Majority of Nigerians may not have realised the consequences on the economy of the recent budget review by the Federal Government occasioned by the Coronavirus pandemic.
But for the President of the Association of Senior Staff of Banks Insurance and Financial Institutions (ASSBIFFI), Oyinkan Olasanoye, the message came quite clear as only a miracle would save the nation from the dire consequences of the sudden slump in crude oil price from over $50 to below $30 per barrel considering its overwhelming dependence of the black gold for foreign exchange.
According to her, the recent budget review and the suspension of the $22.7billion external borrowing plan by the Muhammadu Buhari administration could only mean that Nigerians should prepare for a tougher economic future.
She lamented the negative effect of COVID -19 on the financial sector and other key sectors of the economy could heighten the probability of liquidation and business failures in banks among others..
The ASSBIFI boss also spoke on the challenges facing the banking and financial industry vis a vis, recent government pronouncements on, casualisation, recapitalisation and amongothers.
FG’s downward review of budget/foreign loans
I think the plan is a political statement to Nigerians that there is going to be structural adjustment in a nice form. Who will loan you money when what they expect you will use to repay back which is your oil is now less than $30.?
Definitely, it is a loan that we will not be able to repay, so nobody will give us that money. Unfortunately, majority of our expenditure on the budget is on recurrent expenditure not capital based, so, how would you repay? Government is indirectly telling Nigerians they should be prepared for a structural adjustment and a future that would be worse than now. Already, we have sent circular to all our members telling them to start reducing their expenses going forward, that they should assume that their salaries now is for two months, because indirectly, once there is a global shut down, what do you expect from Nigeria where we import almost 90 per cent of everything, and with oil as our only source of income. So, it is a political statement of saying be prepared for another change that is worse than the current one.
State of industry and challenges
Presently, the Nigerian economy is very shaky. There have been high rate of inflation, reduction in interest, issues on high level of unemployment and general global economic meltdown that is almost leading to a shutdown, and since the financial sector cannot operate outside all these economies, it means there is almost a lot on the meltdown and shutdown on financial institutions. Each time we talk of not harnessing policies, otherwise referred to as policy somersault, it usually has effects on the country, just like the recent policy that says interest rate both on the Treasury Bill to the depositor’s interest rate slashed down.
Although, the Federal Government has good intentions, believing that there should be more industries in the country, more small and medium scale industries, and there is also the thinking in some quarters that Nigerians are somehow “lazy” and would prefer an easy way of just investing and getting interest in their money rather than going into production that will have effect on the whole nation.
But unfortunately, we cannot just reduce interest rate when all the conditions for the citizens to go into small scale businesses are not available. It means people that have their monies in the banks will run to the banks to withdraw their monies and look for another way of keeping them either going to change into foreign exchange that they know is more stable than the Naira. So, everybody looks at it and says so you want me to start saving and go into business without the necessary raw materials, with the COVID-19 that all the economies and countries we are importing from are shutting down. It means everybody now is at a crossroad and confused state of the economic situation. It has a negative rundown on the financial situation of banks, and we are a bit scared that it might lead to lack of liquidity in some of the banks very soon.
How COVID-19 pandemic will impact on the financial sector
When it comes to issues like this, I will first of all talk from the angle of employees. We are still meeting with customers we can’t stop doing it. We are still working on almost mutilated notes that are no longer new.
Again, Nigerians are still spraying money at parties, some of us are still putting the money all over our bodies; the local market women, which is still touching their sweats and their saliva.
As a nation, we have never had respect for our Naira, and this is what my members are working with everyday.
If we can ask schools and other organisations to shut down due to COVID-19, we can ask for a total shutdown of the banks? Even if we decide to shut down the banks, there will still be persons who will load the ATM machines, if not the entire economy will collapse, as there will still be buying and selling. For us, we know there is no way we can to protect ourselves 100 per cent except we decide to do the individual basic things.
So, for the banking halls, our managers have introduced hand sanitisers at the entrances before you enter any of the branches, we have also advised our members that individually they should all have hand sanitizers and sanitary wipes, and we have also advised them that they need to get up frequently and go and wash their hands. We have introduced all these to our members. We have also had talks with their managements and they are working on it.
As to the effect on members, jobs and the bottom line of the banking sector, we are presently not anticipating banks laying-off workers because of this virus, until we have a clear understanding of the condition of health. So, any bank that is going to lay-off people now, would face the repercussion of its action very soon.
So, for now I am not expecting any bank in Nigeria to lay-off staff. However, there will be effect on the profitability of the banks and there are going to be effects on people that took loans and now they cannot go into production.
Although the Federal Government has announced that there should be reduction in interest rate for more people to have loans, we are not talking about interest rate but them producing for an ability to pay back. When we look at all these, they are going to affect production, it is already going to affect the exportation of our crude oil, and the importation of petroleum products very soon, because when you can’t export, you can’t import too and there are people whose raw materials are imported.
Again, I know it is going to affect the banks because many of these companies are on one loan or the other, and the only loan the CBN can specifically ask interest rate to be reduced are the loans directly sourced from it. I could see that it will not be immediate, but by the end of the year, there may be job losses, because when it comes to profitability of the banks, it is going to be very low.
Saving members from job losses
Early this year, the CBN came up with a law that it must be informed before any bank lays-off more than five workers.
There is a provision in the Labour Act that says there must be a meeting of banks and staff representatives, which is the union. We are working on that and we have written to the CBN. This is one of the reasons we had proposed last November 2019 that we would be going on strike, because we realised that with the current world of work and now with the current economic and health situation, this is the time that every sector of the economy needs a modern and viable collective agreement.
For example, what will happen if we close down these banks, maybe the Federal Government says shut down. Apart from financial workers, what will happen to companies that cannot produce, will they be willing to continue paying salaries at the end of the month for people that did not work? But because we are ready to work; it is the economic situation that says we cannot work, this bring me down to the agitation for government to have a social insurance system in place for all Nigerians for situation like this, because if we are not careful and the economy shuts down due to the virus, what have been put in place for those that are not working to enable them earn their salaries? It is not about the financial sector but all employees in Nigeria. This is a global issue and it is more of a national issue than sectoral.
Review of collective bargaining with banks and your next line of action
It is a sad experience that up till today nothing has been done. Immediately after our threat, the Minister of Labour and Employment, Dr Chris Ngige, called for a meeting that was chaired by the permanent secretary in December 15, 2019. At that meeting, we were given till March 31, to conclude all issues on the collective bargaining. From our angle as employees, we have prepared our documents but it saddens our hearts that till now employers have not called us, so there has never been any meeting. On March 13, we were with the minister of labour and we called his attention to the fact that if by March 31, banking industry employers refuse to come to the table, we will go back to our strike threat. We have written several letters to the CBN quoting the banking principle guidelines, quoting the section of the International Labour Organisation (ILO) where every sector is entitled to a collective agreement.
Our pain is not only on redundancy but also on procedural issues. When we put in place our current collective agreement and we talk about viruses and issues of medical care, because it was only HIV that was mentioned in the previous guidelines. Currently, there are many viral diseases and the medical facilities did not consider this, even the medical provision granted employees in Nigeria did not put this into consideration issues like this. So, we really need the collective agreement. We have discussed with TUC and NLC our parent bodies. But if nothing is done by March 31, there will be a world press conference organised by NLC, TUC, NUBIFIE and ASSBIFI, after which we will shut down financial institutions in the country in April.
Bill criminalising casualisation at the National Assembly
For me, I prefer to use the word, non-permanent workers rather than casualisation when it comes to the financial sector. The difference is that for casualisation according to the Labour Act, is just a provision of jobs for six months, which is not what we are complaining about in our sector. We are complaining about contract workers that are being given contract of one or two years and they end up spending 10 years with this contract being renewed every two years, and the previous years are not counted because they are given new conditions of service at every renewal. If we concentrate all our efforts on casualisation in the financial sector, it will affect us in the sense that we are indirectly giving the banks the opportunity to employ people only for six months, because our Act is speaking for only six months. I appreciate the fact that the national legislative arm is coming out to know what contract workers are going through in the country, but what the senator is proposing is that after six months it is either the bank confirms the staff or let the staff go. What will happen when the bank does not want to confirm the staff? It means the person will go.