Nigerian universities produce thousands of graduates yearly without jobs for them. Still banks have taken turns to lay off workers, blaming in part the Treasury Single Account (TSA). Reporter HENRY ODUAH writes…
Skye Bank rendered no fewer than 175 employees jobless last week when it announced their sack in defiance of government’s directive, piling more pressure on Aso Rock, banks, and the labour market.
In response to economic difficulties, Ecobank Nigeria fired 1,500 workers two weeks ago, making a total 1,700 since late last year.
Diamond Bank has also sacked 200 and First Bank plans to disengage 1,000 in phases.
These numbers join the teeming number of the unemployed across the country.
Analysts attribute the bulk of the crisis in the banking sector to the new TSA which requires all monies paid to the government to immediately pass through banks to the Central Bank of Nigeria (CBN).
For and against TSA
TSA requires all ministries, departments and agencies (MDAs) to close their revenue accounts in different banks and transfer the proceeds into one account operated by the CBN.
Most commercial banks had MDA accounts running into billions of naira. Some of the funds were not withdrawn for many months. Banks traded with them and make profits.
But since TSA became effective, banks have had to fend for themselves.
Social commentator, Achike Chude, in a live chat on radio last week said: “The reality is that sometimes evil comes out of good and this is what we are beginning to see. He (President Muhammadu Buhari) wants to make things difficult for people to steal but at the same time he does not want to shut down an economy.
“At the same time he does not want to create a situation that becomes unpleasant for the generality of people and institutions of governance.
“For instance, people have talked about the need for exemption for critical government infrastructure like hospitals.
“You cannot shut down the accounting system of a hospital just because the government has brought you an instrument that should ensure accountability and transparency.
“Patients must be treated. Things must move. And there are complains everywhere.”
But Stephen Ocheni, professor of public sector accounting, Kogi State University, Lokoja, expressed support for TSA, saying its full implementation will not hurt banks.
“It will only hurt establishments that purport and pretend to be banks but have failed, refused, and neglected to understand banking and do what bankers do elsewhere.
“It is an opportunity for banks to refocus on the original purposes for which they were set up to collect depositors’ funds, keep them safe; engage in intermediation to create wealth and jobs for the economy, and in the process earn profit for themselves,” Ocheni said.
An economist, Peter Ochai, urged banks to return to core banking to survive the current wave blowing them, which means cutting loans to the government and loaning more to the real sector.
His words: “Why we are experiencing this kind of retrenchment is that we do not operate core banking system in Nigeria.
“Our banks do business out of public funds. They rely on government deposits, then they buy bonds and give back to the government as loans with the same money.
“And they don’t share the profits they make with public funds with the government.
“Intelligent banks should simply go back to core banking system by loaning to the manufacturing sector which can use the money to grow businesses, pay the loan and interest and in turn generate profit for banks.”
Others argued, however, that the government is the major earner and spender, but with social infrastructure in bad shape, banks run a big risk loaning to manufacturing which does not guarantee growth yet.
They asked the government to fix power supply to encourage banks to loan to manufacturers.
Investigation by TheNiche showed that bank employees resume work daily dreading the sight of envelopes on their desks to mean sack letters.
The fear of job loss flows right from top management to the least employee.
Ngige to the rescue?
Labour and Productivity Minister, Chris Ngige, has directed that all retrenchment be stopped, including those done in the past four months pending a stakeholders’ summit for employers and employees of banking, insurance and financial institutions scheduled for July 2.
He said: “Following the high spate of petitions and complaints from stakeholders in the banking, insurance and financial institutions, I hereby direct the suspension of the ongoing retrenchment in the sector pending the outcome of the conciliatory meetings in the industry.”
Analysts countered that it is wrong for the government to give an order without consulting stakeholders to guarantee compliance.
They said the government has no right to give the private sector an order to restrain it from doing what it perceives would be in its best interest.
Defying Ngige’s order
Skye Bank clarified that it did not sack employees because of economic downturn but that the workers failed the 2015 appraisal exercise which considered factors ranging from low productivity to disciplinary issues.
“The staff disengagement exercise is coming a year after the bank’s successful integration with the erstwhile Mainstreet Bank, which it acquired in October 2014.
“The integration exercise, described by analysts as a landmark in Nigeria’s banking industry, has significantly improved Skye Bank’s ICT capacity and helped strengthen [its] service delivery,” the bank said in a statement.
“The bank extended its appreciation to the affected staff for serving the bank, describing them as members of the family who will always be accorded deserving respect in their future dealings with the bank.”
The Economic and Financial Crimes Commission (EFCC) is on the trail of Skye Bank for allegedly failing to remit N6.3 billion to TSA.
Its Managing Director, Timothy Oduntayo, and chief compliance officer are being quizzed.
