By Bimbola Oyesola
Nigeria’s currency has suffered a major depreciation in the last one year, but the President of the Senior Staff Association of Banks Insurance and Financial Institutions (ASSBIFI), Olusoji Oluwole noted that government’s spending is one of the major problems contributing to downward slide of the naira.
The ASSBIFI President in this interview, opined that those in Government need to look at all their unnecessary trips and tours funded by scarce foreign exchange.
He also expressed that devaluation or strength of a currency does not always reflect the strength of that economy, harping on the need for Nigeria to have a productive economy rather than the present consumption economy.
Oluwole also shares his view on the re-capitalisation of the banks allaying fears that it will not lead to massive job losses.
He speaks further on other important issues of national interests which cut across Minimum Wage, Central Bank of
Nigeria (CBN)’ s economic intervention, unionisation and others.
Excerpts:
State of the union
We’ve done relatively well, but not without its challenges, which is not unexpected in the kind of sector that we are in. First, I will talk on the employer side, where we had a couple of employers who were acting against the norms of engagement of our members, taking actions that were contrary to what the Labour Act and known labour conventions, in terms of engagement or separation, so to speak.
And for some, they were able to retrace their steps and do the right thing. But for others, we’re still at it with them. In fact, interestingly, one of them ran to court, took us to the industrial court, simply because we were asking for the rights of our members. But we believe that we are up to the task to ensure that no matter how long it takes to make sure that justice is served.
Now, if we look in terms of the Nigerian administration, again, a lot has happened in our sector, especially relating to the economy because there’s no way we would talk about the economy and not talk about our sector; and the two most salient things that happened for all saying the last one year have to do with the removal of subsidy leading to the devaluation of the Naira and then the sudden scarcity of the foreign exchange in the market which brought the Nigerian currency practically to its knees, exchanging for as much as 1,900 Naira to a dollar. And unfortunately, in the quest to find a solution to it, our sector again was made the punching bag of the administration where a section of our sector was accused of being responsible for what had happened.
But that is something of the past right now, as we find out that the government has finally been able to deal with that problem effectively through the CBN. And we’ve seen now that the Nigerian currency has started to regain its strength again without anything extra being done in our industry.
Re-capitalisation
The second part for our industry has to do with the recent announcement for banks to re-capitalization within the next two years. There has been a lot of focus on banks since that announcement was made. There has been a lot of speculation with expectations from the experience of 2004 that there will be mergers, that there will be loss of jobs,
that some banks may not be able to make it. And these we have addressed over time because one, it’s too early to speculate and two, with the kind of plan that has been rolled out by the CBN, it gives the institutions enough time to be able to plan adequately. Of course, there are some sections of the circular that have not really gone down well in the industry. But then that is a matter that will be discussed at top level in terms of the type of capital injection that is expected.
But nevertheless, we are hopeful and expectant that almost all the institutions that we have will be able to scale through considering the type of funds that have been made available by the CBN. And it means that banks can either remain as they are, upgrade or downgrade their licenses. Or if they so desire, they’ll be able to merge at the time of the expiration of the timeline.
But we see this as a positive development for the industry, and the economy in Nigeria. And all things being equal, we also see it as a positive development, even for our members, because it means that with the kind of capital that the banks are expected to raise, business is going to get better, profitability will be higher. And we want to believe that based on that, the level of job security will be higher and better than it was in the past.
Job losses due to re-capitalisation
Well, to start with, we cannot be definite about job loss right now. And I have to be clear about that. The last time we had a re-capitalisation was in 2004/2005; and if you look back at that time, there are a lot of things that didn’t exist at that time but exist today.
For example, we had almost a hundred banks that were practically struggling. At that time, I think the bank capitalization was 2 billion Naira and was to move to 25 billion. And at that time, the instruction was very clear. Re-capitalize, merge, or acquire. It was a straightforward thing.
And it was at a time when the capital market was not as active as it is today. So, at that time, it wasn’t so easy. It was quite a difficult task for many of the organizations. Some had already gotten that amount in place, that 25 billion or were close to it. So, we had big banks that were able to pull through easily. But there were the smaller banks that had to, that had to merge. Some had just even gotten their licenses and had just started businesses. So, yes, at that time, there were job losses.
However, in this present time, banks have opportunities to upgrade, downgrade, or rename. For those that want to merge, yes, there may be the possibility of job losses because of duplication of roles and excess staff. But we have preempted that, even though we have said we will not speculate at this time because it’s too early. And what we have done is that we have raised our concerns to the central bank, we have raised our concerns to the Ministry of Labour. And we have also notified our Labour Center, that is the TUC. And we are working closely with our other counterparts, NUBIFIE who are under NLC, to ensure that whatever it is that happens at the end of the day, that every worker in the bank must have a fair deal.
So, if the institutions end up having to disengage the staff, they must ensure that the separation is in such a way that will be a win-win for everybody because it will be unfair that people who are out of, not fault of theirs, not due to their own volition have suddenly found themselves out of jobs. We feel that and we have demanded that such people must be given the adequate treatment that is expected by the law.
And one of the things we are fighting for presently to be able to ensure that, is Nigeria’s ratification of ILO Convention 185 that states that in times of disengagement, that the person being disengaged must be adequately compensated and that is not what we are having in quite a number of institutions today. So those are the things that we have started putting in place.
And of course, we are also putting in place interests in the organizations where we are unionized. Because there is also that possibility that there may be mergers which we have seen in the past, that a unionized organization will merge with a non-unionized organization, and then they discard the license of the unionized organization and come claiming that that organization is not unionized.
This is born out of the errors that we have seen in the Labour Act as it is today that talks about volunteerism and so on and so forth, which a lot of the employers are beginning to wrongly capitalize on, are beginning to misinterpret. And unfortunately, the government has not addressed that.
So, these are things that we also expect to be addressed when the Labour Act is finally reviewed, and the final document is brought out.
Casualisation/Unionisation
In terms of casualization, the Honourable Minister of Labor in the last administration was able to conclude an issue that had been on for almost a decade and that was bringing out the documents relating to casualization.
So that has been taken care of and a lot of engagements have been going on in the early days is that casualization is more about NUBIFIE than ASSBIFI, but we’re working closely with them.
However, in terms of organizing the unionized organization, when we look at the Labour Act it talks about people joining unions not organizations joining unions. The only caveat there is that for you to be part of the union you must be the staff of that organization.
So what we are trying to do, two things, one is to make the union itself attractive to people who are in un-unionised environment because a lot of them only run to the union when they start running into problems. When we try to organize them, they resist because as far as they are concerned, the union does not have anything to offer. But today, we are looking beyond protecting jobs or looking for salary increases. Yes, those things are there. But there are other things that we are looking at that will add value to their lives, that will add value to their careers in terms of training, in terms of collaboration.
Even one of the things that we even said was that hopefully in the shortest possible time, even the organizations will realize that they need the unions even more than the unions need them. Because there are times when issues will come up that it is the union that will be able to speak on behalf of the organization. Not situation where we go on air talking about injustices and all those things. No. Our relationship should be such that our members are well treated, and we too can go out and project our organizations positively.
That is the desire that we have to be. Unfortunately, a number of employers do not see that. For some of those that see it, I can tell you that the cooperation that exists and the joy that our members, who are in those organizations, cannot be quantified. Of course, there may be moments of disagreement, which is normal in any situation because you cannot say that everything is going to be agreeable. But for us now, we believe that we need to change the dynamics of organizing and bringing in new members. We do not need to wait for the organization. So, they are there. They are with us. They participate. And when there is a challenge, when there is a problem, they don’t need to run to us. We can really stand up for them and take up their cases and let them know that this person that we are coming to fight for is indeed a member. And the evidence are there to show. I do not require the authorization of an organization to have somebody being my member.
CBN’s intervention
The CBN has come out to deny that they are not using the reserves. I cannot confirm or deny that because they are the only ones who can tell us. But what I know is that, for you to be able to have adequate foreign exchange in your economy, there must be something that is bringing that foreign exchange in. So, we’ll be talking in terms of inflow, we’ll be talking in terms of export production outside Crude Oil.
So, the question that we probably want to ask is, what the government probably needs to come and tell us beyond denying, is the things that have changed and allowed the currency to relatively stabilize.
However, there are a couple of things that we need to understand. Number one, the devaluation or strength of a currency does not always reflect the strength of that economy. Now, if you look all around the world, there are some countries that despite the strength of their economy, their currency is not so valuable when compared with the dollar. But if you look at those countries as well, there are countries that produce, there are countries that are dependent on them for a lot of products in other parts of the world. So, for them, it’s okay to have their currency devalued, because it means that it drives the market to them, and it drives the foreign exchange to them, which now makes their own economy strong, despite the value of their currency.
Now, for us in Nigeria, beyond the role of the government, we as citizens also have our role to play. Now, we’ll take the side of the government first. The government has to make sure that there’s an enabling environment for production, for export, for consumption. Consumption of things that we normally import. So that immediately takes care of our high dependency of imported goods, which puts a lot of pressure on the demand for foreign currency, and of course, which will affect the value of the Naira now.
The second is for the government to also put on infrastructures that will ensure that we do not go out looking for what we can find here. We’re talking of things like health, education. If we had a good educational system, public education, good healthcare system, then we do not need to have people leaving the country in droves, taking the scarce foreign exchange to go and pay for that education abroad.
We know that decades ago, we had international students who were coming to our universities. Why were they doing that? It was cheaper for them to come and study in Nigeria. But now the reverse is the case. It’s our students who are leaving in droves to go and study abroad. And it is not cheap to achieve all those things.
And of course, the government has to cut down on their spending. They need to look at all these unnecessary trips and tours that they go on that are funded by scarce foreign exchange. So once that side of it is taken care of and export is encouraged without any bottlenecks, then our Naira will even get stronger.
And we probably will be the ones wanting to devalue so that whatever it is that we are producing will be attractive to other parts of the world. And for us as citizens, we need to stop hoarding this currency. We need to stop scrambling to buy what we do not need. And we need to control our own excesses. In terms of things that we would term as luxuries, so to speak. On a lighter mood, I mean, when we hear of people ordering pizza from abroad, buying bread and bringing it into Nigeria, I mean these are things that are totally unnecessary. Let us encourage our own local industry. Because I’m surprised when I hear these things. We have people who come here excited that they are eating organic food and then we are there running in to bring processed things, bringing in genetically modified foods and all the rest of it. So, we need to be able to control our own excesses and ensure that we only use these things for things that are absolutely necessary.
So once that demand drops, because this is the demand and supply market, the higher the demand, the higher the price. If the demand drops, people who are hoarding will definitely bring it out because they want to get rid of it. It’s not adding any value to them.
So that is the direction that we need to face presently, rather than speculating and hoping that it’s going to rise so that we can sell and make profit.
Minimum Wage
What I can say right now is that whatever the minimum wage is right now is not acceptable. I can tell you that clearly now. Now, when we talk about what the minimum wage should be, it’s not just enough to roll out a number to say it’s half a million or one million or 100,000 or 250,000. We cannot do that. What we need to look at first is what is going to be sustainable over a period of time before the next negotiation comes.
Now, what are the things that eat into wages? Health, housing, transportation, education, feeding. those five elements. Where does the problem lie? The problem lies in the fact that there is nothing being done in the country. And as long as nothing is being done, whatever it is that is given as a minimum wage today may not have any value in the next couple of months.
Governments should look beyond what they are going to pay but make it in such a way that whatever is being paid, that a large percentage of it is used more to sustain the family. And when we talk about sustaining the family, it’s probably just about feeding, being able to invest a little, being able to save, being able to acquire certain things.
For us as a nation, yes, we’ve removed subsidies from petroleum, we’ve removed subsidies from electricity, and so on and so forth. But if you look at a lot of countries, there are certain parts of the economy that are still being subsidized, e.g. mass transportation. So, what governments should look at is to provide mass transportation that is comfortable for everybody. So that they are not dependent on the expensive petrol but to realize that they can go out to work and come back at this minimal cost. If it’s going to increase, it’s probably going to increase at a minute percentage. I can be able to go to a healthcare center and get free treatment, at least for the basic things. I must be able to send my child to a public school at the barest minimum possible. Those are the areas where things need to be dealt with before we talk about the minimum wage.
I recall I had a meeting with the transport agency of a particular state government in the southwest when we were trying to do some things with them. And when we were talking about the pricing, the man told me clearly, he said, this business was not created to make profit. It was created to provide a service to people. And therefore, the maximum that can be charged for this means of transportation within this state is this for the longest distance. I think then, for the longest distance was N100. At the time when Lagos was charging N500 on BRT buses. Now, what they were doing was that the government bought the buses, paid the salary of all the people that were there, paid for the maintenance of those buses. The only thing that, that they used the money for, was to fuel those buses.
And it had a time frame; after a couple of years, governments either refurbished or purchased more buses for them. And that is what we really need to adopt generally in the country. The people that are most impacted are the masses. And they are the ones we need to take care of first. Once that is taken care of, every other person is taken care of because the people who are the lower cadre, who are now comfortable with those things that are being provided, are no longer dependent on the people like the higher cadre because they also have their own pressure to take care of their own dependence around who are not adequately paid. Once all those things are put in place, you can be sure that whatever it is that you are earning, if the next negotiation is going to be in the next three years or the next five years, you will know that if there is any value that has been lost, it will probably be in a single digit.
And in so doing, it means that the next negotiation, we are not talking of a massive change in the minimum wage. I mean, let’s look around the world. You’ll probably find, for instance, let’s use the U.S. as an example, that if there is going to be a change in the minimum wage or in wages at all, you’ll probably find $2 being added per hour, $1 being added per hour, also depending on the state because each location also has its own cost of living. These are things that seriously need to be addressed beyond just the value that is going to be paid because if we focus only on the amount, I can bet you that before the end of the year we’ll be calling for another increase.
Workers condition
Truth be told, things have been very, very bad. And I think this started right from the 29th of May when the President made that pronouncement that subsidy is gone. And from that day, workers, and indeed almost every Nigerian has suffered from that statement. It hasn’t been easy. Sometimes, I wonder, I personally wonder how people cope with what it is that they are earning because I hear complaints at all levels. And when it comes to that, what it does is that it creates a bigger problem for the government if something is not done as quickly as possible because it will affect productivity, it will affect security, it will affect almost every aspect of operations and governance in the country.
Because yes, we may just be looking at the average worker, but the average worker is the person that oils the economy itself. So yes, between the last May Day and now, it hasn’t been comfortable. I’m sure that by the time we get to the Mayday celebration all these things are going to reflect clearly in the environment.
Workers expectation
We can only hope that whoever it is that is representing the president would come up with plans that would bring some succor. Yet again, we do not have to wait for Mayday. I expect that in every Mayday celebration, the government should be able to come out to say, between last year and now, this is what i have done for and this is what we are able to achieve. Because we find out that year in year out, it is all about demands and promises that are hardly ever kept.
Scorecard
When the administration started, there were too many trials and errors, but from all indication now, they seem to be finding their footing. We would realize that while trying to stabilize an economy, you are also trying to bring in sanity. And those two things themselves are major factors of the problems we have today. In terms of stabilizing the economy, they may have started getting it right. But we hope that it is not artificial just like a lot of people have speculated as regards using the nation’s reserves to support the economy. But we are seeing a lot of clean-ups that we believe would be helpful and have future impact.
However, i think the government still has a lot to do in terms of fighting corruption.