Honestly, I am thankful for the efforts our fellow citizens have put by sending suggestions and contributions to assist my planned presentation to a Nigerian Senate Committee. Professors, bankers, doctors, students, engineers and indeed professionals from across all key industrial sectors have written publicly and privately to assist. On LinkedIn, the contributions came from all parts of the world: UK, U.S., Australia and our home. Simply, our people want a better nation and they are ready to offer whatever it takes to make that happen. I just received a 15-page tome on how to fix Nigeria.

We are Nigerians, we are great people and I can see the passion and the energy in our people. If people could make this time to offer these ideas for the good of the nation, I think it is high time our leaders did the right thing. Indeed, Nigerians can fix this country because they truly love Nigeria.

My opinion has always been this: If government thinks that it has the right policy but no one is investing, it means the policy is broken. Nigeria cannot have all the opportunities and yet no one is coming to make money unlocking them. There is opportunity in energy but no one is providing electricity. There is opportunity in clean water but no one is providing clean water. You cannot tell me that you have the right policy and yet markets are not after your opportunities.

My experience serving in a committee in the United States National Science Foundation taught me something: when markets shun opportunities, it means the policies are not market-friendly. Nigeria does not have many market-friendly policies and that is why we have many ideas, but no products and services to serve our citizens.

Yet, I must acknowledge that government has gotten many things right: we got the BVN (Bank Verification Number) with the banking community right. We can have such home runs across many industrial sectors. This country needs to work, for everyone.

I believe in this nation. Nigeria made me. I enjoyed highly subsidized tertiary education in Federal University of Technology Owerri. That is a something I continue cherish.  Though we could be very difficult to deal with as Nigerians, but generally we love our nation.

A repeat of the credit and liquidity squeeze, which rocked the banking sector in the wake of the takeoff of Treasury Single Account (TSA), may be in the offing if the Federal Government succeeds to acquire private accounts operated without Biometric Verification Number (BVN) numbers.

The Federal High Court, Abuja, penultimate week granted the Federal Government’s prayers to have thousands of account in commercial bank, that are still without BVN forfeited if owners do not come forward to claim them in two weeks.

[…]

According to industry source, no less than N600b, and an alleged undisclosed N400b by “smarter banks,” mostly belonging to politically exposed persons, may be sterilsied in the exercise, if followed duly and diligently by authorities.

 

You just wonder why people cannot make time to visit their banks and add their BVNs. It is very strange that about N1 trillion may be unassociated with any person in Nigeria today. That is about 10% of the total market capital of the Nigerian Stock Exchange.  In the past, Nigeria allowed people to operate bank accounts without identities, but today the government has fixed the loophole. We just need to work and do the right thing. That is how we will continue to be a great nation and good people.

To all that contributed and continue to send ideas, Thank You. We would do justice to it.

Over the last few years, we have seen the development and growth of the video-on-demand sector. iROKOtv is the undisputed leader in Nigeria. It commands great brand equity and is a recognizable leader in the industry.

But in coming years, the sector will see massive competition. With DStv, TStv, Showmax, GoTv, Supersports and the regular TV stations competing for attention, it is time for iROKOtv to explore if it can build a merchandising business in Nigeria. I do think there is a latent opportunity in the market for that, and any new revenue source will help the firm to finance its growth. It needs contents to stay on top with amalgam of options like Netflix arriving in the region.

For iROKOtv to have effective merchandizing, it may need to begin building characters in its movies. And that means, having a long theme that runs seasonably instead of the one-off model of today where movies come, and movies go. This present model cannot easily allow the firm to develop characters which can connect with fans, to open the merchandising business. The following are areas it can build merchandising business:

• Sweater
• T-Shirts
• Action figurines
• Toys

I also suggest that iROKOtv explores working with its top actors and actresses on merchandising. Besides, it can also partner with leading supermarkets like Shoprite to display its characters in its stores. As a modern company, having a Konga store to sell these items will be good. It can outsource the merchandising business so that it is not distracted from its core movie making business. And most importantly, it must make sure that the distribution channel is well managed to avoid the piracy of its wares.

Walt Disney Co. is a merchandise behemoth and Netflix is working on developing a huge merchandising business. But for iROKOtv to have success, relatively, like these American companies, it must develop a roadmap that produces movie series and premieres as I have noted above. As it does that, it needs to think critically about what kids will want and that means making movies for kids in Africa so that it can monetize the merchandising via toys, shirts and other things.

When you have more sources of revenue in any business, good things happen. I do think iROKOtv can make merchandizing work out. It simply needs to outsource it to partners who will take all the risks.

Every month, when I look at my company bank statements from different jurisdictions, I always notice one obvious anomaly in the Nigerian ones. Banks charge you fees for banking and doing business with them. In U.S., banks actually pay you money for banking with them. In other words, if you want to open an account in most U.S. banks, they give you free bonus. If you are aggressive, you can get up to $400 just for opening an account and setting up direct deposits in some banks.

U.S. banks want you to send your money to them. And at the end of the month, in most great banks like M&T Bank, no one will charge you a fee. No single debit in your account. In some bigger ones like Bank of America and Chase, they may require a minimum daily balance (say $1,500) or a direct deposit of say $750 to avoid about $10 monthly fee. If you maintain either, you will not have any fee penalty.

But in Nigeria, there are many entries on all kinds of fees. I used to work in the bank in Lagos. But then, it was Commission on Turnover (COT) – this is the fee, the bank imposes on your account for actually withdrawing your money. I have called it one of the most ingenious products that propelled the new banking era in Nigeria. Without COT, there will not be many new generation banks. They offered better services than the dinosaurs of the older banks, but needed to monetize the obvious preferences of their services in order to invest in technology and new operational models. Customers knowing the value in better service did not complain. The COT provided easy cash and they triumphed, took market share from old banks. So, even if they do not make loans to earn interests, provided that customers are coming and withdrawing money, they would make money. That is a setup that will never fail. They bring the customers with efficient services and then charge fees on their accounts as they do transactions.

To illustrate how critical COT was to most new generation banks, some were closing accounts of customers who had money with them but were not moving them in and out. For instance, if you have N100,000 in your account for a year without touching it, some of the banks would make a bank draft, informing you that the account has been closed. They have no need for that money because they were not necessarily interested in the money. They wanted the COT only. Yes, no need to invest your money to earn interest fees. But have N10,000 in the account and tomorrow you withdraw it and the next day you put it back, you become a damsel as that movement will generate COT for banks. That is why banks like traders because they generate so much volume and that means COT: say N3 per thousand, you can see massive income when people deal on millions of Naira.

The Central Bank of Nigeria killed COT. But quickly, we saw new types of charges – Account Maintenance Charge. That charge also comes with a VAT. So, the banks charge you a fee and then ask you to pay VAT on it. That is the law of the land.

Then as you are dealing with bank maintenance charges, there is another one – the Stamp Duty. That one annoys me terribly because the duty is simply designed to make money from customers. All the transactions are done digitally and yet banks have to buy stamps! Sure, the cost of the stamps is irrelevant. It is an inherited nonsensical tradition from the British Empire which thinks that unless you stamp a document, it may not have full legality.  Visit Corporate Affairs Commission, High Court etc and you will see stamps in action: if they do not put those stamps, some of the documents may not be completely valid. This means that you have to pay the stamp duty for that digital-based bank transfer to be legally binding!

Yes, I must note that some of these new fees are imposed by the Central Bank of Nigeria (CBN) on bank customers. So, it may not necessarily be banks’ money: they share with CBN.

The Implications

There are people that do not want to bank in Nigeria simply because of the fees. For a citizen that makes a minimum salary of say N18,000 per month and has to withdraw money four times, you will see that at the end of the month, the person may be losing close to N500 especially if the individual has SMS alerts which attract another fee class (The SMS fee is expected, banks have to cover their costs on that one. They do make Internet banking free.)

Nevertheless, there could be a bank that can waive the SMS fees since by regulation banks are required to prepare monthly statements for their customers. Of course, having real-time information on payment via alert is priceless. People will prefer to pay for that instead of waiting for the monthly statements which the law expects from banks. SMS is good and customers can ask for it to be deactivated; it is an optional service.  In technology, Nigerian banks have made progress.

But for the poorest citizens in Nigeria we are trying to bring into the banking fold, we need to think how other core non-optional fees can discourage them. I do not see how some of these citizens will embrace the banking sector with these fees. Either you want them to keep the money in the pillows or you reform the banking fee charges to make them attractive for extremely cost-sensitive people to bank. Without that, CBN may not be addressing the root cause of the issues before us on financial inclusion.

I must note that Savings Account in most Nigerian banks do not attract fees. However, some require a minimum balance which technically you cannot even draw below. In Union Bank, the amount is about N1,500 and that means unless you close the account, that minimum must be there. For some poor citizens, that balance is a huge burden.

All Together

To accelerate financial inclusion, the Central Bank of Nigeria should reform the varying levels of fees in the banking sector. Those fees could be discouraging the very people it wants to attract into the banking sector. For someone making N18,000 monthly and having to part with N300-N500 on fees and associated SMS charges, it could be a disincentive to bank. People are smart and when there is a burden via fees for extremely cost-sensitive people, any policy will collapse. CBN needs to revisit bank fees and work with our banks to find better ways to offer products that can reduce cost burdens on poor citizens. This is not a problem that technology can fix because the fintech companies do not take customer deposits. So, it is only policy that can solve this, and only the central bank has the capacity to make that happen. Yes, banks are not charities and are there to make money. So CBN needs to balance its policy.