AMCON, Bank lending and jobs – 1

By Dele Sobowale

“The banks and government only help those who don’t need it. The ones who need it get no loans, no advice, not even a simple guide on how to start”. Ibrahim Okai, 1980s. (VANGURAD BOOK OF QUOTATIONS, p 20).

What Ibrahim Okai said in the 1980s was true before then and still true today – especially in Nigeria. Banks according to economic principle, are the only entities established to create wealth. But, they seldom do it for the poor in most countries. In Nigeria, never. In fact, here, they prefer to lose money on rich dead-beats than to make money on small struggling business people.

If you have not applied for a loan lately, kindly be informed that the lending rate starts at 30 per cent for the most highly favoured customers. Unless you are Dangote, Otedola, Mike Adenuga, Atiku, then forget it. And if your company is not MTN, GLO, Zenon Oil, Airtel etc., don’t go near any bank.

The interest rates have been pegged so high, as one banker confided in me, “in order to discourage borrowing.” The implications of that policy, which apparently has been embraced by all the banks, are grave – in the immediate, short, medium and long-terms –however defined.

CBN Governor
CBN Gov, Sanusi Lamido

If you think the Federal Government knows nothing about the high interest rates inhibiting borrowing and lending, then you must be living in another country not this one. Government and the banks have colluded to ensure that the micro, small and medium scale enterprises obtain no loans, no advice and “not even a simple guide on how to start.”

If you ask three top government officials, most directly involved in the promotion of those enterprises, Minister of Finance, Minister of Investment and the Governor of Central Bank what is government’s policy on the promotion of those businesses, the answer will be the same. Government, you will be told, believes in the small and medium enterprises because they employ 70 per cent of workers and create most of the job opportunities.

Ask further what government is doing for those categories of businesses and the reply, well-rehearsed, will be forthcoming without hesitation. Government is doing everything it can to help them. Press further and ask how and you will probably draw an angry glance. The reason is not hard to find. Governments have been paying lip-service to promoting small enterprises.

My last attendance at a seminar or workshop (more like talk shop) organised by the Federal Government was in 2005. The contract was given to the young daughter of a well-connected party official. Among the speakers was Dr Magnus Kpakol, the Director- General of the Poverty Alleviation Programme, who was there to inform the participants about how his agency will reduce poverty and create hundreds of thousands of small entrepreneurs.

It was perhaps the 20th such workshop to which I was invited since 1975. So, I was accustomed to “the salad bowl of illusions” (George Santayana, 1863-1952) which served as communique after the exercise. Raising my hand, I asked the organiser why we should expect any result from that particular workshop given the track record? Her reply was prompt.

“Don’t attend any other workshop we organise if we fail this time”. Well, they failed and that was the end of seminars or workshops on small and medium scale enterprises for me. Even the PAP, which from the outset was a bed of corruption, has failed to create small scale entrepreneurs fast enough to fulfill its mandate of reducing the poverty level; which stays stubbornly glued at 70 per cent.

Certainly, several more have been held with the same results – small and medium scale enterprises have not benefitted from government in the last 40 years. And they are not likely to do so – as long as government makes promises with one side of the mouth and takes measures guaranteed to negate those promises with the other side.

Everybody knows that credit is the life-blood of enterprises. Banks have never been enthusiastic about lending to small businesses –even under the best of conditions. Small business people have also not been too keen on taking loans at shylock rates. Elsewhere in the world (USA, Japan, China, Korea, Malaysia, etc, where interest rates never exceed 3-5 per cent, the governments have intervened to make it possible.

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