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Bank Directors and future of banking in Nigeria

By Babajide Komolafe
The importance of bank directors as key stakeholders in the banking industry came to the fore at the annual stakeholders’ forum of the Bank Directors Association of Nigeria (BDAN) which focused on the “Future of Banking in Nigeria”.

Presentations and discussions at the forum revolved around the myriad of reforms and initiatives witnessed in the industry in the last two years and how they would influence the banking industry in the future.

CBN Deputy Governor, Dr Kingsley Moghalu however said that the impact of these changes in determining the future of banking in the country greatly rest on the shoulders of bank directors. “Bank directors, being key decision makers in the industry, need to keep abreast of how these changes will shape the future of banking in Nigeria”, he said, in a keynote address delivered at the forum

Moghalu, who was represented by the Head of Fiscal Policy and Regulation, Mr. Chris Chukwu particularly tasked BDAN saying,  “As the umbrella body of non-executive directors of banks in Nigeria, BDAN has an important role to play as a key stakeholder through the continuous improvement of the knowledge and competence of bank directors, for the purpose of promoting sound corporate governance and ethical practices within the Nigerian banking industry in line with its mandate.”

This implies that besides the reforms and various policy initiatives, the future of banking in Nigeria is significantly tied to the continuous improvement of the knowledge and competences of bank directors. This was indeed one the factors for the formation of BDAN in 1997, when the which is one of the major objectives of BDAN.

The Association was inaugurated at the 13th Banks’ Directors seminar under the auspices of the Financial Institutions Training Centre (FITC).

The formation of the Association was a collaborative effort between, FITC the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC), for the principal objective of providing a good forum for improving the knowledge and the competence of Bank Directors, in order promote honourable practice within the banking industry in Nigeria.

And to further show support for the achievement of this mandate, the CBN, NDIC and FITC are represented on the 12 member governing council of the Association, which is presently led by former Chairman of UBA PLC, Chief Ferdinand Alabraba.

To achieve its mandate BDAN, among other things organises quarterly activities to  enlighten bank directors and enhance their competence to make effective contributions in the management of their banks.

The major event of the Association is the annual Stakeholders Forum, which brings together executive and non-executive directors of banks, officials of other financial institutions, regulatory authorities, professional bodies and executives of other leading companies in Nigeria.

The purpose is to meet and discuss very topical issues in the industry, usually encapsulated in the theme of the forum, and how it relates to the responsibilities of banks’ directors, and also to set agenda for the industry.

The theme and focus for this year’s forum is ”Future of Banking in Nigeria: Stakeholders Expectation”.

“The banking industry and the economy have went through phenomenal changes in the last three years We believe that BDAN as part of its objectives and responsibilities as a forum to enlighten and educate its members in regard to their responsibilities in respect to their banks, should play a leading role in preparing bank directors and the industry ahead of these changes.

That is why we have devoted this year’s for this purpose”, said Yemi Idowu, BDAN’ s General Secretary and a Sterling Bank director.

In addition to the Keynote address by Moghalu, the forum featured a guest lecture by  Managing Director/Chief Executive Chams PLC, Mr. Demola B. Aladekomo  and Dr. Wiebe Boer, CEO, The Tony Elumelu Foundation who spoke on  ”Impact Investing”.

Dignitaries at the forum include Managing Director/Chief Executive, Ecobank, Mr. Jibril Aku, Chairman, Skye Bank PLC, Mrs.  M.O. Onasanya, President, ICSAN, Mr. Tunde Busari, and Managing Director/Chief Executive, Distribution Services, PZ Cussons, Mr. Adewale Raji.

In his welcome address, BDAN President, Alabraba disclosed that the governing council of the Association, as part of its efforts to boost corporate governance in the industry, has approved a framework that would enable it decide remuneration for boards of banks. He said this has become exigent to harmonise the disparities that exist in the remuneration plans of different banks.

Speaking yesterday at the BDAN Forum held in Lagos, Alabraba said the Council has also decided to play pivotal role in proposing a credible framework for the remuneration of non-executive bank directors.

The framework will take cognizance of similarities and differences in contextual characteristics of the banks in the country reflect the renewed responsibilities of the board of a bank and also evaluate best practices of contemporaries in other nations.

The BDAN boss who was represented by Vice President, Ashim Oyekan said that assistance from FITC and their consultants would be needful and that such recommendations would be based on researches and available industry information.

It will also consider interest of all stakeholders, business continuity and effective governance of respective banks. He appealed to banks to cooperate with FITC ensure the credibility and success of the exercise.

Moghalu in his speech identified seven factors that would shape the future banking in Nigeria. These are: the new supervisory and regulatory paradigm in Nigeria; The new banking model and its implications; global trends and future of regulation; implications of mergers, acquisitions and consolidation of the banking industry; banks contribution to the real economy; the importance of trust; and financial inclusion.

He however noted that the future of the industry should not be left alone in the hands of bankers, noting that that banking is too important to the society to be left to bankers alone.

“Considering the huge consequences of a banking crisis such as we have witnessed, the future of banking cannot be left for the banks alone to decide. It is a task that requires the individual and collective contribution of stakeholders, with each playing its role effectively”, he said.

Dr. Boer on his part called the attention of bank directors to importance of making investment which is not only profitable but which also makes positive impact on the society. He pointed out examples of experiences from other climes which prove that investment can be done profitably in a way that also makes positive social impact.

Aladekomo noted the banking sector had witnessed more technological advancement in the last five years than the last fifteen years. He however affirmed that, “The future of banking in Nigeria is tied to e-payment. In the next five years, cards will not be as important as mobile phones in the banking sector”.

Aladekomo’s presentation and a presentation by CBN on the Cashless Nigeria initiative influenced most of the discussions and comments by participants at the forum.  While commending on the policy move to reduce the dominance of cash, participants stressed the need for adequate measures to ensure the success of the policy.


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