By Bimbola Oyesola, 08033246177
Bearing in mind that no economy can survive without a strong financial sector, which, like other sectors, is not immune to the effects of the economic recession plaguing contemporary Nigeria, stakeholders have called for urgent measures to pull the country out of the red and save companies, financial intitutions and employees, among others, from disaster.
According to the national president of the Association of Senior Staff of Banks and Financial Institutions (ASSBIFI), Oyinkan Olasanoye, the financial sector, even though it is still declaring profits, there have been adjustments and belt-tightening measures, as there is a shortage of funds to deploy to economic activities. She noted that thatworkers in the sector have been at the receiving end of various policies of government in its bid to salvage the economy.
With over 30 per cent of the workers retrenched in the last one year, jobs in the financial sector have become tedious and stressful as employers are not recruiting new hands.
In this interview, she speaks on how the Treasury Single Account (TSA) has affected the sector, the insurance package available for workers on retirement, why the union is diversifying and other sundry issues.
How recession has impacted on the financial sector
There is no economy that can survive without the financial sector being strong. Inasmuch as the economy is in recession, the financial sector will be affected. So all my members, everyone of us, has been affected one way or the order. Some have been forced to leave their jobs, the economic policy has made some of our jobs to be tedious, stressful because as more are losing their jobs, there are no replacements, no new employment. It means that those in the jobs are doing more, even more than the International Labour Organisation (ILO) Convention permitted. Recession has really affected our sector greatly.
Over the years, anytime there is a problem, workers have always been at the receiving end and that is why, three years ago, we came out with a slogan that we should not be paying the price for the inefficiency of our leaders. Early this year, we called a stakeholder meeting where we discussed with our management that it is not the laying off of employees that will sort out their problem in recession or beef up their production. Since we have been having this dialogue from time to time, we have been able to have good understanding of the issue. However, between last year and this year, we have lost nothing less than 30 per cent of our members to job loss and because we keep on losing our members every year, there has been structural adjustment, there has been recession, merger and acquisition, it means that in the past 10 years we’ve lost over 60 per cent of our members. Bearing in mind that the strength of any union is in the membership, what has kept this union going is that we have been visible and we are still trying to adopt more visibility. Our visibility operating in the financial sector is what has kept us going; when it comes to membership, we have lost a lot. But because of the strategic position we occupy, we are still relevant as if we have not lost that volume, but we have really lost a lot.
Before now, we were conscious that, without even losing our members, it would get to a stage where we would have to protest or something, a stage that our members may have to leave their jobs, so we diversified before now. We have a guest house in Abuja, we are constructing a five-storey, 68 bedrooms en-suite hotel with an event hall in Lagos, we have 38 hectres of farmland in Abeokuta, we also have another farmland in Abuja. We are trying as much as possible to become employers of labour. This is not only because of those who are losing their jobs, but we have another unit that we are having issue with at the present; we believe that if government intervenes we would be able to resolve it. We call them school of banking honour. It is a research institute like a school. We realise that most of our members that are losing their jobs could still be relevant to the sector and we also realise that, with the outsourcing and the contracting of employment, organisations are bringing in people that do not have the understanding and the fundamentals of what it takes to be bankers. We believe that inasmuch as somebody is a graduate, he can work anywhere, but there is something called on-the-job training that one really needs. Because those working there do not understand the nitty-gritty, the sector is more often exposed to fraud. What we intend to do is establish this school and research institution and it will be a training ground where all those that lost their jobs prematurely, who have been well trained and have experience, can now serve as trainers.
For most of our members who lost their jobs as a result of retrenchment, we always sign agreement on their behalf, we always go through due process in ASSBIFI, we may not be able to protect members from losing their jobs, but we make sure that nobody is losing their jobs without following due process. There is always an agreement that we sign on their behalf, so that they don’t go empty-handed. Also, we have a cooperative society, where our members, while on the job, have back-up savings, and now we are also trying to discuss with insurance companies if we can have a policy in place, a job loss policy, where anyone who loses their jobs due to no fault of theirs would have something to fall back on.
Why banks still make profit in recession
The financial sector only deals with finance and economy. Only a few people come into production in the manufacturing sector without having financial assistance, one way or the other, from the banks. Some of them will have loans, some of them facilities, so, there is still interest on (loans). But no matter the profit that is being declared by the financial sector, it is no longer as fantastic as before, especially because of the TSA. Before the TSA, we had funds to play around. Government is the highest spender in the economy, and the present government is no longer spending. Money has been trapped in the Central Bank, so its a bit difficult for banks to loan out money to business owners; even if we are talking of interest, this is now shrinking. Because, before now, money that was lying fallow, was being made to work in the financial sector. For example, the Nigeria Custom Service brings in money every month. They have an idea of their expenditure, know that they will not spend all their monthly revenue, so the banks can easily give the funds to manufacturers as loans and add interest on the loans and part of this can be given to the owners of the money, the Customs. But with the TSA, these monies are being withdrawn from the banks, the CBN cannot give them out as loans on their own, which means that the manufacturing companies are suffering because they dont have the money for their operations as banks do not have the money to loan out. Hence, as they do not have the money to loan out, it is no longer possible to have as much profit as before.
How TSA has affected banks
The TSA has affected the whole nation, the whole economy. It is only that we have been the custodians of the whole money, so all eyes are on us. The way it has affected us is that, before now, we had the opportunity to give out this money, but when government came with the TSA policy, we were asked to return all the money. Even the proportion that had been loaned out had to be returned. In the course of returning it not everyone that had collected loans could repay. The banks had to go to their reserves to return money to government and that affected their liquidity. But for those that had been given loans, some were given in stages, especially for the production sector, for example, those who wanted to build factories, the banks would initially give money for the construction, before the equipment and raw materials. But let’s assume, if after giving money for the construction and government is demanding that the money should be returned, how would the balance be paid? There are so many uncompleted factories or those that have no fund to purchase equipment or raw materials. This has affected the whole economy because those people find it difficult to repay loans collected from banks.
Apathy to insurance
Our culture in Africa, especially Nigeria, is a culture of God-will-protect-me-from-harm. Most Nigerians, if you talk to them about insurance, will tell you that it is God that protects them. Even if you are telling them to take insurance on their children’s education or personal life insurance in case of any eventuality, they may look at you as an enemy and believe that you want them dead. Because of these, you see even intelligent and well-to-do Nigerians ready to insure their factories but not their personal lives and properties. Insurance is about peace of mind. It is not a collection that you do, but a pool. If I buy a vehicle valued at N1 million, under the law, I am supposed to pay N100,000 to insure that vehicle. It means that you must have 10 to 15 people in that pool, and believing that it’s not all of us that would be involved in accidents for that year because it is from my N100,000 and others that will be pooled together. The pool of risks takes care of anybody that is involved; it means it’s not all of us that will benefit from the pool that year. But for an average Nigerian, the thought is, if I am not involved in an accident this year, what is the need for me to take insurance? This makes it really difficult to sell insurance to individuals in Nigeria. Even those that are doing it, do not see it as a priority, so it means that during recession like this, insurance is not at the forefront. Insurance is an afterthought, after every other expense. Another thing is that we don’t have the culture of record, and in insurance everything is documented. That is why some people believe that insurance firms are not paying claims, but they do, actually. There was a particular period that my organisation paid over N3 billion to one of the top manufacturing companies in Nigeria. That N3 billion was the recapitalisation fee of an insurance company at the time.
Another thing is that there are many insurance policies backed by law, but no one is really effecting or implementing them. For example, if you are constructing any building, it supposed to be insured under the law.
With all due respect to NAICOM, CBN is the supervisory body of banks, and CBN has its own budgetary allocation, but NAICOM as the supervisory body of insurance has no allocation. So it’s like insurance companies have no opportunity of being corrected without fine. Each problem or a slip by an insurance company has a fine attached to it because there is no budgetary allocation to NAICOM, as such insurance companies have a lot of expenses and this, in a way, affects what they have to spend on advertisement.
Annuity and pension
At the point of retirement, a worker has the option to buy annuity or keep on collecting the monthly stipend from the pension fund administrator. Under the law, annuity is about trying to determine your life benefit and allocating that money to suit your lifespan. For pension, it can say you will be paid for 10 years, after which there would not be any further payment, even if that person is still alive. But annuity still takes into consideration the lifespan of the family to determine what age most people in the family live up to, for the insurance firm to structure the payment. At least for the rest of that person’s life, he will be collecting money. In case the person dies before the period, the next of kin would collect the remaining balance. That’s the difference between the two. Unfortunately, our life expectancy is going down and an average Nigerian believes that he should take care of himself first before any eventuality, take his money for the next five or 10 years, without keeping anything. This is what is affecting annuity, it is a very good product, but not well marketed.