In Naomi Klein’s multiple books, especially the Shock Doctrine, she focuses discussion on capitalism and its darker edges, which she described as disaster capitalism. One of her argument is the pernicious symbiosis between capital and a small click of elites, and at the detriment of the 99 percent living around the globe. To be precise, these small elites are mostly not politicians or your usual hustler around the seat of government. Even, in Nigeria, the bastards that have stolen the Commonwealth dry are not part of Klein’s small click of elites. So, who are they? Aliko Dangote is on my mind.
Soludo’s evidence for the success of the bank consolidation in Nigeria was the testimony of Dangote, which according to Soludo, Dangote could not have grown as big as he is without those consolidations. The argument is that with bank consolidation, there were banks that grew big enough to syndicate loans big enough for Dangote to grow his empire. In 2012, Sanusi Lamido, Emir of Kano, in Warwick, England, continued the same mantra, in defending the consolidation. According to his Highness, banks perform several roles, of which Nigeria banks fail, and as a consequence, those banks had to be eliminated. To most Nigerians, the salacious theft of Cecilia Ibru, Akingbola and others was enough reason for the bank consolidation.
In one swoop of legislative suicide, Nigeria reduced the number of her banks from more than 80 banks to about 22—and, a new era of megabanks was borne. The balance of cash and equities in those smaller banks accrued to the benefit of the surviving megabanks, and they in turn became awash in money. And, all for the benefit of Dangote and his few 1 percent neighbors. There is nothing to wonder about that the advent of Nigerians on Forbes list of billionaires coincided with the bank consolidations. The Dangote, Adenuga, Otedola, Kalus and others, now compete on the Forbes list.
On the other hand, the first casualties of the bank consolidations were the young, employed and unemployed graduates of our universities who either would or have secured entry level corporate jobs at those smaller banks. The small town farmer, who needed a goat milk extractor or medium Tiller for his farm, struck out next. The spare parts dealers and others, whose goal were medium to short term small loans, suddenly became history. The neighborhood vulcanizers, market women, and contractors were unknown consumers of credit or banking services, so, they couldn’t have factored into the casualty list.
There are more than 6000 community banks in the US, representing 93 percent of all lenders in the country. Community banks, which typically have less than $10 billion in assets, account for about 45 percent of all of the $4-5 trillion loans to businesses and farms made by insured institutions in the United States. In short, the JP Morgan Chase, Bank of America, Wells Fargo and others constitute merely 7 percent of all lenders in the US. While the asset of a smaller bank in the US far exceeds that of a bigger bank in Nigeria, the relative investment of a Nigerian businessperson is undoubtedly served by those smaller banks.
Before I am being jumped and thrashed, the crimes of Ibru, Akingbola and others were serious, as they undermined credibility in our banking institutions, but the solution is not the total elimination of those smaller banks. Between 1986 and 1995, US witnessed the Savings & Loan Crises (S&L), where 1,043 out of the 3,234 S&L banks failed. About ten years later, another banking crisis that affected the entire world struck. Each of these crises had its antecedents in one fraud or the other, but what has not happened in America is to eliminate the need for the small-town community banks.