Return of Bank of the North

The 19 Northern states governors have kick-started a fund-raising drive to reinvigorate the Bank of the North which was merged with some financial institutions about a decade ago. In my understanding, it is a good step in the right direction. We do hope that this time around the attempt to reestablish the bank will go […]

The 19 Northern states governors have kick-started a fund-raising drive to reinvigorate the Bank of the North which was merged with some financial institutions about a decade ago. In my understanding, it is a good step in the right direction. We do hope that this time around the attempt to reestablish the bank will go beyond political statements. You need the banking sector whether commercial or Islamic or microfinance banks to benefit from the federal government Intervention funds. Unarguably Northerners have benefitted with little or nothing with the Federal Government Intervention Funds due to financial exclusion.

“The North had 18 out of the 82 banks in the country, which was about 20 per cent, but gradually, we lost out. Out of the 23 that emerged, it is only the Unity Bank, which is a combination of nine banks, that we can say is northern…” Alhaji Falalu Bello (Daily Trust, Sunday, April 23, 2017). Permit me to say that out of the 23 existing Commercial Banks in the country none of them has its highest shareholders by Northerners not even the Unity Bank. The economy of Northern Nigeria will remain underdeveloped as long as its peoples and their businesses lack access to credit.

In my humble opinion, with all the rich men in the North and the then serving 19 Northern governors we were not able to raise N25 billion to maintain the structure of at least one bank. The investment of N1.3 billion by each of the states would have raised N 25billion. Running a bank has a huge potential.

A lot of towns in Northern Nigeria lack even microfinance banks let alone, commercial banks. What does it take to set up a micro finance bank? It is only N25 million. Our state governments should encourage the establishments of Microfinance Banks. Our rich men should also establish microfinance banks in order to promote financial inclusion. As important as the banking industry many Northerners, for numerous reasons perhaps religion or lack of financial literacy are not banking and lacked access to formal financial services. A lot of Northerners are financially excluded. Northern Governors should be organizing seminars and other enlightenment programs for financial literacy.

A 2013 CBN report said: “Only an average of 18% of adults are Banked in Northern Nigeria. The North-west has the lowest rate of population that keep their money in the banks with only 13 percent. The North-east followed with 15 percent and the North -central has 27 percent of the formally banked population. CBN said the financial exclusion rate is worse in the Northern part of the country, with about 68 percent of the population excluded from financial services in both the North- east and North-west regions” (CBN report Daily Trust, December, 27,2013).

Some of the reasons for the low percentage of the financial inclusion in the North is attributed to the average distance to Deposit Money Banks (DMB) branches varies widely within Nigeria, from almost 60 kilometres in Kebbi State to less than 1 kilometres in Lagos State. Educational levels and financial literacy are also included. 

In my humble suggestion, the new Bank of the North to be established should be run professionally as a purely business enterprise. Public sector investments in Nigeria have bad records of performance and survival. Furthermore, the most profitable government investment is the Nigeria Liquefied Natural Gas (NLNG) simply because it is being run purely as a business enterprise.  NLNG is unarguably the country’s best success story. The company was owned by four shareholders: the Federal Government represented by NNPC (49 per cent), Shell (25.6 per cent), Total LNG Nigeria Ltd (15 per cent) and Eni (10.4 per cent). We could adopt this approach of public investment for its success. We do hope the idea will work this time around.

Nurudeen Dauda, [email protected]