of the country’s impressive foreign reserve – put at $40 billion – and the readiness of the Obasanjo administration to empower the apex bank with some liberal financial resources.

But those who are looking forward profiting, hugely from the new banking regime have been advised to see the extent of risk assessment of what projects they may be presenting before bank managers. The lower the risk of a particular project – as to the assurance that the loan that would go with it would be easily paid back – the likelier the possibility that percentage of borrowing would be friendly.

High risk project

The situation could be a lot different, given a high-risk project. That, in itself, would fatten the fortune of those who are versed in project or proposal assessment writing. Development economists say that the coming of the mega banks ought to spin a new generation of local entrepreneurs and employers of labour, especially at the medium level.

They have pointed out that, for instance, apart from the wizardry that a few individuals have exhibited in the banking sector – the rise of the captains of Guaranty Trust Bank, Standard Trust Bank, say – there had been less of such outside the fiduciary areas – as in the core labour and employment sectors.

The question arising from their position bothers on how impressive is the number of industries and employment that have been generated since the birth of the Fourth Republic. It is their view, still, that, to this end, there was a need for the Federal Government, the captains of the new mega banks, the Nigerian Labour Congress and chambers of commerce and industry could, in a skull session, provide a national, small-scale industrial blueprint. Essentially, what development economists – influenced by the poverty reduction profile of the Governor of the Central Bank, Professor Charles Soludo – say they would like to see – as part of the major, if immediate, gains of the recapitalisation of the banks – is “a small-scale industrial revolution”, driven by a new breed of invigorated industrialists in whom the future of the country’s industrial progress could be invested.

It’s no use having so much money within the banking sector, if it cannot be injected into an industrial development matrix. Against this backdrop, Sunday Vanguard sought to find out what the implications would be mainly for borrowers. The reactions of those spoken to ranged from an expectation of high competition to woo new customers and the possibility of a low, durable interest rate. Excerpts:

Mr Magnus Egili, Estate Valuer: I am one of the customers of the first generation banks. This has been my choice since the past13 years solely because of the credit facility that was offered when I wanted to start my business. At that time, back in the early ’90s, the cost of borrowing was considered fairly high, even by today’s standards; banks were charging up to10 percent.

Although it was a bit difficult getting approval for my business proposal, my confidence was rested on the fact that it had to do with housing, which was a popular one. I considered it that, in a place like Lagos, there would always be a demand for shelter. The other option would have been transportation in recognition of the mobility of labour, but my banker advised me against a venture that was too fraught with industrial risks and the hazards associated with insurance and minimal returns.

With about 11 houses in different parts of mainland Lagos to manage, I have had as clients mortgage banks and computer dealers, some of whom have shifted base to Abuja. Well, at today’s lending rate, not all the banks are expected to charge uniformly, even for the same project. There have been all manner of charges lately – including cost of transaction – attached to every loan given by the banks, which some business captains see as unnecessary. But I feel this should inform part of a greater reform in the banking sector. I still believe that the cost of borrowing is high; 17-19 per cent is on the expensive side. That is if the government’s plan to reduce poverty is any guide. If banks are ready to assist in the programme, I expect that they should slash the cost of borrowing to about 13 per cent. The Central Bank should take the lead in this. I say this because, apart from the management discipline and business acumen that would be expected to come into play in managing such borrowed funds, the kind of service that would be rendered to the demanding public matters.

Yomi Feyisola-eti, Furniture Dealer: The available banking facilities
might be said to be in order because every bank that lends needs to looks forward to making some profit. My business of selling furniture has gained a lot from the banks. Unfortunately, the bank I borrowed almost three-quarters of a million from has long ceased to exist, At about, three years before the last bank crisis, I was able to pay back. The only thing that I saw as unfair to borrowers then was the prevailing economic climate, which was influenced by the structural adjustment programme of the military government. Most of the banks were unwilling to part with their money to those of us who were into small-scale enterprise. But, if I may share this secret with you: I have been contacted by some top housing authorities in this country to supply first-rate furniture for hotels and hospitals here in Lagos. So, in the new banking era, I expect that the banks should be careful as to whom they lend money; they should look at the antecedents of their prospective clients. It is not enough to say that the cost of borrowing is too high. Don’t forget that banks too are in business to ensue that they rake in some profit, if at all they want to remain competitive and relevant in the new consolidation era. Poverty alleviation is not synonymous with reckless banking or lending habit.

Mrs Olajumoke Sanya,Textile Dealer: I will always go to the banks to borrow mainly because I prefer to deal with corporate bodies than individual lenders. It’s not because there is a ready pool of money in the banks, but for the fact that, as a tax-payer, one of the likely hurdles would have been scaled. But I expect that the Central Bank would come up soon with a new lending policy so that anyone with a good project will benefit from the activities of the consolidated banks.

As far as the cost of borrowing is concerned, it depends on private perceptions. No one knows, as yet, whether the rate would rise or fall, but addressing this issue, generally, government should be mindful of the level of unemployment in the country. To that extent, it should instruct the banks to finance projects that are sure to create jobs, generate tax, put money in the system and help provide food for the hungry.

Mrs Sekinat Ore-agbuyi: I am already having a wrong feeling that the whole exercise of strengthening the banks will be to the benefit of some Nigerians. I am only a small time trader. I am not indebted to any bank. And because of the high expectations that the Central Bank has placed on the shoulders of the new banks as apparent image-makers of the country, that means those of us here at the lower level of the economic system are far from sure of gaining from the activities of the few big banks.

Although I have borrowed money from some thrift and co-operative bodies, I think it will be wrong to sideline petty traders from the much-expected gains of what they say is a form banking revolution that we are about to witness in this country.