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Saving AKWA SAVINGS & LOANS LIMITED

UDOM
…the need to entrench corporate governance, accountability
By Ukpong UKPONG
It was a good step taken by the new management of ailing state owned finance company, Akwa Savings & Loans Limited, when it visited the state legislature recently to seek support in the bank’s shot at recovery.

In all honesty, the present plight of Akwa Savings & Loans Limited, a microfinance bank established to assist in the economic development of the state by providing loan services and financing for individuals, businesses and/or corporate organizations, should bother any patriotic citizen.

That is why state government’s injection of bailout fund (an undisclosed amount), constitution of a panel of inquiry and change of the bank management as well as an investigation of the bank’s looters by the Economic and Financial Crimes Commission, EFCC, should be commended.

It is expedient to know how a once viable bank that funded several development projects and programmes in the state eventually became a clearing house for settlement of political supporters, money laundry and payment of phony contractors while bank workers were owed for months and depositors were denied access to their funds.

In the meantime, while awaiting publication of findings by the state panel of inquiry into the operations of the state owned bank from January 2007 to May 2016 and possible prosecution of those criminally responsible for the bank’s failure by the EFCC, government must ensure that the new move to salvage Akwa Savings and Loan Limited is comprehensives enough to make its comeback enduring.

One essential step towards recovery and sustainability is ensuring that the bank imbibes corporate governance. According to Major General Leo Ajiborisha (rtd), the chief executive/ managing director of the Institute of Strategic Management Nigeria (ISMN), corporate governance is the second layer of governance which has to do with what the board of directors ought to be doing, their dos and don’ts and what management should be doing.

Corporate governance has been identified as the pillar holding any organization together and enabling it to achieve its objectives. Findings show that its principle has become an issue over the last 30 years across the world even though a lot still needs to be done to get it right. In fact, many industries and organizations have collapsed not just because of poor infrastructure or dwindling funding, but as a result of poor governance.

In the banking sector, paying greater attention to sound corporate governance and best practices are the panacea for preventing systemic crisis. According to the Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Mr. Umaru Ibrahim, the absence of sound corporate governance was one of the major factors responsible for the 2009 Nigerian banking crisis.

He revealed that the special examination conducted on the 24 banks in Nigeria by the Central Bank of Nigeria (CBN) and NDIC revealed that 10 of the 24 banks were critically distressed as a result of many factors amongst which was poor corporate governance. This submission was reechoed recently by the state governor, Mr. Udom Emmanuel, who maintained that from preliminary assessment Akwa Savings & Loan Limited failed because of lack of corporate governance.

The former management was reportedly neck deep in corruption and other fraudulent financial dealings with its collaborators within government, which left the establishment on the brink of collapse. The bank could not have survived the onslaught by looters, who evidently were part of the hierarchy of the ruling political party in the state.

Whereas, had the last administration imbibed financial probity, made attempts to entrench corporate governance as well as instill discipline and accountability in the bank, the case today would have been quite different.

A retired accountant from Zenith bank informed the writer that what makes his former employer one of Nigeria’s foremost banks is good corporate governance, which enforces strict compliance by management and staff to its vision and objectives.

He recalled that when he was still working with the bank, even as a senior management staff, he was unable to assist his relative once when he needed to convert dollar bills (being payment for a supply contract with federal government) into naira notes because those days the bank refused to deal directly with politicians and government contractors as a policy.

Well, today the state relies on a product of Zenith bank to salvage its ailing microfinance bank and without impinging on the governor’s choice, it is important to submit that the people do not expect less than high level of professionalism and patriotism from those he recently appointed into the board and management of the bank. They must establish sound corporate governance, accountability, transparency and due process, in order rebrand a bank notorious for poor practices.

Akwa Savings & Loan Limited is a microfinance bank and has as its primary objective the provision of financial services to the active poor, who are traditionally not served by the conventional financial institutions. This is spelled out in CBN’s 2005 Microfinance Policy, Regulatory and Supervisory Framework for Nigeria that was revised in April, 2011.

A good management would know the business environment and how to take advantage of emerging opportunities to suit its purpose and strategic needs. Today, farmers and small scale entrepreneurs would be best served by a vibrant state owned microfinance bank.

Furthermore, there must be a mechanism in place to oversee what the board and management of the bank is doing. Accordingly, much as the Speaker, Barrister Onofiok Luke, has pledged the support of the legislature for the bank, he should see to it that henceforth the state house of assembly has oversight function over this very vital agency of government.

Ideally, it would be wise to allow the bank’s board of directors to run autonomously, free from undue political influence. However, the legislature should make laws that will entrench good governance, accountability and due process in the bank. There must be a mechanism in place to guarantee that the bank will never again be used as a conduit pipe for thieving political office holders and their patrons.

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