Wednesday, May 23, 2018
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ideas have consequences

You are here:Home>>Stevie C. Chiakwelu>>Displaying items by tag: banks
Displaying items by tag: banks

According to the latest data collected and released by The Banker magazine, a publication of the Financial Times of London 25 African  and 7 Nigerian Banks made top Global 1000 Banks.

The largested Bank in Africa according to the ranking is Standard Bank Group of South Africa with  a tier one capital of $9.642 billion. While Zenith Bank is the largest  bank in Nigeria with a tier one capital of $2.398 billion.


The seven top Nigeria's banks have a total capitalization of $11.699 billion in 2012 compared to the year 2011 of $11.332 billion. The capitalization slightly notched up did not change the ranking of these banks as they remained in same rankings as that of last year.


The Nigerian banks rankings: "Zenith Bank is the no. 1 Nigerian bank on the list with a tier 1 capital of $ 2.398 billion (Zenith is no.7 in Africa and #322 Worldwide). Zenith is followed closely by First Bank’s tier 1 capital of $ 2.262 billion (#2 in Nigeria, #8 in Africa and #338 worlwide). GTBank is third with a tier 1 capital of $ 1.478 billion (#3 in Nigeria, #11 in Africa and # 455 worldwide). Access Bank’s tier 1 capital or shareholders’ funds is $1.054 billion (#4 in Nigeria, #15 in Africa and #541 worldwide)."


"Bank of America which occupies the first position in the global ranking has a capital base of $163.626 billion. It is followed closely by JPMorgan Chase with a capital of $142.450 billion. The third position is occupied by HSBC, a British bank with a capital base of $133.179 billion. China has three banks in the top ten positions while Japan has just one," vanguard reported.




The Governor of Central bank of South Africa, Gill Marcus has proven herself a pragmatic free market banker rather than ideological by the way she goes about with her responsibilities as the apex banker of the land. She has wisely asserted her independence by refusing to yield to pressure from politicians and labor union to further cut down the benchmark interest rate.

"On March 25, the central bank cut its benchmark interest rate to the lowest in at least 12 years, reducing it by half a percentage point to 6.5 percent, to shore up a recovery from the first recession in 17 years. Labor unions have been pushing for further rate cuts to create jobs." Governor Gill Marcus understood quite well that credit crunch must be ameliorated in order to stimulate the economy for wealth and job creations. For her gallant action she deserves every kudos.

Gill Marcus, Governor of South African Reserve Bank

Gill Marcus was the deputy governor of South African Reserve Bank before she was appointed the new governor of South African apex bank to replace the retired Tito Mboweni. Marcus appointment assured the global financial market that President Jacob Zuma who made the appointment was still committed to free market and financial discipline of his predecessor Thabo Mbeki.

The retired former governor of South African Reserve Bank, Tito Mboweni have the reputation of being fiscal conservative with a prudence in the application of well thought monetary policy to control inflation and maintaining the value of rand. Under the watchful eye of Mboweni the South African currency rand have continue to maintain its strong value but not too strong to dwindle export of home made goods.

South African economy is quite ebullient with its relentless dominance of the entire African economic and financial landscape - the largest economy in Africa and the only African country that made it to G20. A good thing coming from South Africa is the continued investments in the continent. South African investors are investing heavily in West Africa particularly in Nigeria and neighboring countries where they are dominating telecommunication industry. Many of construction contracts in buildings and road constructions in many African countries are dominated by South African firms.

Afripol praised the appointment of Gill Marcus by President Jacob Zuma and maintained that "the keeping of high interest rates do not augur well for growth of small and viable businesses in South Africa. High interests make it difficult for a flourishing economic growth in the country and for upcoming new capitalist it can be detrimental in obtaining and paying back loans from financial institutions." Therefore lower interest rate can be necessary for economic growth and job creation.

The further cutting of interest rate can stimulate economic activities and can help to regenerate economic growth in South Africa in era of global recession, ultimately setting the climate for job creation that is badly needed in the country. When business community and marketers have access to credit, it will surely bring about the needed liquidity that the market is craving for. But cutting the interest rate to appease political constituents will not be good for a coordinated and well thought monetary policy.

A way lower interest rate may certainly encourage more borrowing but more spending and easy money have its downside too. Excessive liquidity may trigger inflationary trends and higher inflation that may retard economic growth that comes with higher unemployment and even weaker rand. The rand is not doing badly even with local demand of dollar; it stood its ground and always rebounded. It was reported that "the rand has surged almost 27 percent since the start of last year, helping to ease price growth by reducing the cost of imports such as oil." An appreciating and strong rand is an indicator of prosperous economy but overtly stronger rand may discourage and dampen export.

The inflation rate since February in South Africa has been 5.7% and that is three-year low. And Reserve Bank Governor Gill Marcus deserves the credit on the handling of the apex bank and its monetary policy. Keeping the inflation lower may be the most important job she has been doing. Higher inflation will complicate her duties by slowing growth and that will not help to alleviate poverty among the youths and unemployed of South Africa. And the increasing stronger and appreciating rand will lose its luster and potency with rising inflation.

Governor Gill Marcus has done well by resisting the mounting pressure to further lower the benchmark interest rate. Yielding to such pressure without the consideration of the market forces will not be prudent. And with that comes the losing of independence and a weaken reserve bank.


Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.












Importing ideas from one country to another without properly examining the social factors of the country will only lead to failure. Micro finance banks have become the rave in developing countries to reduce poverty due to the success of the nobel laureate Yunus Mohammed in impacting the lives of rural women in Bangladesh. His success has become a model being duplicated all over the world.

In my recent trip for to Nigeria I was pleasantly surprised to see two micro finance banks in my village in Zonkwa in the heart of Nigeria. Curiosity led me into one of the banks and I wanted to find out if they were actually giving loans and what the process was. I opened the door and was greeted by a teller who inquired about the nature of my visit, I told her I was interested in getting a loan and wanted to know what steps to take. The loan officer was not in but she gave me a check list for loans which asked for things like land CFOs, bank history, etc. I also remember thinking as I left why the bank was empty even though it was next to a booming market.

Weeks go by and I am in Kaduna a town of 4 million people visiting James a friend who was having a bad day because a local businessman derailed his plans for the day. I inquired more on what happened and he told me helped sell 2 generators for the local business man for a commission and cashing the check turned out to be an adventure. The check was written in the man’s name but he did not want to go to the bank with Mr. James, he only wanted cash and asked James to return the check and collect money. They went back and forth and in the dialogue james learnt the businessman had not been to a bank before and did not have an account. My friend volunteered to take to one. When they got to the bank it became a hassle for the man to physically enter the gate of the bank, it took time and convincing before they could enter.

This incident shed light to me about hidden hindrance to the success of micro finance banks in developing community. I was surprised to learn that the business man has been in business for over 20 years and her has never been in a bank before, not only has her not been in the bank before her does not see it as an institution that can help expand his business and bring him wealth, her sees it more as something that could possible cause harm to him. What is the source of this institutional fear?

People in developing countries have not seen institutions serve them, instead institutions have been a source of exploitation. This maybe the cause of institutional fear, others include language, identity, and documentation. Language is a barrier because it is a hindrance to communication when information and literature that promotes services are written in a language the average client does not understand. So in Zonkwa the local merchants inability to read and speak english affects their understand of what a micro bank does and how they could benefit, as far as they are concerned it is another large building that caters to the elites. Identity is an issue because there is no legal representation of one’s self in any governmental form. This is accomplished in America through social security number, driver’s license, or passport. In developing countries the only form of identification indigenous people have is themselves. Documentation may be the worse barrier because it provides proof of legitimacy and reliability. The businessman had his store for 20 years but there is no proof of registration, there is no land title to his store location, and he had no ledger documenting his business activities for the last 20 years. These items where on the checklist of the micro finance bank.

Examining these issues and coming up with solutions to these barriers will go a long way in making micro financing successful in more places and improving rural communities in developing countries.


Published in Gideon Nyan

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