FOLASHADE ADEYEMO, Assistant Professor at the University of Reading, recently moderated the second edition of the Global South Dialogue on Economic Crime, an online discussion focused on the regulation of banking and financial institutions in Africa. In this interview, she talks about the role of the Banks and Other Financial Institutions Act 2020 (BOFIA) and the lessons that African countries can learn from developed countries to address economic challenges. AMAKA ANAGOR-EWUZIE brings the excerpts:
Recently, the Global South Dialogue on Economic Crime, in collaboration with the Commercial Law Research Network Nigeria and the University of Reading, organized a webinar on banking regulation in Africa. What is the meaning of this?
This webinar was the second in a series of webinars on the issue of banking regulation in Nigeria. I also launched my highly anticipated book titled “Banking Regulation in Africa: The Case of Nigeria and Other Emerging Economies” (Routledge 2021). The book focused on the development of the banking regulatory environment in Nigeria.
He paid particular attention to the pre-colonial era medium of exchange and the two types of banks that were established in Nigeria during the colonial period; indigenous and commercial banks. Both banking systems have struggled, with local banks suffering several bank failures.
The significance of the webinar was that it provided a platform to shed light on the impact of regulation in Nigeria’s banking and finance sector.
Could you please provide a general overview of the Banks and Other Financial Institutions Act 2020? How would you rate its performance against modern financial realities in Nigeria?
The main objective of the Banks and Other Financial Institutions Act 2020 (BOFIA) was to improve the banking regulatory environment in Nigeria. It attempts to do so by introducing new legislative provisions, which seek to bring the law up to par with other scholarly and modern legislative instruments, in view of a substantial change in political, social, local and global economic realities.
To accurately reflect some of these changes, BOFIA 2020 now includes legal provisions for financial technology (fintech), improving cybersecurity regulations. It has established and created a resolution fund for the banking sector, which charges institutions and banks to maintain this fund with the CBN. It also introduced provisions concerning the licensing of banks and the revocation of bank licences.
The law also introduced new provisions that revisit the CBN’s regulatory powers over banks and other financial institutions. It introduced the resolution of the powers of the CBN and the obvious limitation of the role of the Nigeria Deposit Insurance Corporation (NDIC) in the resolution of banks and established a tribunal for the enforcement and recovery of eligible loans.
BOFIA 2020 also takes into consideration global pandemics, such as Covid-19, which have brought unprecedented challenges to the banking industry, globally.
In terms of evaluating its performance, we can say that it is indeed a welcome law because the BOFIA of 1991 was not able to respond to changes in the banking space. However, the new law introduces new challenges. It has already been argued by scholars, including myself, that a special court is needed to deal with banking law issues.
The second issue is that BOFIA 2020 effectively limits the role of the NDIC, which had previously played an important and active role in resolving banks in insolvency. To resolve this issue, the NDIC Act of 2006 would require an amendment reflecting this limitation and also ensuring that the resolution powers of the two Acts remain at the same level in order to avoid a conflict of laws and maintain effective bank resolution.
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What are the challenges to achieving economic crime-free functioning in the private and public sectors, and to what extent can you say that the Global South Economic Crime Dialogue has contributed to addressing them?
One of the aims of the Global South Dialogue on Economic Crime (GSDEC) is to provide an avenue/platform for knowledge dissemination. We do this through the events we organise, many of which have been funded by external bodies such as the UK Research and Innovation Council, the Society of Legal Scholars and through the support and resources of our respective institutions such as the University of Reading, University of Lincoln and University of Aston.
The caliber of speakers at our event was also helpful in the knowledge dissemination process. One of our main objectives is to ensure that we remain committed to providing innovative and research-driven responses to the complex challenges of financial and economic crime in the Southern region.
Strategic partnership with public and private sector stakeholders is very important for national and economic development. What role does your organization play in achieving this?
When planning our events, we keep two crucial questions in mind. First, what change do we hope to bring about? And who could help us make that change? Our two recently concluded webinars (Unexplained Wealth June 2022 and Banking Regulation in Nigeria August 2022) are examples of creating, developing and managing relationships with key stakeholders in this space.
As a result of these webinars, many speakers and moderators of these events have started working on relevant policy documents with recommendations that can help stakeholders improve national and economic development.
When you look at the economic situation in Nigeria like inflation, high unemployment rate, food crisis and insecurity, what advice do you have for the managers of the economy to address these issues?
The first step, in my view, is to crack down on corruption and proactively embrace zero tolerance for corruption. I recently traveled to Nigeria and was so shocked at how quickly food, gasoline, healthcare and the cost of living in general has gone up.
What I found most interesting is that many economic managers, who walk the halls of power in Nigeria, actually go to the western world and see how things are done there. They see how things work in other economies.
I’m not saying the Western world is entirely right since it too has faced its own challenges, but there’s no reason why we can’t learn from its experiences. We could start with basic amenities that citizens of other countries can enjoy/benefit from, such as electricity.
The managers of the economy must redefine their priorities to allow them to deal with the real problems on the table. These problems include inflation, extremely high employment rate, insecurity and education, among others.
Of course, I can talk a bit about the issue of education. I am of the opinion that they should tap into their talents at home. We are starting to see an increase in the number of Nigerian students and professionals moving themselves and their families to greener pastures in the UK. The simple reason they moved overseas (not just to England) is because things are tough in Nigeria, and they can’t seem to see the way forward.
Inflation rates make it impossible to sustain a household. If the government is willing to really invest in their talents and take care of important issues like security, chances are things will improve and people will stay.
For you to come this far to become an assistant professor at the University of Reading, you must have had your ups and downs. Was there a moment when you wanted to quit? Without regret?
I started teaching in the second year of my doctoral research. I found it difficult at first, as I struggled to balance my research commitment and my teaching responsibilities. I started my career teaching law students, gradually moving into the first year, then finally teaching the first, second and third years of the LLB law degree, up to the LLM.
During my very first Criminal Law class, I was introduced to the students by the Head of the Module and I remember one student, quite loudly I might add, shouting across the room “She’s so young!” I of course took that as a compliment and the student ended up doing very well in the course.
I then joined the University of Reading in 2018 and things changed dramatically. My class sizes became three times what I was used to because it was a much bigger law school. I remember walking to my first corporate law class there and having about 100 eyes looking at me! I admit it was rather daunting, but the real test came when I introduced the banking law module at law school in 2020.
In its first year, over 200 students chose the module and the number has remained stable so far. I guess you could say my confidence went up overnight. It is the most selected module in the second year of the LLB law degree and receives consistently positive feedback.
Do I have any regrets? No I do not have. I love what I do – I love being able to impact my students’ knowledge. The most rewarding part of the job is watching them succeed in their chosen career.
Technology is increasingly shrinking the space of professional practices in all sectors with its disruptive impact. How should organizations, especially in Africa, prepare for this new normal?
Organizations and institutions must quickly come to terms with the fact that one day they could be taken over by artificial intelligence (AI) and robots as well as other forms of technology. African countries cannot reasonably afford to be left behind. It is important that organizations in Africa jump on this bandwagon, to ensure that they use the power of technology to achieve their ultimate goals.
To do this means that organizations in Africa must go back to the drawing board, unlearning old habits and learning new ones. A paradigm shift is needed to embrace the technology; organizations need to let go of the idea that technology is disruptive and embrace the massive benefits it brings.
Q: I’m not saying that the Western world is entirely right since they too have faced their own challenges, but there’s no reason why we can’t learn from their experiences.