THREAT TO REVOKE BANK LICENCES: A GRAVE SIGNAL
I was shocked to read the statement credited to the Minister of Labour & Employment where he was quoted as follows" The Federal Government gave licenses to the banks to operate and if its directives are not adhered to, their licenses will be withdrawn if the need arises. We will go a step further if they continue. We know what to do. They need to comply..." This threat was made as a reaction to the failure of Banks to stop laying off their staff as directed by the Minister. To be true, this is a very troubling development which makes me really sad.
In the first place, what is the locus of the Minister to issue orders to Banks? Even the CBN which supervises banks can not issue that type of order to Banks. Banks are private companies owned by private investors and managed by their Boards of Directors and the Executive Management Teams. They owe allegiance to their shareholders. They are not owned by the government, and are certainly not parastatals of the Ministry of Labour, which the Minister can issue orders to,often without regards that those Parastatals and Agencies are responsible to their governing Boards.
To follow up such illegal order which at best constitutes undue interference in the affairs of private companies, with a threat to withdraw their licenses is to me the height of official rascality and indeed a most insensitive statement with dire consequences. I am downcast that after more than 20 years of pushing the liberalization and deregulation of our economy and with all the progress made to align to best global practices, a Minister in 2016 will be making such a retrogressive statement. Such statement may have been tolerable when Government owned Banks or owned controlling shares in financial and other business institutions. But that ended decades ago with the adoption of the Privatization programme. To make statements or threaten to take action that seem to suggest that Government still controls banks is a dangerous throw back to a forgotten era.
What is more distressing is that this careless statement can cause untold damage to Nigeria's image in the investment world. A country that is desperate for new investments- domestic and foreign, and one with a history of policy flip flops can not be giving the impression to the Investing Public that Government may be planning to nationalize private companies. This is a major disservice to all the efforts being made to change the image of this Country and make it investment friendly. It smacks of a new height of impunity and it is dangerous. Other Government officials may follow this unsavory example. Infact a few days ago, I read of the threat of the Governor of Rivers State to withdraw the C of O of AGIP oil Company for some reason. This is preposterous!
The Banks are private companies that employ and 'fire'as determined by their operational needs. They are set up to return profit for their shareholders while serving other economic purposes like paying taxes. They require resources to operate, one of the most important being Human Resources. Nobody tells them when to employ as they realize that without adequate human Resources( Quantity and Quality), they can not compete and may not make money for their shareholders. Similarly, when the economic space is contracting and their business is declining, it is within their discretion to decide to reduce their human resource load, so that they can remain afloat and achieve the objective of setting up the banks. This is similar to what obtains in all arms of the Private Sector all over the free World.
Of course there are Industrial Relations laws that determine how workers are treated by employers. And should any employer offend there are safeguards. First, the Industrial Unions are there to protect the interest of their members. And even if they do not exist or are unable to protect their members, the National Industrial Courts are there to defend them and to ensure that the rights of the workers and the employers are protected. And as I have commented in this column in the recent past, the National industrial Court is one of the performing institutions in Nigeria. They have decided several cases in favour of workers who were wrongly sacked. These are the options that are followed in democratic and free societies including our African Neighbours.
The best the Minister could have done, was to appeal to the Banks and not to order or threaten them. May be the Minister and others who may be tempted to support this misguided 'populist' action, need to have a better understanding of how a free Economy operates. When an economy is contracting as we have seen in the last one year, with the GDP going negative as we saw in Q1(-0.4%) and when the right policies are not taken and implemented promptly as we have noticed in recent times, job losses are imperative. No one can wish it way or decree against it. Likewise when the right policies are promptly implemented and when the economy expands, Job gains follow. That is the Sequence. If the Minister or the government wants to command or order, then it can attempt ordering the economy to improve, so as to halt job losses and when the economy fails to respond, then it can go ahead and threaten the economy.
Last weekend,the Nigerian Army dismissed about 50 senior military officers in an unprecedented mass sack of senior military officers. And we are told to expect similar sacks from the Navy and Airforce. Why did the Minister not order the Military to stop the sack? Those sacked, are they not Nigerians or do they not have families?Infact, the military asked those not satisfied with the sack to go to seek redress in the courts. If the military can recognize the democratic process, I am surprised that a civilian Minister is talking like a Military administrator. Let it be known that If urgent steps, like the speedy and full implementation of the 2016 Budget are not taken to reverse the economic decline, the Minister may have to give more orders and make more threats because soon the State governments and even Federal government agencies may begin sacking their own workers, in addition to the massive job losses in the Private sector which have been ongoing in the last 15 months. When people have not been paid salaries for over six months, can they still be said to be in employment? The Government seems to have conquered the Trade Unions and if it believes it can also cow and conquer the Banks,the Telecoms industry, the oil companies and indeed the Private sector through ill advised orders and threats, then it might soon find that it is shooting itself on the foot. And must be prepared not to pass the blame to the previous administration.
Mazi Sam Ohuabunwa OFR
In the first place, what is the locus of the Minister to issue orders to Banks? Even the CBN which supervises banks can not issue that type of order to Banks. Banks are private companies owned by private investors and managed by their Boards of Directors and the Executive Management Teams. They owe allegiance to their shareholders. They are not owned by the government, and are certainly not parastatals of the Ministry of Labour, which the Minister can issue orders to,often without regards that those Parastatals and Agencies are responsible to their governing Boards.
To follow up such illegal order which at best constitutes undue interference in the affairs of private companies, with a threat to withdraw their licenses is to me the height of official rascality and indeed a most insensitive statement with dire consequences. I am downcast that after more than 20 years of pushing the liberalization and deregulation of our economy and with all the progress made to align to best global practices, a Minister in 2016 will be making such a retrogressive statement. Such statement may have been tolerable when Government owned Banks or owned controlling shares in financial and other business institutions. But that ended decades ago with the adoption of the Privatization programme. To make statements or threaten to take action that seem to suggest that Government still controls banks is a dangerous throw back to a forgotten era.
What is more distressing is that this careless statement can cause untold damage to Nigeria's image in the investment world. A country that is desperate for new investments- domestic and foreign, and one with a history of policy flip flops can not be giving the impression to the Investing Public that Government may be planning to nationalize private companies. This is a major disservice to all the efforts being made to change the image of this Country and make it investment friendly. It smacks of a new height of impunity and it is dangerous. Other Government officials may follow this unsavory example. Infact a few days ago, I read of the threat of the Governor of Rivers State to withdraw the C of O of AGIP oil Company for some reason. This is preposterous!
The Banks are private companies that employ and 'fire'as determined by their operational needs. They are set up to return profit for their shareholders while serving other economic purposes like paying taxes. They require resources to operate, one of the most important being Human Resources. Nobody tells them when to employ as they realize that without adequate human Resources( Quantity and Quality), they can not compete and may not make money for their shareholders. Similarly, when the economic space is contracting and their business is declining, it is within their discretion to decide to reduce their human resource load, so that they can remain afloat and achieve the objective of setting up the banks. This is similar to what obtains in all arms of the Private Sector all over the free World.
Of course there are Industrial Relations laws that determine how workers are treated by employers. And should any employer offend there are safeguards. First, the Industrial Unions are there to protect the interest of their members. And even if they do not exist or are unable to protect their members, the National Industrial Courts are there to defend them and to ensure that the rights of the workers and the employers are protected. And as I have commented in this column in the recent past, the National industrial Court is one of the performing institutions in Nigeria. They have decided several cases in favour of workers who were wrongly sacked. These are the options that are followed in democratic and free societies including our African Neighbours.
The best the Minister could have done, was to appeal to the Banks and not to order or threaten them. May be the Minister and others who may be tempted to support this misguided 'populist' action, need to have a better understanding of how a free Economy operates. When an economy is contracting as we have seen in the last one year, with the GDP going negative as we saw in Q1(-0.4%) and when the right policies are not taken and implemented promptly as we have noticed in recent times, job losses are imperative. No one can wish it way or decree against it. Likewise when the right policies are promptly implemented and when the economy expands, Job gains follow. That is the Sequence. If the Minister or the government wants to command or order, then it can attempt ordering the economy to improve, so as to halt job losses and when the economy fails to respond, then it can go ahead and threaten the economy.
Last weekend,the Nigerian Army dismissed about 50 senior military officers in an unprecedented mass sack of senior military officers. And we are told to expect similar sacks from the Navy and Airforce. Why did the Minister not order the Military to stop the sack? Those sacked, are they not Nigerians or do they not have families?Infact, the military asked those not satisfied with the sack to go to seek redress in the courts. If the military can recognize the democratic process, I am surprised that a civilian Minister is talking like a Military administrator. Let it be known that If urgent steps, like the speedy and full implementation of the 2016 Budget are not taken to reverse the economic decline, the Minister may have to give more orders and make more threats because soon the State governments and even Federal government agencies may begin sacking their own workers, in addition to the massive job losses in the Private sector which have been ongoing in the last 15 months. When people have not been paid salaries for over six months, can they still be said to be in employment? The Government seems to have conquered the Trade Unions and if it believes it can also cow and conquer the Banks,the Telecoms industry, the oil companies and indeed the Private sector through ill advised orders and threats, then it might soon find that it is shooting itself on the foot. And must be prepared not to pass the blame to the previous administration.
Mazi Sam Ohuabunwa OFR
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