Counting the gains of banking reforms
By AMECHI OGBONNA
Thursday, April 5, 2007

All over the world, the major difference between a traditional society and a city is usually defined by the level of infrastructure development.

Without looking at the World Bank definition of a city or rural settlement, a conventional definition of these two human settlements may well be by looking at how their citizens have access to such infrastructure as electricity, portable water, motorable roads, hospitals and perhaps financial institutions among others.

The absence of one or more of these usually account for the high incidence of rural-urban migration or drift.
Interestingly too, many city dwellers happened to have come from some of the rural communities where little or none of these infrastructure exist, even after 46 years of Nigeria’s independence.

That also explains why thousands of school leavers are trooping into Lagos and other city centres in search of better life, or places that have better infrastructures than their original villages.
For the many years one has lived in the village, for example, going for any banking transaction in the state capital was like going to a pilgrimage because most villagers keep their money under the pillows or in some secret locations in their homes.

Even some relations who luckily migrated to Europe, Asia and America often find it difficult to remit money for the upkeep of their aged parents, relations or even to execute one development project or the other while they are still away.

Stories have been told of people who sent money to parents through some relations in the city for onward transmission to them only to discover to their chagrin that such remittances never got to those for whom it was intended.

This is so because banking services and international money transfer have so far remained an urban phenomenon thereby alienating rural dwellers from the benefits.
So, even when parents or relations have cash to receive from loved ones abroad, the dangers inherent in travelling to get this from the city remains enormous.

Often times, such remitances were often tampered with, in the process by people sent by the illitrate beneficiaries to collect on their behalf.

That was why people were excited that the consolidation programme is gradually reducing some of the dividing lines between the city and rural communities.

For instance, when recently the Group Managing Director of Union Bank of Nigeria Plc, Mr. Bartholomew Ebong, hinted of his organisation’s plan to taking MoneyGram International cash transfer services to rural communities across the country, many Nigerians clearly saw that development as one of the many gains of the last banking consolidation programme. The Union Bank chief, whose bank only last week, launched the MoneyGram franchise as its key agent in Nigeria said he intends to utilise the bank’s large network of about 400 branches, some of which are located in the rural areas to ensure the cash transmission business is popularised in the country including some remote villages that have not known about the service before now.

The Union Bank helmsman, who described the bank’s MoneyGram partnership as one of the benefits of banking consolidation, stated that his organization was going to use its network of about 400 branches to make cash remittance service reach rural dwellers.

This is particularly pertinent when according to Mr. Richard Meredith, MoneyGram director from South Africa, one considers that the largest inflow of cash remittance to Nigeria are usually from South Africa and London where majority of the citizens live.
He pledged the company’s support towards the bank’s bid to take cash remittance business to the remotest villages in Nigeria largely.

With a representative office in South Africa and another in London, Union Bank working to ensure that remittances through its overseas outlets could at least get to the beneficiaries without undue interference from third parties, consistent with its mission as a one-stop financial services provider.
In addition to its domestic network, Union Bank has affiliates in Ghana and Benin Republic through which its management says it will deploy for the benefit of the Nigerian customers.

However, in order to fast track this programme, the managing director said the bank has already deployed a new software package in about 240 branches, even as he hopes the remaining ones would be linked before the end of April this year.

If Ebong’s experiment which is expected to be backed by the brand owners MonyGram, it will certainly stand out in the history of post-consolidation banking in Nigeria, as a unique value proposition concept for customers and for which credit could be given to the Central Bank of Nigeria’s reform agenda.
This is particularly so because the bank would for the first time in the history of Nigeria, be taking what used to be an urban phenomenon into a local setting which is also a big innovation.

From all indications, it is a great innovation that parents, relations and those who have dependants living abroad can now collect their money direct in the currency of choice, without the involvement of third parties with all its attendant implications.

When this innovation is combined with multifaceted gains of the GSM and information revolution, the villagers would begin to have a worthwhile living experience after many years of suffering untold hardship and deprivation due to the neglect by successive governments.
Taking MoneyGram to the grass roots would also involve expanding other banking services including the ATMs and related service innovations to the rural dwellers.

While these are capable of stimulating savings among the people, it will no doubt enhance the banking culture and habit within that segment of the population and reduce the degree of migration from the rural to urban city.

Unlike the practice elsewhere, successive governments and development experts in Nigeria have tended to concentrate provision of infrastructure in the city centres to the neglect of the rural areas where the population of the citizens reside.

In the same vein, one of the tragedies of the banking industry prior consolidation was the thinking by managers of the sector that the rural dwellers have little or no capacity for savings and therefore do not deserve to be accorded the kind of attention, urban residents usually attract from the industry.
But with over 70 per cent of the nation’s active population still living in the rural area, coupled with recent growth indicators from the agricultural sector and other primary industries, no one needs to be told that the time has come for the grassroots to benefit from the banking revolution brought about by the just concluded consolidation programme.

Over the years, the Central Bank of Nigeria has continued to stress the need for the banks to be more innovative in their product and service offering by going down to the villages to dig out what the inhabitants want in a bank.

The apex bank’s advice comes on the heels of concern that money outside the banking system may indeed be larger than that within it and only an innovative product can convince these residents with little or no knowledge of saving culture to pool their enormous resourses into the financial system in the interest of the economy.

Although some of the old genration banks actually embraced the rural banking programme of the 1970s, just to avoid sanction from the authorities, the difference in the present experiment is that no one is threatening any bank to expand to the rural areas.

Instead, banks are being compelled by the exigencies of their environment to expand.
Interestingly, those who have the potentialities in the rural areas are beginning to move gradually into it and this seems to be what Union Bank is trying to do with international cash transfer with the launch of the MoneyGram fanchise.

MoneyGram, which is reputed as the fastest growing money tranfer company in the world today, started business in 1940 in Mineapolis, in the United States of America.
Currently operating in more than 180 countries of the world, MoneyGram has over 110,000 locations worldwide.

With the coming of MoneyGram to the villages, courtesy of Union Bank of Nigeria Plc, it is indeed Eureka for my grandma.