THE DEATH OF PROFESSIONALISM

The Institute of Chartered Accountants of Nigeria, Chartered Institute of Stockbrokers, Chartered Institute of Bankers, Institute of Chartered Secretaries and Administrators, Nigerian Society of Engineers. These are some examples of the professional bodies we have in Nigeria and others abound! The ones listed here are just a tip of the iceberg. However, the ongoing crisis in the banking sector suddenly leads me to the question of what exactly the roles of all these professional bodies are? A professional body is meant to consist of a group of people in a learned occupation, who are entrusted with maintaining control or oversight of the legitimate practice of the occupation. They are also supposed to safeguard the public interest

I take a look all around me and I suddenly discover that true professionalism died long ago and has taken the back seat in this country. Rather, in almost every industry what we now have is a situation where quacks have wrested control and are now at the forefront of the industry. In most developed countries before operating as a plumber, electrician or carpenter, much less as an Architect or Engineer, one would typically have passed some exams and obtained to sort of certification to qualify to repair plumbing or wire a house. But here, all manner of people, both qualified and usually unqualified take on such jobs.

The banking sector is a vital industry in any country. It is an industry where the raw material is money….other people’s money! Through lending, it has the capacity to provide much needed capital to millions of people and industries, which might ordinarily not have had access to the funds required to set up their own small business, expand an existing one or add another production line to a cement factory. All of which would provide millions of jobs, lift so many out of poverty and grow a national economy. Yet, despite all the benefits of a virile banking sector, the industry is fraught with risk as it challenges the leadership to find a right balance between the desire to make profits and satisfy shareholder demand on the one hand and the safeguarding of depositors funds on the other. Therefore one would typically expect that in order to achieve this, the leadership of our banks would certainly have to know what they were doing. But do they?
In an industry as delicate and important as banking, one would expect that the Chartered Institute of Bankers would play a vital role in the running of these banks. Not directly of course! But by ensuring that those saddled with the responsibility of managing our banks were sound in every aspect of the profession. But sadly, this does not appear to be the case.
The profession of banking has been so diminished that the sector now attracts all manner of people. In a typical bank, if any survey was carried out, I can almost guarantee that every bank in this country has fewer Chartered Bankers or even Banking and Finance graduates in its employ than non bankers. In fact, when I was in University I recall some of my fellow students telling those studying Banking and Finance that “they were wasting their time”. Now, that is not to say that only professional bankers can work in a bank. At junior levels, yes, I believe they can, but at senior level? At Assistant General Manger level? Where the decisions that determine the future viability and sustainability of a bank are taken? No, I think not! What does a Yoruba graduate know about banking? What does a graduate of pharmacy know about banking? There is no way such a person would have had the tenets of the profession ingrained in his mind. Such a person can be smart and highly intelligent, but that doesn’t make him or her a banker? I find it odd that someone who studied Pharmacy, who spent 6 years learning about the do’s and don’ts of her PROFESSION, all the ethical and moral issues, suddenly veers off into banking and before you can say “hopscotch”, is suddenly in charge of a sensitive department such as Credit and Risk Management or becomes the Head of Treasury. Little wonder then, that our banks have stupidly created all manner of bad loans. Little wonder that they continually put all their eggs in one basket, ignoring the risk of credit concentration as it relates to individuals or companies as well as industries. Little wonder that marketing has been reduced to employing pretty girls of questionable backgrounds to hit the streets and encouraging them to do “what the girls in that other bank do”, rather than actually selling a product. If banking were so simple or trivial, those who designed the course wouldn’t have designed it for 4 years and there wouldn’t be a professional body saddled with the responsibility of maintaining the highest standards of ethics, integrity and professionalism (although CIBN can be said to have failed in that regard).
While I have used banking as a case study, the fact is that professionalism has disappeared. Real Estate management is now an all comers affair. Everyone is now an ‘agent’. Architecture and Engineering have been taken over by quacks. Clearing and forwarding is now something everyone can do.

What are we loosing by the death of professionalism? Well, for one quality. Quality is a priority in any business and profession. It is not only restricted to the product, but also the performance of the professionals. Lack of quality leads to a compromise in the standard of performance. This compromise in the standard of performance is what our banking crisis smacks of!!

THE CLEANSING OF THE BANKING SECTOR

It has been a while since a single subject dominated the media the way the current banking reforms are doing. The media has been feeding fat on the frenzy the CBN Governors actions has caused and many a public commentator has lent his voice to the debate. Of all the various issues raised, the primary point of contention appears to be whether the action of the CBN Governor is a Northern orchestrated agenda or is an objective and independent mission to sanitize the banking system.

However, rather than play the typical North/South political game with the issue, I ask myself- based on the available facts, is the effort to cleanse the system the right thing to do? I have been privileged to work in a Bank before and in the Treasury department at that, as an inter bank trader, so at least I am qualified to say a thing or two on the subject matter. Like almost all people who have made one comment of or the other, I have not seen the findings of the CBN special audit. Therefore, my comments, like theirs, are based on available information.

I am well aware that of the 5 banks sanctioned, 3 of them have been absolute net takers of funds at the inter bank market as far back as 2002-2006 when I was an inter bank trader. Now, being a net taker of funds is in itself not a bad thing, but when it becomes a perpetual day in, day out, year in, year out thing, then there is obviously a problem. The inter bank is meant to be a market where banks borrow/lend for their short-term deficit/surplus clearing positions. It is absolutely not meant for long term financing. A bank can only be in a perpetual long term clearing deficit when there has been a gross mismatch of its assets and liabilities ie short term liabilities have been used to finance long term liabilities or assets that are not returning any cash flow (non performing loans). This may not have been an issue if it involved say 3-10% of existing loans, but when it involves half of a banks loan book, when never ending commercial papers are continuously rolled over and sold to generate liquidity, when ALCO (Asset and Liability Committee) meetings- arguably the most important top management meeting in any bank- are turned into meetings where the management chat about how much deposits their staff have brought in and whiplash those who have failed to meet their targets, then it is obvious that the CEO’s of these banks have no clue what they are doing and thus their removal from office by the CBN is well and truly justified.

So many of us have lost money or at least know someone who lost money to the failed banks of old. We have all wondered as to how the banks could continue to declare outlandish profits in a country where the manufacturing sector is almost dead and buried and most other businesses are experiencing declining fortunes. I’m therefore surprised that in spite of this, I hear so many negative comments about this reform exercise. While the approach of the CBN may have been better, I expect to hear more of constructive criticism as to how the process can be better facilitated, rather than outright condemnation of the exercise.

Anything that can reform our banking system and get it to effectively contribute to capital formation for meaningful economic growth and development is welcome and should be embraced by all, be it in the North or in the South.