According to economists, the distribution of wealth in society is determined by the ownership of factors of production namely Land, Labour, Capital and Entrepreneurship. So, people who own one or more of the factors use them as sources of income as they engage in economic activities. You pay me rent for using my land, wages for labour, interest for capital and profit goes to the entrepreneur.
Based on the above, we can capture all individuals in the society and model a possibility of economic prosperity for all. We will be making some assumptions along the way.
Before we go further let us agree that all human beings have at least one factor of production, hence, this implies that we all are capable of earning income upon putting our factor input to a payable service. In this model, only those who fall in the category of children are excluded from factor owners, in that they are not of working age; child labour is illegal. Persons of disabilities to join this category as it is nearly impossible or extremely difficult to have them engage in many forms of economic activity.
Starting with the most popular factor of production labour, we can agree that all who are not children or disabled have possession of labour to offer services and earn income in the process. We also know that with skilled labour comes higher compensations. So, an individual of working age is free to find a paying employer. There exist some options from menial jobs to skilled jobs. If an individual is lucky enough to have taken advantage of free education offered by the Nigerian government from Primary to Junior Secondary School they will have more options of where to offer their labour no matter how little the compensation. Upon getting employment, the owner of labour can decide to acquire more skills and attract better payments. The individual is now able to fend for himself and others. In the current times, I have met young people who sponsored themselves through higher institutions of learning in Nigeria. We cannot deny that tuition in Nigerian higher institutions are affordable.
As for those fortunate to own lands, they have the choice to engage their land in real estate and receive rent. However, since the majority of the Nigerian population are employed in the agriculture sector and the country has vast arable land, we say the owners of land are the farmers. So, the farmers own one factor land from which rent comes. Also, they produce food for the country which qualifies them as entrepreneurs (those who combine the other factors of production to make a service or product).
Entrepreneurs as we know them come into the economy to solve difficult problems and earn a profit. We have several of such problems which could mean several opportunities for the entrepreneur. In our model, one opportunity for the entrance of the entrepreneur is the gridlock in the agricultural sector. Low output from the farmers, low pricing of farm produce, lack of access to markets, weather variations among many things leave the farmers perpetually poor. The entrepreneur will prosper in these settings.
Finally, we have capital, which includes machinery fixed or mobile used to produce goods or services. Owners of capital charge interest. These machines are needed in agriculture and other sectors, to boost productivity and increase profits.
So, if you have at least one of the four factors of production, you should be living above 3 dollars a day. Remember this is a simple model, meant to stimulate development thinking.
When I first published a paper based on an evaluation of the impact of the country?of?origin effects on the consumption patterns of “made in” Nigeria Guinness as opposed to Guinness “owned by” Ireland in 2011, I had not imagined that the alcoholic beverage market was being disrupted.
Since that paper was published, there have been numerous manifestations of the changing landscape of the booze industry. With the rise of craft beers and transformation of Prosecco to Jay Z’s decamping from Crystal to Armand Da Brignac (aka Ace of Spades) coupled with the scramble for Africa orchestrated by big brands such as Heineken.
Fastforward to a recent report on Tanzania, which is now Africa’s second-biggest wine producer after South Africa producing arguably tsome of the best and sweetest wines in Africa. Who would have thought about this only a few years before?
According to a recent report by How Africa News entitled “Here are 9 Most Popular Tanzanian Wines that Kenyan President Uhuru Kenyatta Can’t Get Enough Of”:
“Grapeines were first introduced to Tanzania’s central zone in 1938 by missionaries from the Hombolo Catholic Mission, who, after independence assisted in seting up the first commercial production in Dodoma.”
The same article goes on to provide some insight into that place called Dodoma:
“Dodoma is Tanzania’s major grape growing region and the four acre grape farm at Dodoma’s Isanga Prison was the first government institution to invest in wine, in 1969 it built a winery plant and achieved international recognition by becoming Tanzania’s sole buyer of grapes for wine processing.”
The rest as the saying goes, is history!
Talking about history the story of religion and booze linked to the origins of Tanzania Wine can be linked to the biblical narratives of the Wedding at Cana where Jesus turned Water into Wine. See John 2:1-12.
Likewise, the rise of South Africa in this sector disrupting the old guard such as Bordeaux and California, i staking on a new turn from the East Coast of Africa.
Finally, let’s remain mindful of the fact that this is agriculture, and that is a key focus for the development of Africa – Artificial Intelligence, Agri-Tech or whatever other nomenclature exists out there, we need a tangible, critical mass of this nature to secure the future of Africa and its Agricultural sector.
Key highlights:
The Grapevine
Missionaries and Grapes
The Miracle at Cana
The Wine Trail
Craft beer
Tanzania
South Africa
Dodoma Wines
Presidential Wines
Nigerian Guinness
Nnamdi O. Madichie, PhD, is Director of the Centre for Research and Enterprise at the Bloomsbury Institute in London. He is a Fellow of the Chartered Institute of Marketing (FCIM). He has published extensively in the areas of Marketing and Entrepreneurship in Emerging Market contexts. He is author of “Made?in” Nigeria or “owned?by” Ireland? published in Management Decision in 2011.
Madichie, N. 2011. “Made?in” Nigeria or “owned?by” Ireland?”, Management Decision, 49(10), pp. 1612-1622. https://doi.org/10.1108/00251741111183780
As if Nigeria doesn’t have enough challenges, the fear of fast growing population has joined the queue. This problem is already being felt by some individuals, especially those that have about four or more children, who grumble about the increase in the family expenditure. As the economic condition of the country gets tighter, the bites of population increase deepen.
A lot of researches have been done and recommendations given towards bringing the population growth under control. For instance, my mother told me that there was a time teachers were trained on population control strategies so that they can train those at the grass root level. They did their best but it didn’t stop the growth. The health sector has carried out several campaigns on birth control but it still didn’t stop what was happening. Economists have done their own, where they recommended something about decentralising industries. But all these efforts have not really yielded the desired results so I think none of thems has been able to reach deep down to locate the underlying cause of the population increase – culture.
Culture is commonly defined as people’s way of life. The culture of a people determines how they live, act and think. There is need to study the culture of the different people in the country so that it will be easier to devise ways of battling uncontrolled population growth. When the strategy devised didn’t favour the culture of the people, it will fail.
Well, I am going to point out some cultural beliefs and practices among the Igbo’s that can encourage population growth. Being an Igbo, I can only discuss that which I am conversant with. So I’ll advise that those from other ethnic groups should also find out what can encourage incessant child birth within their communities.
So, in Igbo culture, children are treasures. Yes, I know it is the same thing all over the world. But our own is different. When I say ‘treasure’, I mean ‘treasure’ – literally. Children are seen as wealth in Igbo culture. The number of children you have determines the size of your wealth. My dad once told me that someone told him to have more children because five was too small, and that he can’t stand before other men and talk. You can imagine when five children were considered small. Anyway, I thank God that this ideology is gradually fading away because some men are beginning to grumble about expenses while some women are complaining about not having time for their jobs and businesses. But, we still have those that still think this way.
All children are special in Igbo land, but some are more special than the others (Lol). Gender inequality is still a problem in the Igbo tribe. That you have seven children is wonderful, but if they are all girls…well you have to continue bringing them out until at least one boy joins the number. A family without a son is considered unfortunate. Should anything happen to that man, his wife and children may end up thrown out of the house and the man’s properties taken away from them and shared among his male relatives. Daughters in Igbo land are looked at as ‘somebody else properties’ because they will get married and leave their fathers’ houses. So it is seen as improper for them to inherit any of their fathers’ wealth and take to their husbands’ homes. So for a man to be ‘balanced’, he and his wife (or wives) must have a son that will inherit his wealth and ensure that the family’s name didn’t vanish from the face of the earth.
Note that a family that has just a son will be uncomfortable because that son is the proverbial “one eye that owes blindness”. This means that if anything happens to him, … we know the rest. So, this family will continue trying for more male children till they arrive at a comfortable number.
I know you will be debating about a family that already has many male children but the mother is still producing. Honestly, the major reason behind this one passes me. But let us look at something about our culture. In Igbo land, a child is expected to take care of his aged parents. But then, the male children have been said not to do this very well because their wives won’t take good care of their mothers/fathers-in-law. Therefore, every woman wants to have a daughter that will take care of her at old age. Like I said earlier, this is something I believe that could be the possible cause of this. I believe so because women say so themselves. Besides, I have just two sons, and since I came back to work in the East I kept receiving queries like – you don’t want a daughter that will take care of you when you get old? Try more till you a daughter comes. Boys don’t take care of their mothers o. You don’t want to go for omugwo? (for sure, I’ll go for my omugwo now, in my sons’ houses. *smiles*). So you see our problem, boys are important for some reasons, while girls are necessary too.
I want to touch some aspects of our marriage institution. In Igbo culture, a man is free to marry as many wives as he wants so long as he takes care of all of them and the children they bring forth. The coming of Christianity, Western education and Western civilization has discouraged this. But that doesn’t mean it no longer happens. The only thing is that it is hard to see a man living with many wives. But our traditional marriage institution still allows a man to send his wife back to her father’s house and marry another one. Also, a woman that is being maltreated by her husband is free to go back to her father’s house and remarry. All that is needed is for the bride price to be returned to the man and the marriage contract will be severed. “How does this increase the population?”, some people may ask. Ok, let’s look at it this way – when a woman, who bore children for her ex-husband remarries, she will be expected to have more children for this new husband. This second set (or even third set) of children would have been avoided if the first marriage was still ongoing. In the case of the man that divorced his wife and remarried, the new wife will want to give birth to ‘her’ own children no matter how many children the man had from his other wife (or wives) because she believes that the children of another woman cannot take care of her at old age. Besides, she will also want to partake in the inheritance of the man’s properties (which can only be done through her male children).
Still on the marriage institution, a family that has just a son may decide to marry a wife for him when he is still tender. The essence of this is not because they want the son to be sexually active at such a tender age (nope, not at all) but to ensure that his linage continues should anything befall him. So this ‘wife’ will be giving birth to children that bears this tender boy’s name (please don’t ask me who gets her pregnant, we have other pressing issues here). But when this son grows up and is old enough to marry, he will still go out there to marry someone of his choice, who will come in to start producing more children. So you can imagine how many children this young boy/man has now.
A woman that bore only daughters is allowed to marry another woman that will bear more children for her. This tradition is quickly fading away because parents are beginning to query why their daughters should marry a woman, and the daughters themselves are no longer interested in having women as husbands. But it is still in existence, though it has a different format – they will discuss with the girl’s family in private and present a male relative to the public as the girl’s husband.
There are so many other practices encouraged by our marriage institution that increases the rate of population growth but they all centre on one thing – the quest for more children, especially the male ones. Maybe this is why the teachings and campaigns on population growth have not really been effective. Those campaigns have not really touched the major factors that encourage the increase in birth among the Igbos. So here is what I think should be done to control the birth rate in Igbo land.
Every Igbo family wants to have a male child but most of them don’t know how. Unless attention is paid to teaching couples how to pre-select their children’s gender, the ‘give-birth-to-the-number-of-children-you-can-train’ campaign may not work. In fact, I don’t think it is really working because couples only find out they have bitten more than they can chew after they have taken the bite. But if these couples are able to pre-select the gender of their children, they may consider taking a break after having like three of them. At least I know it worked in the small scale, so I believe it will work in the large scale.
This is a call to concerned medical practitioners, marriage counsellors, religious organisations, NGOs, and well meaning individuals and organisations – let our people have the power to choose the sex of their children so that they can have the number of children that they can train.
Once upon an animal clime, the Tortoise was madly in love with the only daughter of the King. The problem is, the King does not want Tortoise, who is famed for his self-contentedness, to succeed him as King. Yet, he also does not want to offend Tortoise who has being the Crown Princess’ childhood heartthrob.
The King’s preferred successor was the Tiger.
The King happened on a plan.
Knowing how dead slow the Tortoise can be, he declared that the Crown Princess shall be bride to whoever wins the race up the mountains of the dwarf goats between the Tortoise and the Tiger.
Tortoise knew he had no chance against Tiger in terms of pace and speed. He, therefore, requested of the King that the race should start from the top of the mountain and end at its heels. The King gave his approval, especially as the Tiger doesn’t see how that can change the race outcome.
Tortoise approached his friend Elephant for one little favour. Incidentally, the Elephant has been chosen as the Referee to blow the trumpet from his trunk. Now, everyone knows the Elephant has a habit of stumping his hoof whenever he bellows.
On the day of the contest, the Tortoise appeared on the scene with the empty shell of his late grandfather tied to his tommy in an embracing fashion. The crowd laughed at him – a man who cannot run when free now attempting to win a race carrying a dead-man’s shell. To make matters worse, Tortoise went and positioned himself behind the Tiger, at the foot of the Elephant. They concluded the oracle that advised him thus must have been struck by severe fever of the brain.
All set.
Elephant raised his trunk, gave a loud blast of a starting sound while simultaneously kicking Tortoise with his powerful hoof.
That kick lifted Tortoise and landed him just a few inches near the foot of the mountain where he simply rolled across the finish line to win the race even before Tiger has done half of the distance.
Now, you know the rest of the story.
What you may not know is what business the Tortoise may have in common with Fintechs and Central Bank of Nigeria’s goal of reaching Nigeria’s 60.1m unbanked populace with financial products by 2020.
It has become common knowledge that as at 2018, about 36.8% of Nigerian adults do not have access to formal financial banking services with 44.1 % being male and 55.9% female. It was also noted that about 71.3m Nigerian adults have access to mobile phone while a very sizeable number do not have a phone. The bulk of the unreached and under-served persons are found in rural and semi-rural areas with Northern Nigeria accounting for the largest numbers.
You may find that Mama Risi, from whom you buy vegetables at a roadside stall, does not have a phone not to talk of bank account. She may ask you ‘wetin I wan put inside bank account?’ But don’t be surprised to discover she contributes up to N5,000 in esusu each weekend.
Did I tell you Mallam Bello makes a return of up to a million naira at the end of each harvest cycle from Onion alone? No, I did not.
People like Mama Risi and Mallam Bello who farm your Onion in Birni-Kebbi make transactional payments majorly via cash in the informal market. They are inhibited by lack of tailored financial products, limited literacy, affordability and institutional exclusion.
Like the King in our story, CBN has set a goal of reaching the 60m financially excluded Nigerian adults by 2020. Seeing, however, the pace of marketing and distribution efforts of existing grassroots-focused Fintechs providers in the country, I dare say that the finish line is more feasible for the Tortoise than for us. Market players such as Firstmonie, Paga, PayNow among others are making efforts but most of these efforts seem to be concentrated among urban and financially included populace.
Prove me otherwise, please.
As someone who has been involved in successful rural marketing on several products, I can tell you that not much is being done in taking these products to the rural market as at date. The reasons are not far-fetched.
That very few of these products and marketing activities are being developed taking cognizance of the basic socio-economic characteristics and needs of the pre-identified unbanked segment cannot not be denied. Even Neighborhood banking and USSD that don’t require owning a bank account to access basic financial services are not been pushed aggressively. My guess is the players probably feel it may not be worth the investment. If this thinking is true, the mindset may be the first that need to be addressed.
The informal sector contributes about two-thirds of Nigeria GDP annually and the sub-sector we are discussing is worth one-third of these.
So, unlike the Tortoise, the service providers seem to have failed in that they are building their product and marketing tactics for the rural and semi-urban market from urban perspective instead of the reverse. Even where the products seem to fit, no effective kick-me distribution strategy has been executed as at date.
Every successful agricultural input marketer knows the best way to reach smallholder farmers is to position oneself closer to them as well as incorporating their involvement all through the demonstration process. In the same vein, for Nigeria Fintechs focusing on the unbanked to succeed in rural markets, they need to:
Stay close to them by meeting them at their gatherings, markets and festivities;
Incorporate influential local personalities;
Recruit, train and engage educated locals in the execution process;
Research clusters peculiarities instead of generalizing;
Remove inter-village access and product cost bottlenecks;
Engage high personal selling efforts;
Enter each cluster of villages in grand-style;
Weave your brand into what they respect and value to heighten their sense of pride in their heritage;
Avoid and quickly deal with misconceptions;
Empower the people;
Drive brand loyalty and knowledge by corporate social investment;
Adapt marketing mix to their specific characteristics; and
Let them know what you have done for them.
The liberalization of the market to other non-banking service providers like telecoms should not only create more products but deepen the reach.
The mantra for rural marketing as always should be the 4As of RM covering affordability, availability, awareness and acceptability.
In my view, it may also help to treat semi-urban and rural consumers as separate segments owing to the later typically frowning at being urbanized while the former feel a sense of pride by same. Beside the two are similar to a limit.
This piece was inspired by conversations I have had with few players in the industry who have reached out for my service in pushing their brand into the market. My observations as well as interaction with these professionals left me with the impression that the goal of CBN, though worthwhile, may remain a mirage if bold investment is not the right part of this informal market.
As CBN review the timelines of that goal, I make bold to say that marketing efforts must be rightly focused by all existing and emerging Fintechs. It is not enough to roll out good products. We must quickly create and execute the right marketing tactics if we are to win the race like the wise Tortoise. Those who are fastest in thinking and responding like the Tortoise are likely to emerge with market leadership as the Bride.
It is undoubtedly a modern concept to own and operate a bank account for several reasons, some of which include less risk in carrying bulk cash and seamlessly engaging in high volume of transactions across different platforms without touching money through the instrumentality of using banking services.
Sometimes bank account holders complain about unauthorized, illegal and fraudulent transactions carried out on their accounts operated in bank and when issues of this nature arises, many banks reluctantly handle such cases unprofessionally leading to the customer getting frustrated with the banking system, the result of which is institution of cases in court to seek redress over the bank’s handling of their deposited funds.
In this article, the legal perspective of bank’s liability over fraudulent and unauthorized transactions carried out on a customer’s account is well addressed and readers are encouraged to pay attention to the duties that the bank owe them and send feedback, questions or inquiries regarding cases of similar experiences with banks.
Definition of a Bank
The word “bank” is not defined in the Constitution nor in the Interpretation Act. In its ordinary grammatical meaning, the word “bank” means an organization or place that provides financial service. Thus, a ‘bank’ is a quasi public institution, for the custody and loan of money, the exchange and transmission of the same by means of bills and drafts and issuance of its own promissory notes (cheques) payable to bearer, as currency, or for the exercise of one or more of these functions, not always necessarily chartered but sometimes so, created to serve the public ends. It is a financial institution regulated by law.
A bank is wholly the creation of statute to do business (for profit) by legislative grace and the right to carry on a banking business through the agency of a corporation is a franchise which is depended on a grant of corporate powers by the State. See the cases of Standard Trust Bank Limited v. Anumnu (2007) LPELR-CA/A/51/2006 per Awala JCA, Wema Bank Plc v Osilaru (2008) 10 NWLR (Pt.1094) 150 at 182 paras. A – C (CA) Per OGUNDARE, J.S.C. p. 33, paras. B-D.
Meaning of “a Customer”
Black’s Law Dictionary, 6th Edition at page 386 defines a customer in relation to a bank is as follows:-
“In banking, any person having an account with a bank or for whom a bank has agreed to collect items and includes a bank carrying an account with another bank. As to letters of credit, a buyer or other person who causes an issuer to issue credit or a bank which procures issuance or confirmation on behalf of that bank’s customer.” See the case of Ecobank Nigeria Plc. v. Intercontinental Bank Plc & Ors. (2011) LPELR-CA/L/371/2009 per Oguntade, J.S.C. at pp. 36-37, paras. G-B.
In NDIC v. Federal Mortgage Bank of Nigeria (1997) 2 N.W.L.R. (Pt.490) 755 at 756 the court had interpreted the words “individual customer” to include a bank where that bank places money in another bank to yield interest, where per Uwaifo JCA (as he then was) has this to say:
“It must be taken, I think, that by depositing money with the bank for a given period so as to earn interest payable by that bank, the customer created the relationship in respect of the transaction of an individual/customer and its bank.” See also the case of FCMB Plc. v. Nyama (2014) LPELR-CA/K/283/2011.
Law Governing Bank/Customer Relationship
It is settled law that the relationship between a banker and its customer is governed by the ordinary principles of contract as espoused in the case of D Stephens Industries Ltd v. Bank of Credit and Commerce (1999) 11 NWLR (Pt.625) 29.
It is therefore open to the customer to give an oral instruction to have his account closed at once although he would not be able to take out whatever remains as credit therein until a proper settlement of obligations on both sides is carried out. But the banker is entitled to act on the notice without delay. It is when it is the banker who decided to have the account of the customer closed that he must give the customer reasonable notice in case there are outstanding cheques to be cleared or some business the customer intends to conclude through the bank account. See the case of Joachimson v. Swiss Bank Corporation (1921) 3 K.B. 110 at p. 127, Fidelity Bank v. Onwuka (2017) LPELR-CA/E/661/2013.
Nature of a Banker and Customer Relationship
The Court per Okoro JCA (as he then was) held in the case of Union Bank v. Idowu & Anor. (2016) LPELR-CA/I/186/2008 that: “It is now settled that the relationship between a banker and customer where a bank accepts money either in current or deposit account from its customer is a relationship of debtor and creditor. The relationship is essentially contractual.”
Also, Nkiru-Nzegwu Danjuma described a banker at pages 108 – 109 of her book titled: “The Bankers’ Liability”, revised edition, 2014 as follows:
“As regards money deposited by the customer in an account with the banker, the nature of the banker and customer relationship is that of contract of debtor and creditor. The position becomes clearer when the customer asks for his money. As a result of an implied undertaking by the banker to repay the customer all or part of such deposit, the banker is a debtor for an amount deposited. If a valid repayment demand of the customer is not met by the banker, the customer may bring an action against it for breach of contract. The action will be against the bank and not against the bank manager.”
Additionally, courts have described the relationship between a debtor and creditor in the case of Osawaye v. National Bank of Nigeria Ltd. (1974) NCCR 474 thus:
“The relationship between a banker and customer is one of debtor and creditor with the additional feature that the banker is only liable to repay the customer on payment being demanded. There is no obligation on the part of the banker or debtor to seek out his creditor, the customer and pay him: obligation is only to pay the customer or some person nominated by the customer, when the customer makes a demand or gives a direction for payment.”
In essence, it is the receipt of money either from or on account of its customer that constitutes a banker into debtor of the customer. Thus, when a banker credits the account of a customer with a certain sum of money, the banker becomes a debtor to the customer to the extent of the credit. It is to be noted that the ordinary customer rank as an unsecured creditor in the liquidation of the bank. The concept of debtor and creditor in the banker and customer relationship are not static. The banker may in certain cases become the creditor, while the customer assumes the position of a debtor. For instance, where a banker grants overdrafts to its customer and debits the customer’s account with sum or value of the overdraft, the customer becomes a debtor to the bank to an amount equal to the credit.
Accordingly, after the reconciliation of the banker and customer’s account, which party is the creditor, can sue if demand for payment is not complied with. See the case of FCMB v. Action Alliance (2018) LPELR-CA/A/292/2009. The nature of a banker/customer relationship in respect of the money deposited in a bank is akin to that of a debtor and a creditor; because where a customer asks for his money, the bank ensures payment on demand of any cheques drawn out by the customer. See the case of Yesufu v. African Continental Bank Ltd (1981) LPELR-3524-SC, Diamond Bank Ltd. v. Ugochukwu (2007) All FWLR (Pt. 384) 290 at 304, paras. F – H (CA), Nigerian Maritime Administration and Safety Agency v. Stephen Adi Odey & Ors. (2012) LPELR-CA/C/45/200.
Duty of a Bank under its Contract with its Customer
It is settled law that a bank has a duty under its contract with its customer to exercise reasonable care and skill in carrying out its part with regard to operations within its contract with its customers. The duty to exercise reasonable care and skill extends over the whole range of banking business within the contract with the customer. See the case of New Improved Mainbannc Ventures Ltd. First Bank of Nigeria Plc. (2009) LPELR-CA/C/138/2007, Mai v. STB Ltd. (2008) ALL FWLR (Pt. 399) 552 at 567.
Duty on a Bank in a Banking Transaction to honour a Customer’s Cheque
A bank is bound to honour a cheque issued by its customer if the customer has enough funds to satisfy the amount payable on the cheque in respect of the relevant account and the refusal to honour a customer’s cheque will amount to a breach of contract which would render the banker liable in damages. The moment a bank places money to the customer’s credit, the customer is entitled to draw upon it, unless something occurs to deprive him of that right, for example, a cheque which has not been cleared, where clearance is necessary does not put the account in funds. See the cases of Allied Bank (Nig) Ltd v. Akubueze (1997) 6 NWLR (Pt. 509) 374 and Union Bank of Nigeria Ltd v. Nwoye (1996) 3 NWLR (Pt. 435) 135, Owena Mass Transportation Company Ltd v. Enterprises Bank Ltd (2014) LPELR-CA/B/132/2005.
While it is the business of the bank to get grant credit facilities to a customer, the customer is also bound to pay interest to the bank. See the case of STB Ltd v. Inter Drill Nigeria Ltd (2007) All FWLR (Pt. 366) pg. 756 at 761, U.B.N Ltd v. Salami (1998) 3 NWLR (Pt. 543).
What Determines the Interest rate on Loan/Overdraft Facilities?
The law is trite that bank’s rate of interest is dependent on the agreement between the parties or established custom or consent of the customer. Also it is the duty of a banker claiming a particular rate of interest to prove it. See the case of Alhaji Aminu Ishola (1997) 2 NWLR (Pt. 488) 405, Suberu v. A.I.S.L. Ltd (2007) 10 NWLR (Pt.1043). An interest on bank loans/overdraft is not a taboo; nor out of place, since it is a usual practice. Banks have been empowered to impose interests on loans/overdraft facilities. By virtue of section 15 of the Banking Act Cap 28 Laws of the Federation 1990, the Central Bank of Nigeria is empowered to regulate and control banking activities in Nigeria. In the exercise of this power it controls by law the interest rate chargeable by any bank and dictates the facilitation in the rate of interest. See the cases of Union Bank of Nigeria v. Albert Ozigi (1994) 3 SCNJ pg. 42, U.B.N. v. Sax Nigeria Ltd. (1994) 8 NWLR (Pt. 361) Pg. 150, Union Bank of Nigeria Plc v. Alhaji Adams Ajabule & Anor (2011) LPELR 8239 (1994) 3 SCNJ Pg 42. Flowing from the above position, it must be noted that interest rates chargeable on loans vary depending on the economic and market conditions.
Nigerian bank customers
Whether a contractual transaction of a banker/customer relationship is distinct from the general contract governed by laws of contract?
A contractual transaction of a banker/customer relationship is not distinct from the general contract governed by laws of contract among other regulations. There must be offer and acknowledgement of the acceptance of the terms specifically set out in the contract document for ease of reference. This is commonly because parties are bound by their agreement. A party who enters into an agreement is clearly bound by the terms of the agreement and he cannot seek for better terms midstream or when the agreement is a subject of litigation, when things are no longer at ease. Although a party may seek for better terms, the court is bound by the original terms of the agreement and will interfere them only in the interest of justice. See the case of Idoniboye-Obu v. NNPC (2003) 4 MJSC 131 at 168 para G, Sergius Onyekwelu. v. Ele Petroleum Nigeria Ltd (2009) All FWLR (Pt. 469) 438 paras D-E.
An offer is an expression of willingness to contract on certain terms by a person to whom it is made with the intention that it shall become binding as soon as it is addressed. Once the offer is unconditionally accepted, a valid contract has come into existence. See the case of UNIC Ltd. v. FADCA Ind. (Nig.) Ltd (2000) 4 NWLR (Pt. 653) 4006 at 417, Innih v. Ferado Agro & Construction Ltd. (1990) 5 NWLR (Pt. 152) 604; Sona Breweries Plc v. Peters (2005) 1 NWLR (908) 478 at 488, Pan African Bank Ltd. v. Ede (1998) 7 NWLR (Pt. 558) 442, Ezenwa v. Ekong (1999) 11 NWLR (Pt. 652) 55, FBN Plc v. Ndoma-Egba (2006) ALL FWLR (Pt. 307) 1012 at 1033 para D-E.
Principle Governing Banker/Customer Relationship Where an Overdraft Facility is Granted
There is no doubt that in a banker/customer relationship, a customer when in short of cash and there is an urgent need to execute some transactions, can apply for a loan/overdraft facilities. The reason for this is not farfetched; nobody at all times has the money in all cases of one form of business transactions or the other. However, such banking transactions are strictly documented and the terms explicitly stated. In case of overdraft facility, there must be a letter of offer defining the terms, bonds and conditions of the facility granted i.e. interest rate, the duration of the facility, and security for the facility and there must be acceptance by the applicant of the terms and conditions of the offer. See the case of Alhaji M. U. & Sons Ltd v. L.B.N. PLC (2006) 2 NWLR (Pt. 964) 288, Owena Mass Transportation Company Limited v. Enterprises Bank Limited (2014) LPELR-CA/B/132/2005.
Can a Bank be Held Liable for Fraudulent and Unauthorized Transaction on a Customer’s Account?
The law of contract clearly requires that both parties to a contract must fulfill their contractual obligations. The contractual nature of bankers and customers relationship was dealt with in the case of Wema Bank Plc v. Alhaji Idowu Fasasi Solarin Osilaru (2008) 10 NWLR pg. 170, where the court asked: What was the duty of care owed by a bank to its customer? and stated thus:
“A bank has a duty to exercise reasonable care and skill including interpreting ascertaining and acting in accordance with the instructions of the customer”. See also the case of Agbanelo v. Union Bank of Nigeria (2000) 4 S.C (Pt.1) 243, Heritage Bank Plc & Ors v. Percy Okorie (2017) LPELR-CA/OW/24/2013.
In the case of STB Ltd. v. Anumnu (2008) 14 NWLR pg.154, the Court per Adekeye JCA, held:
“A bank has a duty under its contract with its customer to exercise reasonable care and skill in carrying out its part with regard to the operations within its contracts with its customers. This duty extends to the whole range of banking business within the contract with the customer. This duty applies to interpreting, ascertaining and acting in accordance with the instructions of the customer.” See the case of Tom Total Nigeria Ltd. v. Skye Bank (2017) LPELR-CA/L/456/2007.
It is now well settled that generally in law a bank in its dealings with its customers owes to them a duty of care and thus negligence if proved is a ground for liability against a Bank by its customer. It follows therefore that between a bank and its customer, negligence will arise where the bank breaches the implied duty to observe the standard expected of a reasonable banker in respect of dealings with the customer’s account and the onus of proving that it is not negligent lies on the bank.
There is no gainsaying that where in handling as customer’s account it is shown that there was manifest negligence of the duty of care is clearly breached or broken, then the bank will be held liable. See the case of I.T.P.P. Ltd. v. U.B.N Plc. (2006) LPELR-SC.342/2001.
Conclusion
The duty imposed on a bank is clear in law. It is a duty to exercise reasonable care and skills and which extends over the whole range of banking business within the contract with the customer. See the cases of Standard Trust Bank Ltd. v. Anumnu [2008] 14 NWLR (PT.1106) 125, UBA Plc v. Uzochukwu (2017) LPELR-CA/E/339/2007.
It is beyond controversy that one of the principal duties of a banker to its customer is to maintain a complete secrecy/confidentiality of the information about a customer’s account from the day the account is closed and is no longer operated. It is one of the implied terms of contract between the customer and the banker which is not restricted to the account alone but also to any other information which comes to the knowledge of the banker about the customer in the course of their contractual relationship. However the duty of the banker to maintain secrecy/confidentiality of the status of the account and any other information relating thereto is not absolute. It is a qualified duty.
In other words, it is subject to a number of exceptions which were established by the English case of Tournier v. National Provincial And Union Bank of England (1924) 1 KB 461 AT 472 as follows:
(a) Where disclosure is under compulsion of law,
(b) Where there is a duty to the public to disclose,
(c) Where the interests of the bank require disclosure,
(d) Where the disclosure is made by express or implied consent of the customer.
Apart from the above laid down principles of law, any unauthorized or fraudulent disclosure or transaction on a customer’s account would amount to a ground for liability of breach of duty of care and negligence if proved in court against a Bank.
