Mama Ebele is a small time grocery seller in surulere who has for over a decade grown her business from a mere N10,000 market to a market of about N500,000. She had mostly kept her money in her house until a fire burnt down the house of a competitor who unfortunately lost not just her goods but her entire savings. That prompted Mama Ebele to look closely at the offer made to her by her neighbor, an entry level banker at a new generation bank. Soon she would open her very first bank account with a promise that her money would be kept safe and made available to her whenever she wants. As her business grew she needed more money to expand and remain competitive. The Bank told her she did not qualify for a N100k loan as she did not have collateral. She decided to look for other options but soon realized all banks were the same. However, there was a silver lining, a wonder bank put up an billboard ad on her usual route home promising millions in exchange for a meagre deposit of N20,000. Another bank had one ad on the radio which promised a chance to win a house by just opening an account. It all seemed like they were speaking to her. Since banks weren’t ready to lend her money they may as may as well dash her.
The scenario above was evident in Nigeria just 4 years ago. Then our newspapers and tv screens were adorned with advertorials from commercial banks promising Nigerians all sorts of gifts in exchange for opening a flurry of accounts or maintaining some. Fast forward to today and it’s dejavu all over again as banks have once again taken up spaces on our newspapers and TV screens in search of our money. Can you blame them? Deposits rates are at its lowest in years whilst lending rates are as high as ever. And with the CBN tightening the amount banks have available with them by increasing cash reserve requirements, banks have no option but to resume aggressive deposit drives that do not benefit you and I. One would think the introduction of cash-less banking and introductions of several banking products like online banking, mobile banking, ATM cards etc. is enough to mobilize deposits without having to resort to cheap advertorials that look more like lottery. When a bank promise depositors millions in exchange for deposits of N20,000 it’s hard to differentiate it from a simple lottery. In a free market society deposits should come with the right incentives. People need a new deal from these banks. They want better security for their money, the ability to pay for a mortgage at single digit interest rates over 30years. Small businesses need affordable loans to fund job creating investments in new products and services, students needs loans to pay for University Education. Start Ups needs loans to funds innovative ideas and invention that will change the way we live.
Mama Ebele was too ignorant to realize the trap she was been lead into. She soon opened more accounts with several other banks in a bid to win a car, a house, a generator, just about anything the banks promised provided she had a minimum N20k in her account. Her luck soon ran out as the banks who once promised heaven and earth were soon dragged into the dungeon of insolvency, taking her deposits with them. History does have a way of repeating itself and old habits die hard. The banks are back to 2008 employing the same old tactics. Will you fall prey?