FOLASHADE ADEYEMO, assistant professor at the University of Reading, recently hosted the second edition of Global South Dialogue on Economic Crime, an online discussion that focused on regulation in banking and financial institution in Africa. In this interview, she speaks on the role of the Banks and Other Financial Institutions Act 2020 (BOFIA), and the lessons African countries can learn from developed nations 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 organised a webinar on banking regulation in Africa. What is the significance of that?
This webinar was the second in a series of webinars on the issue of banking regulation in Nigeria. I also launched my much-anticipated book tagged, ‘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.
It paid particular attention to the medium of exchange pre-colonial times and the two types of banks that were established in Nigeria during the colonial period; indigenous and commercial banks. Both banking systems experienced challenges, with indigenous banks suffering several banking failures.
The significance of the webinar was that it provided a platform to shed further light on the impact of regulation in the banking and finance industry of Nigeria.
Could you please provide a general overview of the Banks and Other Financial Institutions Act 2020? How would you assess its performance in relation to modern financial realities in Nigeria?
The primary purpose of the Banks and Other Financial Institutions Act (BOFIA) 2020 was to improve the banking regulatory environment in Nigeria. It attempts to do so by introducing new statutory provisions, which focus on bringing the Act at par with other erudite and modern statutory instruments, considering a substantial change in political, social, local, and global economic realities.
To accurately reflect some of these changes, BOFIA 2020 now provides statutory provisions for financial technology (fintech), thus, improving cyber security regulation. It established and created a resolution fund for the banking sector, which mandates institutions and banks to maintain this fund with the CBN. It also introduced provisions that address the licensing of banks and revocation of licenses of banks.
The Act also introduced new provisions which revisit the CBN’s regulatory powers over banks and other financial institutions. It introduced the resolution of powers of the CBN and evident limitation of the role of the Nigeria Deposit Insurance Corporation (NDIC) in the resolution of banks and created a tribunal for the enforcement and recovery of eligible loans.
BOFIA 2020 also takes into consideration, global pandemics, such as Covid-19, which have resulted in unprecedented challenges for the banking sector, globally.
In terms of assessing its performance, it may be argued that this is indeed a welcomed Act since BOFIA 1991 was incapable of addressing the changes in the banking space. However, the new Act introduces some new challenges. It has previously been argued by scholars, including myself, that a special tribunal is necessary to address banking law matters.
The second issue is that BOFIA 2020 effectively limits the role of the NDIC, which had previously played a significant and active role in the resolution of banks within the insolvency framework. To resolve this, the NDIC Act 2006 would require an amendment to reflect this limitation and to also ensure that the resolution powers of both Acts remain at par to avoid a conflict of law and to maintain effective bank resolution.
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What are the challenges to achieving economic crime-free operation in both private and public sectors, and to what extent can you say Global South Dialogue on Economic Crime has contributed to solving them?
One of the objectives of the Global South Dialogue on Economic Crime (GSDEC) is to provide an avenue/platform for knowledge dissemination. We do this through the events that we hold, many of which have been funded externally through bodies such as the UK Research and Innovation Council, the Society of Legal Scholars and through the help and resources of our respective institutions such as the University of Reading, University of Lincoln and Aston University.
The caliber of speakers at our event has also been helpful in the knowledge dissemination process. One of our key objectives is to ensure that we remain committed to making innovative and research-oriented responses to address complex financial and economic crime challenges in the global south region.
Strategic partnership with stakeholders in the public and private sectors is very critical to national and economic development. What role is your organisation playing in achieving this?
When planning our events, we keep in mind two crucial questions. One is what change are we hoping to bring about? And who could assist us in bringing about this 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 of the speakers and moderators of these events have started working on relevant policy documents with recommendations that can assist stakeholders in improving 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 own opinion, is to stamp down on corruption and to proactively take zero tolerance for corruption. I recently travelled to Nigeria and was so shocked at the rate at which food, petrol, healthcare and the general cost of living have increased.
What I found most interesting is that many of the economic managers, who walk the corridors of power in Nigeria, do in fact travel to the western world and see how things are done there. They see how things work in other economies.
I am not suggesting that the western world has gotten it completely right since they too faced their own challenges, but, there is no reason why we cannot draw from their experiences. We could start off with basic amenities that citizens in other countries are able to enjoy/benefit from such as electricity.
The managers of the economy need to reprioritise to enable them to deal with the real issues on the table. These issues include inflation, the tremendously high employment rate, insecurity, and education among other things.
I can of course speak a little on the issue of education. It is my opinion that they need to tap into their talents at home. We are beginning to see an increase in the number of Nigerian students and professionals moving themselves and their families for greener pastures in the UK. The simple reason for them making the move abroad (not just England) is this: things are hard in Nigeria, and they do not seem to be able to see a way forward.
Inflation rates make it impossible to sustain a household. If the government is willing to really invest in their talents, as well as deal with important issues such as security, the likelihood is that things will improve, and people would stay.
For you to come this far to become an assistant professor at the University of Reading, you must have had some ups and downs. Was there a time when you felt like quitting? Any regrets?
I started teaching in the second year of my doctoral research. I found this challenging initially, as I struggled to balance my research commitment and my teaching responsibilities. I started my career teaching law students, gradually moving to the first year, then eventually teaching the first, second, and third years of the LLB Law degree, right up until the LLM.
During my very first criminal law class, I was introduced by the module leader to the students and I recall one student, quite loudly I might add, shouting across the room ‘She’s so young!’ I of course took this as a compliment and the student ended up doing very well on 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 larger law school. I remember walking to my first Company Law class there and having about 100 eyes staring back! I will admit that it was rather daunting, but the real test came when I introduced the Banking Law module at the School of Law in 2020.
In its first year, it had over 200 students picking the module and the number has remained steady till now. I guess you could say my confidence boosted overnight. It is the most selected module in the second year of the LLB Law degree and constantly receives positive feedback.
Do I have regrets? No, I do not. I love what I do – I love being able to impact knowledge on my students. The most rewarding aspect of the job is when you get to see them do so well in their chosen career.
Technology is increasingly narrowing the space for professional practices across all sectors with its disruptive impact. How should organisations especially in Africa prepare for this new normal?
Organisations and institutions need to quickly come to a place of acceptance of the fact that someday, they may 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 organisations in Africa jump on this bandwagon, to ensure that they are utilising the power of technology to achieve their ultimate goals.
To do this, it will mean that organisations in Africa need to return to the drawing board, unlearn old habits, and learn new ones. A paradigm shift is necessary to embrace technology; organisations need to leave the notion behind that technology is disruptive and look towards the strong benefits it brings.
Q: I am not suggesting that the western world has gotten it completely right since they too faced their own challenges, but, there is no reason why we cannot draw from their experiences
