Why MSMEs are finding it difficult getting credit from banks – Dr. Uju Ogubunka

Dr. Uju Ogubunka, president, Bank Customers Association (BCAN) and former Registrar, Chartered Institute of Bankers (CIBN), in this interview, explains why MSMEs are finding it difficult getting credit from banks, and how arbitrary charges banks can be stemmed among others. He spoke with Sam Nzeh, Editor, The Business Times.

What is the mandate of BCAN and how far have you gone in actualizing it?

The mandate of BCAN is to create awareness, to empower bank customers. I don’t know how many people in Nigeria who are doing banking the way and manner it should be or indeed understand banking at the lowest level.

We did a study when we were about to start the association and we found out that the percentage level of Nigerians about banking was very low and there was the need to get people to understand what banking is all about and the benefits.

We started by creating awareness. We did some awareness campaigns as an independent association and with the financial regulators like the CBN, NDIC and others. We’ve taken the campaigns to several commercial cities like Lagos, Kano, Kaduna, Aba, Enugu, and Owerri among others. All these campaigns were done to empower bank customers. We also intervene where customers have issues with their banks and resolve it.

How can you describe Nigeria’s Banking industry?

My take is that Nigeria’s Banking industry has never changed from what it used to be in the past. It still has the same structure and system. What is changing is the environment. When I talk about environment, I mean the operating environment that the banks play in.

We still have the structures, the institutions that make up the system, the regulators, the operators, etc.

The economy, however, has tried to make the face of Banking more challenging than it used to be. That’s where you now have things like high inflationary rate, low interest on savings irrespective of the fact that the inflationary rate is far ahead of savings deposit rate. Banking is more challenging now for customers to navigate through, even for customers to get credit, it a big issue.

From figures that the banks post yearly, credit lending is tilted to high net worth persons and businesses with little or nothing for the MSMEs. What in your view should be done to change the narrative?

It’s all about the economy. If the environment is clement enough for SMEs to operate and survive, there is no reason why the banks cannot look at them and help if they need finance, after all, that is what the banks are in business to do.

What you find out presently is that the MSMEs are struggling to survive because of the way the economy has been in the past few years. And to give them money right now, going by the way the economy is, how many of them will be able to pay back without gnashing their teeth?

So, it’s all about what is happening in the economy; is the environment clement and supportive? The regulators are they supportive? However, I believe that currently, the MSMEs have opportunity to get finance for their operations not particularly from the mainstream banks but from the finances that have been made available by government and the regulators for such businesses. However, how many of them qualify to access such funds?

So, if you look at what the MSMEs are doing, how they are struggling to surviving in this economy, it may not be feasible for them to get finance from the conventional banks. And it’s not anybody’s fault but what is happening to our economy presently, that we have the dollar going at an outrageous amount to Naira, fuel selling at high amount per litre, and inflation hitting the roof. So the economy has not been supportive to the MSMEs.

What is your association doing to checkmate the arbitrary charges on customers’ accounts by banks?

I agree that no matter the amount of money deducted arbitrarily from customers’ accounts by banks, such persons should be concerned and raise eyebrows when this happens.

The BCAN members who I lead are aware of this complaint. As an association, we are also enlightening our members on this development and it is the reason the association goes from one locality to the other in the country to educate banks’ customers on their rights and obligations, including what to do when they notice any arbitrary charge on their accounts.

What we encourage our members and other banks customers to do is to try to examine and cross check their accounts on monthly basis and if they find anything untoward, they should report to the bank or to the bank’s branch where they are conducting their transactions.

If that fails to yield result, then they should escalate the complaints to higher authorities. Of course, we have several channels where bank customers with this problem can direct their complaints and get redress. We have the sub-committee on ethics by the Bankers committee; we have the ADR, mediators, etc.

All these frameworks exist for bank customers who have issues with their accounts to take advantage of if they have problem. We even have independent consultants; most of them have had experience in the banking industry and they try to help customers to cross check their accounts and where there are issues, take them up on behalf of the customers with the bank(s) in question.

So, I think that first, customers’ enlightenment, understanding and readiness to do what they are expected to do are crucial to addressing this issue.

If banks know that if they deduct any amount arbitrarily from customers’ accounts and that the customers will complain and take it up until the right thing is done, they (banks) will not be tempted to deduct the money.

Let me also say that resolving this issue this is not a one man’s show. It should be all of us who are customers of the banks. If you are borrowing money from the bank, you should cross check the account based on the interest rate agreed and see if they are overcharging or undercharging you. If they are overcharging you, then you complain.

If your complaint is not addressed, then you take it up with higher authorities. That’s the way to go. Let me also say that the BCAN tries to assist members who have this complaint and we have resolved quite a number.

What’s your take on the growing complaints by customers who go to their banks to withdraw money and they are told that there’s no cash?

I don’t see why the banks will have money and they won’t want to give such to their customers. If such complaint is true, then one has to ask: why are the banks there? If they exist to receive deposits from customers, they should also be there to give the customers money when they need it.

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I’ve had complaint about this and I tried to find out the reason. What I found out is that I think we are trying to promote cashless economy and in one form or the other the regulators are trying to ensure that we start buying into it.

And one of the areas I think they are making headway is to limit the quantity of cash in circulation.

The banks don’t manufacture money; they get their cash from the CBN. So if for instance, a bank goes to the CBN to withdraw N2 million but the CBN gives them N1 million, such a bank will be left with the task of distributing the N1 million across their branches.

In such an instance, there will be limitation as to the amount customers of such bank will get when they request for cash.

So, all the customers can do is to try and make use of the alternative frameworks for financial settlement. We can use our ATMs to make transfers, same with mobile phones.

We can use all these frameworks wherever they are available to carry on transactions without necessarily looking for cash.

However, at the level of our economy is presently, I still believe that we need cash because we are a cash-dominant economy and we can’t just force cashless economy on the people. The CBN should make cash available to the banks and the banks should make such available to customers.

What should the Federal Government do quickly to tackle the growing hardship across the country that has resulted in some protests?

I advise the Federal Government as the father of all to do its best to remove the pains that the people are presently going through as a result of worsening economic condition. Even if it cannot remove all the pains totally, it should make attempts to reduce it.

The Federal Government should look closely at the issues that have aggravated the sufferings of the people. One of such is the issue of subsidy removal. Should we have removed the subsidy in one fell swoop or should we have graduated it?

Then the government should do something quickly to ensure food is available across the country. Feeding is critical to any human beings’ existence. If the government can ensure availability of food, it will go a long way to assuage the restiveness across the country.