CBN Relocation: Archaic Thought Versus Smart Banking Operation

CBN Relocation: Archaic Thought Versus Smart Banking Operation

By Prof. M.K. Othman

In 2001, during my postgraduate program in Montpellier, South France, one of the most observable features of banks in France was the sparse population in banking halls.

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You can hardly see ten people in the banking halls, comprising bank workers and customers. The only reason for a customer to be in the banking hall is to open a new account or negotiate a loan, not to withdraw cash or make a deposit.

ATMs perfectly serve these functions. Even when you need a bank statement, a printing machine is poised at the gate for the customer’s self-service. Then, banking operations in France were about 70% digital. I am happy today in Nigeria; we are almost reaching where developed countries like France were over twenty years ago in banking operations.

The advent of ICT has globalized all developmental sectors and made banking services effective, efficient, and timely. Nigeria has the potential and wherewithal to be on par with any nation in ICT and innovative technologies for the nation’s development.

However, we still face poor infrastructure, human resistance against change, sabotage by the beneficiaries of the old order, and other mundane and archaic reasons to slow down progress. The plan to relocate the Central Bank of Nigeria from Abuja to Lagos can be viewed within this context.

The new CBN Governor, Oluyemi Cardoso, has perfected a plan to relocate essential CBN departments from Abuja to Lagos. The departments are:
• The Banking Supervision (DBS).
• Other Financial Institutions Supervision (OFISD).
• Consumer Protection Department (CPD).
• Payment System Management Department (PSMD).
• Financial Policy Regulations Department (FPRD).
Mr. Oluyemi Cardoso is not a common Lagosian but someone who has immensely contributed to the development of Lagos City. He is a former Commissioner for Economic Planning and Budget of the Lagos State Government, whose contributions transformed Lagos State and made it Nigeria’s thriving business hub and Africa’s megacity. Perhaps his current effort to relocate these key CBN departments is to complement his earlier contributions as the commissioner of economic planning and further develop Lagos’s economy at the expense of other parts of the nation.

One of the reasons given for the return to Lagos plan is a security concern among the central bank’s frequently traveling officials, who must travel across the country to inspect and supervise banks. It was also pointed out that the CBN’s Abuja office precincts, which were reportedly designed to accommodate 2,200 personnel, now house almost 4,000 individuals. Two further reasons suggested are the necessity to save costs and the physical hardship that the nation’s field employees—most of whom have their headquarters in Lagos—face when they routinely travel outside Abuja to manage the country’s banks. These reasons cannot hold water in the face of the current digital economy, backed by the advent of information and communication technology (ICT).

Already, the relocation plan has generated an ethnic coloration in favor of the southwest geographical region, given that all of the authorities in a position to launch and drive the agenda for the relocation of CBN and FAAN are from the southwest. Members of this school of thought draw attention to the fact that CBN Governor Oluyemi Cardoso, Minister of Finance Yomi Edu, President Bola Ahmed Tinubu, and Femi Gbajabiamila, the chief of staff, are all natives of Lagos State.

Besides this tribal coloration, there are five compelling reasons why the relocation of the CBN departments is not an economically and logically sound idea.

First, CBN has large buildings in virtually all 36 state capitals. These buildings were built in the 1990s, when banking operations were physically conducted, requiring every bank representative to visit CBN Hall for checks and other account clearances.

Today, these tens of CBN buildings scattered throughout Nigeria have become eyesore and burden regarding their effectiveness in banking operations because the clearances are done electronically.

Are all the offices in CBN buildings in Katsina, Bauchi, Asaba, Maiduguri, Makurdi, etc. being occupied by officers? What are they really doing? Imagine 4,000 employees in Abuja CBN’s gigantic building.

How many people are working at CBN across Nigeria? Compare it with the African Development Bank (AfDB) – with a capital base of over $200 billion, the African Development Bank (AfDB) owned by 80 member countries operates profitably through sophisticated banking practices with only 2,000 employees working throughout Africa and beyond. With thousands of CBN employees nationwide, the focus should be on addressing the Nigerian economy’s financial challenges: the value of the naira keeps sliding against foreign currency, inflation has jumped to the rooftop, and poverty is spreading like wildfires.

Second, in the 21st century, the need for physical proximity has drastically decreased for banking operations, especially the CBN’s types of regulatory and supervisory functions.

Several Apps are available for banking operations and checks and balances without being physically present. ICT has made spatial location insignificant as long as there is effective Internet service, skilled and knowledgeable human resource.

CBN should be at the forefront of adopting these innovations. Thus, Internet technology has made physical presence less critical, resulting in significant cost savings on travel, office space, and other logistics.

Furthermore, using ICT remotely boosts productivity by allowing employees to focus on tasks without the everyday distractions in office settings. Therefore, CBN’s relocation is needless and a distraction from the real problems of the bank’s maladministration.

The immediate past CBN governor, Godwin Emefiele, cooling his heels with security personnel is an example of CBN maladministration, corruption and nepotism at a high level.

Third, Nigeria has a lopsided economic imbalance against the north, which accounts for 87% of the poverty burden in the country. While Lagos State in the south has less than 10% poverty incidence, Zamfara State in the north has over 90% of people living below the poverty line.

Additionally, over 70% of loans granted by commercial banks or other financial institutions are in the South West, particularly Lagos. Taxes payable by the contractors, companies, and staff relocated would boost Lagos’s economy.

So, relocating essential CBN departments to Lagos entails further economic imbalances and negates the government’s commitment to equitable development and fairness nationwide.

Fourth, relocating to Lagos may lead to separating several families who may have to either choose their family and stay back – loose their job or choose their career and separate from their spouses.

The situation may lead to the exit of several experienced bank examiners who may prefer to resign and look for opportunities elsewhere rather than relocate to Lagos. Given the amount of training and experience it takes to build an examiner, their exit from the CBN may leave quacks without the required skills to engage in bank supervision, which will cause grave consequences for the financial stability of the Nigerian banking industry.

Fifth, the relocation will encourage interest groups agitation to relocate specific ministries or agencies to their location. Already, a former President of Ijaw Youth Council (IYC) Worldwide, Udengs Eradiri, has commended President Bola Tinubu for approving the relocation of the Central Bank of Nigeria (CBN) and the Federal Airport Authority of Nigeria (FAAN) from Abuja to Lagos State. He further called on the President to compel the Nigerian National Petroleum Company Limited (NNPCL) to move the headquarters of some of its subsidiaries to the capital cities of some states in the Niger Delta.

In conclusion, I want to align with the opinion of Chief Whip, Senator Mohammed Ali Ndume who said, “I am very sure that Mr. President will look at this. He is a nationalist and not just a Lagos boy.” Yes, Mr. President, you are not the president of Lagos State but patriotic Nigerian president with unquestionable nationalistic posture.

Dear President Tinubu, may I respectfully suggest that the CBN put forth diligent efforts toward stabilizing the exchange rate and curbing inflation? This would go a long way in restoring credibility and confidence in the bank, especially after the recent Emefiele saga.

Instead of getting bogged down in relocation palaver, the CBN should focus its energies on the pressing task of reviving the economy, which is currently causing distress to many Nigerians.

CBN Relocation: Archaic Thought Versus Smart Banking Operation