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admin 16 August 2009 Entrepreneurship, Leadership, Writings 252 views 2 Comments Email This Post

It is no longer news that the Central Bank of Nigeria, on Friday 14th of August 2009, sacked 5 CEOs of different banks in the banking industry. The news came with a lot of mixed feeling because some see the action as one that has a political under tone. While other’s sees it as a welcome idea which is long over due.

I want to share my thought with you on the matter, I am not going to speak for or against the action of the Central Bank Governor, but try to bring out lessons from the incident which I think will be beneficial to you and me. Yes there are a lot of lessons to be learnt from the incident.

The incident calls for a lot of reflection from us, and with the event unfolding, lesson need to be thought so that the coming generation will not repeat the same mistake. Did they make mistake? Maybe and maybe not, but there are allegations against them. The first allegation and the major allegation against them and their Executive Directors was the fact that they exposed the bank to loans that were not performing.

The first thing that will come to mind is that where is the principle of due diligence in the process of awarding the loans to the debtors, was all the Cs of credit not considered in the process? Were they charmed? But the truth according to the CBN Governor is that the banks has N2.8 trillion as total loan portfolio, margin loan of N456 billion. If the margin loan alone is N456b, which means going by the Soludo’s minimum requirement of capital base which is 25b, it will surprise you that the capital base of 18 banks has been trapped as a margin loan.

However there are a lot of lesson to be learnt as an entrepreneur and some one in the corporate ladder all together. Let me highlight few for you and I trust it will surely help you.
1.    Don’t ever do business with sentiment:  Many of the loan given out  will  are without collateral (as much as 80%), neither was due diligence taken into considerations before awarding such loans. Don’t give out loan or transact business based on personal recognition, because personal recognition does not answer to global economic trends. A bulk of the loan capital was trapped in the oil and gasas well as the stock exchange. These two sectors are badly affected by the global economic meltdown

2.     Be courageous to follow your instinct:  Instincts help to determine ones course of action and most times, it’s always right. I am of the opinion that these individual’s instinct will not have prompted them to take caution in handling the transactions? There is a spirit in man and the inspiration of the almighty gives man knowledge. Don’t throw aside your faith totally when you get to your work place or when transacting business that will help you sometimes.

3.    When there is problem look for solution and don’t cover up: one of the reasons why many of them were not pitied was because in the midst of the crises their respective banks were going through, they were still seen in the public attending functions and donating money to different organisations and states. Why cover up and pretend to be what you are not when your roof is leaking? When there is a problem, retreat and find solution to the problem. That period may not be the time to hide under corporate social responsibility to squander money.
4.   Do carry your employee along: Many of the affected banks employees were not carried along, instead they were been cajoled that all is well and pressure was mounted on the staff to look for more deposit to cover up for their short comings. Most of the staffs were threatened to look for deposit and many were even suspended because they could not meet the deposit target. But the truth is that, when a leader operates with transparency and let the people know the state of things they will rise up to fight for you and defend you.

5.    Do you have an exit strategy? It is always good to operate with the end in mind, learn to read the handwriting on the wall, leave when the ovation is loud. It is no more a news that many of them have overstayed there welcome in the position, yes they did laboured to bring the banks to where it is today but they’ve also been a direct cause for destruction of what they have built all these years. Build your business with the mind of a very good succession planning in mind. Leave or step aside when the ovation is loud. Don’t be too ambitious; don’t run after what God has not given you.
Let me have your comments, I will really appreciate it. But in the mean time the lessons continues.

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