Why we must teach kids how to save - JAIZ Bank CEO
To mark this year’s World Savings Day, the managing director/CEO Jaiz Bank Mr. Hassan Usman spoke to our correspondent on the need to develop savings culture as a nation. Excerpts:
What is the significance of the World Savings day that it is being marked all over the world October 31st?
Economic development is about investments and investments cannot happen without savings. The advanced economies ensured that they had savings culture individually and as nations. Those days, and even today, those economies with surpluses are those able to reinvest and generate more wealth. So both as households and individuals, it is imperative for us to save and to invest. Entrepreneurs are always looking for opportunities to invest, sometimes they raise money in the capital market or the banks to invest. In either of the cases, they won’t get the money if there are no savings. And if you can’t raise money, you can’t expand your business so it’s a vicious circle. Which is why it is important to get the world and the developing countries especially to institute savings culture among citizens. As we grow, it’s important we save, it’s important we don’t go about borrowing anyhow to satisfy our consumption and it’s important we don’t spend what we don’t have. As individuals we are encouraged to save something to take care of the rainy day. You may be saving for ill health in future, you may be saving because you are targeting to acquire an asset or even save to marry. Savings it’s an integral part of every culture and we need to enhance that in Nigeria to improve the level of investments we make. If we make more investments, we will employ more people and generate more savings and the circle goes on. The more you save, the more you invest and become productive. That’s the essence of the World Savings Day. You may say with the recession and unemployment, people may find it difficult to save but you can save in whatever circumstance you find yourself regardless of your income. The savings may be small but develop the habit to save so when the big money comes, you can save as well.
What do you think is the role of the banks in encouraging people in the rural areas to save?
Getting information and financial services to the rural people is not very easy thing to do. But we have to start somewhere. The Central Bank of Nigeria (CBN) is encouraging all banks in Nigeria to go to the rural areas and create inclusion branches where you can provide basic banking services. Maybe not up to five days in a week but some outlets where you can provide micro lending and take deposits from rural people to instill that savings culture. We are looking forward to start doing that because the CBN has allocated some rural locations to all the banks to experiment. Where we find the best model, we will replicate that across the country. That way, we will increase the level of financial inclusion and access to financing to the rural people.
We’ve had cases of some Nigerians putting their monies into wonder banks and recently, MMM. A lot lost fortunes to these fraudsters. How can we ensure Nigerians to keep their monies in the right places?
On the wonder banks, the public is wiser now because anybody is promising spurious return on savings; it’s surely trying to take away your money. The best way to save is look for a financial institution that is registered by the Central Bank of Nigeria, the Securities and Exchange Commission (SEC) and its insured by the Nigerian Deposit Insurance Corporation (NDIC). It is the responsibility of the individuals to ensure they deal with registered and recognized financial institutions. The registered banks in Nigeria ate not even too many to have confusions. We all know them.
Specifically, what would you say are the key challenges stopping rural people and even some people in the cities from saving?
I think that partly it is a cultural issue.You know in Nigeria we have an extended family situation, and we also have high level of dependency. The average family in Nigeria is considered to be very large. Where the income level is not commiserating with the responsibility of that house, you find difficulty saving with the little income that is generated. What we are saying is that, whatever the level of income, teach savings culture to all members of the household. Savings culture is a habit and if you develop it, you will hold onto it. Most billionaires in the world started out by selling petty things but they grew their wealth through savings. You must have a dream, be disciplined about the dream and save to actualize it. Even for us as a bank, if people save with us, we will be able to lend to entrepreneurs and make some earnings as well.
Don’t you think the multiple charges by banks on accounts are a disincentive to saving?
No. I can talk for Jaiz Bank. On savings account, we pay the highest rate of return. We don’t pay interests but month on month, we distribute profits which varies from month to month because it is based on the income we make. We don’t charge COT so if we charge an account; it is for services because of the huge investments involved. If you enjoy our services, you will have to pay and it is universal. There is nowhere in the world that services are free. When you use internet banking, ATM etc you pay because some of these services are provided by third party vendors. But the charges are not much.
There are concerns around the health of some Nigerian banks. Don’t you think this can scare people from saving?
The CBN and NDIC have strengthened their supervisory capacity. They monitor banks on a daily basis and we file returns on a daily basis on our conditions about balance sheet, our liquidity level and our positions - any position at all we are taking. The regulators know they have to ensure financial stability and they have being doing a good job at it. Where there are issues, they intervene to protect depositors. In the last 10 years, no bank has failed because the regulators have ensured no bank fails. This is beside the insurance NDIC provides on deposits. The last time banks really failed was preconsolidation.