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Is the People’s Bank coming back? (2)

By Eric Teniola

THE recommendations of the Ahmed Joda’s committee was that the People’s Bank should be restructured and rationalised in accordance with its revised mandate, to strengthen its professional managerial capability for efficient delivery of services and better investment decisions.

CBN
File: The Central Bank of Nigeria head office in Abuja.

In particular, its credit disbursement and recovery department should be strengthened, with a more professional cadre of staff for effective programmes of loan recovery, be made independent of government’s political and administrative interference and desist from spending whatsoever.

It was also recommended that the bank should regard the poor artisans and small-scale entrepreneurs as its target group and be professional in its operations.

This meant that it should employ trained and qualified professional staff in its core activity, and that it should operate according to well-established banking principles, subject to approved policy directives issued by the Federal Government from time to time. It was also required to pay more attention to the provision of small scale, micro-enterprises and cottage industry credit, leaving agriculture related micro-credit delivery to the Nigerian Agricultural and Cooperative Bank, NACB.

The committee was of the opinion that the People’s Bank should be responsible for loans disbursement to individuals, cooperative societies and enterprises of up to a maximum of N1million, at an interest rate of not more than 75 per cent of the Minimum Rediscount Rate, MRR, provided that it did not exceed 15 per cent per annum and receive substantial soft loan funding from the Federal Government for a period of three to five years, graduated in descending order, after which it should be self-sustaining.

This is to enable it gain financial independence and cease to rely on government funding for its operations.

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In addition, it was recommended that the People’s Bank should clean up its balance sheet, through cutting out bad and irrecoverable loans, fictitious assets and liabilities and unrecognised items. This would ensure that it has a fresh start, with a relatively clean slate.

It was also recommended that the bank should have a strong internal control systems, especially for auditing, which should report directly to its board, rather than to the Chief Executive, be regarded as a core poverty alleviation agency and be funded accordingly and have equally strong systems of credit management, given the fact that the poor credit administration invariably leads to bad and irrecoverable loans and finally have its statues reviewed to reflect its new mandate and focus.

The government white paper approved that the People’s Bank should have a Board consisting of a Chairman, a representative of the Economic Affairs Department of the Presidency, a representative of the Governor of the Central Bank of Nigeria, a representative of the Ministry of Finance, four other persons and the Managing Director of the Bank.

It also approved that the People’s Bank should have eight zonal offices and 280 branch offices distributed all over the federation. It’s organisational structure was to comprise two Executive Directors and seven Departments: Finance, Administration and Personnel, Inspection, Banking Operations, Planning and Development, Credit Operations and Computer Services.

The government also approved that the People’s Bank should open a branch office in every local government area of the country; only qualified and professional staff should be retained/employed for its effective operations, and to work for the bank in project evaluation, monitoring, extension service and loans recovery and ensure that effective loan monitoring and recovery machinery is put in place.

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The Ahmed Joda panel also made the following recommendations with respect to board composition and structure of People’s Bank of Nigeria: An eleven-member board to be chaired by a chairman appointed by the President with the following members: a. representative of the Central Bank of Nigeria; b. permanent secretary Ministry of Finance or his representative, who shall not be below the rank of a director; four other persons to represent public interest, one of whom shall be a woman; d. two executive directors; e. the managing director of the People’s Bank of Nigeria.

The Board shall have a secretary/legal adviser. ii. An organisational structure consisting of a managing director, two executive directors and four general managers; f. six zonal officers according to the six geo-political zones.

At present the People’s Bank has a total strength of 1,546 comprising 870,636 and 40 junior, senior and management staff, respectively. The ratio between operational and non-operational staff is in tune with the professional nature of the organisation. My appeal to the Federal Government is that the issues raised by Ahmed Joda’s committee and the government’s white paper on the People’s Bank should be properly implemented.


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