Nigerian Central Bank Governor highlights the impact of new banking reforms on the sector’s skills needs.

“The Nigerian banking sector can never be the same again,” said Professor Charles Soludo, Governor the Central Bank of Nigeria, during a presentation on the progress of Nigeria’s radical reform of its banking sector.  Speaking at the event organised in London in October by Business in Africa Events, the Governor made clear his determination to push through the reforms which are set to provide an enormous boost to capital market growth and investment opportunities in Nigeria.

The banking and financial reforms are part of the key elements of Nigeria’s economic development agenda and will transform the banking landscape.  Already over 22 groupings of banks involving 67 banks are in the process of merging and, according to the Governor, at least 20 stronger and more reliable banks are likely to emerge at the end of 2005 when the reforms are set for completion.

The 13 point banking reform agenda was designed to address the weak capital base of the majority of the country’s banks, poor corporate governance, high unit costs and unsustainable competition.  The reforms, which include raising the capital base of banks from N2 billion (US$16 million) to a minimum of N25 billion (about US$185 million), should create banking institutions that investors can rely on and that depositors can trust, thereby enhancing transparency, professionalism, corporate governance and accountability.

These reforms will also serve to highlight crucial gaps in the skills currently to be found within the banking sector and those needed within the new banking environment.  Highlighting what he termed the current ‘mismatch’ of skills in the sector, the Governor stressed that the sector will now need to develop professional bankers who can develop effective banking services, structure transactions and drive down costs.

“The reforms have led to a change of approach and now we have to think and be bankers……the right human capital – knowledgeable, exposed and cosmopolitan – is now critical.”

Addressing the human resources implications of the new banking regime, Tony Elumelu, CEO of United Bank of Africa (UBA) plc, presented a case study of the impact of reform on his bank which underwent the first consolidation within the sector.  Applying the principles of professionalism and meritocracy to the merger that created UBA plc had led to an increase in productivity within the bank, he said. 

 “The reforms have led to a change of approach and now we have to think and be bankers”, he stressed.  “The right human capital – knowledgeable, exposed and cosmopolitan – is now critical.”  Pointing to the new bank’s ability to attract Nigerians in the Diaspora away from institutions such as the IFC, General Electric, Citibank and Goldman Sachs, Elumelu was positive about the renewed credibility and confidence of the financial system.

Professor Soludo, who took up his appointment as Governor in May 2004 and was recently voted ‘Best Central Bank Governor of the Year’, cited positive results from the changes that have already taken place and spoke of a new culture of professionalism and customer-centred operations becoming increasingly visible.  On a wider scale, interest rates have dropped to their lowest level since the liberalisation of the financial system in the late 1980’s and lending to the private sector is on the rise, with funding of large scale projects beginning to happen.  The reforms have already seen a significant growth in capital market activity and banking sector stocks have moved into the preferred portfolio for Nigerian investors by over 50% in the year since June 2004. 

With a population now estimated at 150 million, Nigeria is the giant of Africa.  For sub-Saharan Africa to go forward with meeting the Millennium Development Goals, the success of Nigeria’s banking revolution will be imperative.