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| Abuja, Nigeria's Capital city. |
The big question in 2016 is on the health of the twenty-one licensed commercial banks operating in the country? Can the banks provide the enabling environment for the Nigerian economy to achieve growth in sectors other than oil and gas, which have been the mainstay for decades? The United Nation Population agency current estimate of the Nigerian population for 2014 is 177 million people; but shockingly the banks are only serving 12.8% of the population, which is a far cry from an adult population of 100.5 million people. The reality of the state of Nigeria banks have now been revealed, following the compulsory customer audit known as Bank Verification Number (BVN) ordered by the apex bank. The exercise which was concluded in November, 2015, showed the country’s banks have been under-performing in mobilizing customers across the thirty-six states of the country and Abuja, the federal capital.
An analyses of the BVN data, shows that as at 27th of December, 2015, a total of 22.8 million people have enrolled for the BVN. These represent the actual number of individual account holders in Nigeria. This is the reality of the Banking Sector of the Nigerian economy, that is the reason SMEs are suffering and loans are scarce, because the bank vaults have limited loan able funds to those who need it! Further computation of the data using a 1:2 ratio, shows that the twenty-one operating banks in the country are sharing a total of 43 million accounts comprising of current and savings accounts respectively. The ratio means that there are two accounts credited to every one individual account holder made up of current and savings. The conclusion of the analysis is that Nigerian banks have a market gap of over 65.7 million people yet to be reached with banking services. This banking gap falls within the 15-54 years old age group which accounts for 88.2 million people out of a total adult population of 100.7 million.
However, the figures stated above contrast greatly with the previous published data released on the state of the banking sector of the Nigerian economy by the Nigerian Interbank Settlement Services (NIBSS) for 2014, before the introduction of the BVN registration. The reality of the sector is what the BVN data has revealed; the data is in the custody of NIBSS, a joint-stock company owned by the Central Bank of Nigeria, the Bankers Committee and the financial institutions operating in the country. This was the state of the banking sector before 2015; the total number of bank accounts in Nigeria was put at 70.18 million. Active accounts were 42.0 million. The number of Current accounts stood at 15.45 million, while Savings (deposit) account recorded 51.59 million. Corporate account was 5.37 million, while individual accounts stood at 64.81 million. The release of the Bank Verification Number data will aid investors and the banking sector in Nigeria to have a more reliable and authentic database to employ in their projections and marketing drive. Poor planning and a dearth of reliable data has been the nightmare of proper planning which has seen many banks go aground. Many fictitious accounts were in operations and this created a bloated customer base, which the BVN has now exposed. The BVN exercise has succeeded in sweeping the rot and the debris in the Nigerian banking sector, by revealing the true position of the sector in the face of challenges in the economy.
The recent decision of the President Buhari led federal government administration to enforce the Treasury Single Account (TSA); a financial policy which withdrew government, departments and agencies accounts from commercial banks into a single account with the Central Bank of Nigeria, has further exposed the vulnerability of the banks. In 2016, the squeeze in the liquidity of the Nigerian banks will be too glaring, because there will be no more hiding place under NNPC or MDAs accounts, the largest contributors to bank deposits in the country. For any bank to survive, their marketing strategy has to be mass driven or a mopping up of the piggy bank savings of school children.
The much taunted success of the Mobile Money Bank platform which has grown from about 9% in 2011 to 608% in 2014 has to be reviewed in the light of the data revelation of the BVN in 2015. The posited number of subscribers which standard at 24.4 million subscribers as at July, 2015, again using a ratio of 1:2, shows the actual individual population to be 12.2 million people using the mobile money platform out of a mobile phone population of 150.6 million . Most Nigerians own accounts in more than two banks and operates same concurrently. There is therefore a distortion factor which must be taken into account when using data from the telecom population and the banks in Nigeria.
An analyses of the BVN data, shows that as at 27th of December, 2015, a total of 22.8 million people have enrolled for the BVN. These represent the actual number of individual account holders in Nigeria. This is the reality of the Banking Sector of the Nigerian economy, that is the reason SMEs are suffering and loans are scarce, because the bank vaults have limited loan able funds to those who need it! Further computation of the data using a 1:2 ratio, shows that the twenty-one operating banks in the country are sharing a total of 43 million accounts comprising of current and savings accounts respectively. The ratio means that there are two accounts credited to every one individual account holder made up of current and savings. The conclusion of the analysis is that Nigerian banks have a market gap of over 65.7 million people yet to be reached with banking services. This banking gap falls within the 15-54 years old age group which accounts for 88.2 million people out of a total adult population of 100.7 million.
However, the figures stated above contrast greatly with the previous published data released on the state of the banking sector of the Nigerian economy by the Nigerian Interbank Settlement Services (NIBSS) for 2014, before the introduction of the BVN registration. The reality of the sector is what the BVN data has revealed; the data is in the custody of NIBSS, a joint-stock company owned by the Central Bank of Nigeria, the Bankers Committee and the financial institutions operating in the country. This was the state of the banking sector before 2015; the total number of bank accounts in Nigeria was put at 70.18 million. Active accounts were 42.0 million. The number of Current accounts stood at 15.45 million, while Savings (deposit) account recorded 51.59 million. Corporate account was 5.37 million, while individual accounts stood at 64.81 million. The release of the Bank Verification Number data will aid investors and the banking sector in Nigeria to have a more reliable and authentic database to employ in their projections and marketing drive. Poor planning and a dearth of reliable data has been the nightmare of proper planning which has seen many banks go aground. Many fictitious accounts were in operations and this created a bloated customer base, which the BVN has now exposed. The BVN exercise has succeeded in sweeping the rot and the debris in the Nigerian banking sector, by revealing the true position of the sector in the face of challenges in the economy.
The recent decision of the President Buhari led federal government administration to enforce the Treasury Single Account (TSA); a financial policy which withdrew government, departments and agencies accounts from commercial banks into a single account with the Central Bank of Nigeria, has further exposed the vulnerability of the banks. In 2016, the squeeze in the liquidity of the Nigerian banks will be too glaring, because there will be no more hiding place under NNPC or MDAs accounts, the largest contributors to bank deposits in the country. For any bank to survive, their marketing strategy has to be mass driven or a mopping up of the piggy bank savings of school children.
The much taunted success of the Mobile Money Bank platform which has grown from about 9% in 2011 to 608% in 2014 has to be reviewed in the light of the data revelation of the BVN in 2015. The posited number of subscribers which standard at 24.4 million subscribers as at July, 2015, again using a ratio of 1:2, shows the actual individual population to be 12.2 million people using the mobile money platform out of a mobile phone population of 150.6 million . Most Nigerians own accounts in more than two banks and operates same concurrently. There is therefore a distortion factor which must be taken into account when using data from the telecom population and the banks in Nigeria.
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