September 24, 2023

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CIBN Conference: Gumel charges Nigerian Banks to Expand Local Financial Market


CEM REPORT | The ongoing Banking and Finance Conference has open up again the need to concentrate on the exploration of the local capacity of our market in the development of our economy rather than looking across the border when developing strategies and innovation for the banking sector.

Farouk Gumel spoke elaborately, Tuesday, on this subject while delivering his keynote speech on the theme; “Repositioning the Financial Services Industry for an Evolving Glocal Context”, at the 15th Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria holding at the Hilton Hotel, Abuja.

Farouk Gumel, the Chairman of the Board of Directors of Union Bank in his speech delivered with a tone of confidence was clearly built on knowledge, experience and interest on the Nigerian economy being a producer, investor and a consumer.

Indeed, the Nigerian Banking sector has evolved overtime to become one of the most vibrant banking sectors globally and the CIBN is commended for this journey, who from the onset recognized the importance of consummating local context from global perspective. This Gumel said has helped the banking sector gone through the militarisation, democratisation, consolidations, reforms and more recently, digitalization and tokenization the sector has seen.

Though and truly, there is transformation in the Nigerian Banking sector which is recognized globally with notable awards and ranking, there is less of its mining of its local capacity than ease it offers the Nigerian and global elits

“Our banks, bankers and regulators have received numerous awards and have been ranked amongst the best in the world. The returns on equity at Nigeria’s most efficient banks are the  envy  of  peers  overseas  –  even  in  these  most  difficult  and uncertain times.

“As a matter of fact, I think this could be something we have done almost too well! For the elites at least!  Our systems and processes have made it exceptionally easy for  our  elites  to  bank  globally  and  for  global  elites  to  bank  in Nigeria. Let me put it in a different way, an investor in Norway will find it easier to use a Nigerian bank than a farmer in Ningi Local Government”; Gumel said.

The definition of true prosperity is being able to utilize your capacity to create lasting wealth less dependent on external influence especially inbound externality. Failure to direct our innovation towards harnessing local capacity is not only a loss to our local beneficiaries but a loss to our common prosperity.

Gumel aptly captured this insight when he said; “Working for TGI in some of our rural operations, I have come to  realise  that  –  as  we  embraced  a  global  system  –  we  have somewhat  abandoned many of our local compatriots. That is not only a loss for them. It is also a missed opportunity for our financial services industry to help create the growth that lifts us all to collective prosperity.

“This is why we are still talking about “financial inclusion” and how to bank the “unbanked” – after nearly 130 years since First Bank commenced operations in Nigeria.”

The real application of ‘glocal’ concept is that in the same must will innovate to meet global standard and in global context, it must be directed to result in an impactful benefit to local market enhancement and the resultant economic benefits as much as it have on the banking industry itself.

According to Gumel, there is still up to 64 million (nearly the entire population of the UK) unbanked adults in Nigeria. This is 55% of the bankable population in Nigeria according to World Bank. “Those unbanked Nigerians are not only potential savers and borrowers, with our help, these are the entrepreneurs and founders of the businesses of the future.”

Gumel clarifies that the valuations of Nigerian banks, usually based on serving 200 million is an error.  “The reality is that they are not.  They are serving a far smaller country, divided between a handful of big cities – and those big cities look abroad, as much as they look within.

So, to “reposition” for a “Glocal context”, we need also to look more inwards.”

It is also quite true that working to get the unbanked require a change of strategy. The unbanked are informal and less enlightened in that scale however very productive. It is going to be difficult to trying to bring them to operate on the present operational structure, rather the banks need to adjust its current operational structure to suit the purpose of tapping into wealth still lying fallow.

It requires building relationship first while adjusting structures to what they can understand and work with.

“The Farmers will not come to us, we will go to them”; Gumel said.

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