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Opinions of Sunday, 3 May 2020

Columnist: MyNigeria

A series of unfortunate events

There is a similarity between a breakup and mass retrenchment. It is sudden, unexpected and when it comes down to it, the blows up in your face. It is over.

Over the past few weeks of staying at home and trying to keep safe from the coronavirus, our fragile economies have taken a huge hit- something that will go on to affect livelihoods and put several people out of jobs. The first wave has just occurred, we are waiting for the second.

Two significant stories broke the media last week, the Access Bank's decision to retrench a significant bulk of their support staff and an extra pay cut for the permanent staff. While that was in the offing, iROKOtv furloughed 28% of their staff. Before iROKOtv went on this move, it had to let all its freelance marketers go and then grant 28% of its staff strength a compulsory leave. A tactic too familiar with one of the airlines who recently put 80% of its staff on a pay cut and compulsory leave.

For the mass retrenchment and forced pay cut companies, many variables are the cause for it. For Access Bank, it hit close to home because of its recent N2bn donation to the CACOVID fund. The popular argument was if a bank and its MD can donate N1bn each to the CACOVID fund a few weeks ago, why not save your staff strength with that huge amount? Emotions flared on Twitter. Majorly those reactions were countered by Twitter economists who felt "it was a right move, we were in the middle of a second recession and this was a foreshadowing of what is to come in every sector of the economy." Access Bank were just bold enough to blaze the trail.

Well, not like they boldy blazed the trail. Someone leaked the memo. You can't argue right or wrong for whoever did so. If you were on the verge of losing your job, you might do worse.

In analysing the phenomenon of job losses, especially for the Access Bank situation, there are three levels of arguments to this.

First is the fragile economy. For as long as forever, Naira has continually fallen. Inflation has continued to rise in double digits and without appropriate price regulation, the middlemen have cheated Nigeria's poor and middle class to stupor. While some of these issues can stem from empathy to outright greed; Government has not really had an economically viable plan to diversify from the major source of revenue which is oil. Marred by corruption and avarice, the members of the Nigerian elite have continually shipped Nigerian fortune abroad. The failure of the elites to strategise a way from oil has been Nigeria's greatest undoing.

With a dollar currently trading at N450; the economy is in shambles. This was why Jason Njoku of Iroko TV wrote a long blog explaining how their television subscriptions were adversely affected due to the naira plunge. This is why the need for dollar-backed investments was encouraged on the eve of COVID-19. And when US oil prices fell to negative, the world as we know it was stranded. With oil-exporting countries like Nigeria selling its barrels for $10 and yet no one is accepting to buy, then the economy would be in red.

Little wonder the FIRS was begging for companies experiencing boom to pay taxes. Because other firms can no longer keep up with the Federal Government's billing of the common man. For the Nigerian banking system which is not creative but bases their earnings off interests, loans, bank charges and some of those maintenance fees, of course, their earnings will take a hit. If no one is transacting money, how will the banks thrive?

When Access Bank Q1 2020 profit came in last month, they made lesser profit than Q1 2019. In Q1 2019, they made 41.1bn, this quarter they made 40bn. If Wigwe donated the 2bn to the bank's balance books, the profit would have been 42bn and we would not be talking retrenchment or sack. But its the bank's discretion to donate whatever.

GTBank's profit increased by 1.5% this quarter. For Zenith, it was just 0.6% and for UBA, they made a 5% profit. The biggest of the five banks was First Bank which recorded over 50% profit. Most banks usually make the most monies in Q1 and Q2 from my experience in reporting profit and loss. But when banks financials for Q1 are this little- it's like a head above water situation. Every profit, even a 0.1% profit is significant. But for Access Bank's profit reduction and Zenith who recorded a 0.6% increase, it wasn't really good in the real terms of it.

In my analysis, as the banks, and other sectors struggled, the telcos rose up. MTN recorded a hefty revenue of 16%. That was a whole lot, compared to others who struggled to make a profit.

The second argument is the era we are in. I understand Herbert Wigwe's decision. Other economies don't use humans anymore. Nigeria's backward system is the one that depends on several tellers, where international banks utilise a perfect e-banking system. If you watched the movie, "Everything, Everything," the main character ordered a functional ATM from the confines of her house. She even transferred money the same way. Which Nigerian bank can ship you ATM in the confines of your house?

Access Bank has really done well since 2002. They made their dominance from merger and acquisitions. Reading their history, I understand they took over Intercontinental and Diamond. While Intercontinental was not such a bad move, the Diamond merger truly affected their bank books. It increased the amount spent on staff which reflected in their balance sheets. Staff costs moved from N50bn to say 71bn. Hence the reason for increased company income tax that cut their profit after tax to N40bn.

Naturally, I had felt Access Bank would be the best bank after the Diamond merger but the argument I had last year proved me wrong. While banking is the most unstable job ever, most banks have been running lean operations with less staff since time immemorial. GTBank is used to IT and intern staff over degree and masters staff. With small branches clustered above the nation and well-calculated ATM spots, GTBank has managed to hold on as one of the best banks in Nigeria in the top 5 hemisphere with less overhead cost and expenditure in salaries.

With close to 7,000 staff, Access Bank had it coming. You don't keep that much staff without a day of doom. Mostly Diamond bank workers would be cut off and a few Access Bank unnecessary staff will go. You heard the man in the video. Some people were going to go. It's a hard choice but its been made.

Things like these massive shakeups would never happen if they were interest groups like the NLC to drive their agenda. The NLC have never spoken for tech or Bank people before. The bank workers don't have a union neither do tech people. It is easy for Gokada and any big bank to cut people off with no protest except for Twitter sub-stories after which everything dies.

Maybe the bankers' institute should look into this.

Then the final argument is the emotional one. While people think entrepreneurship is a game of no feelings, bad blood is not good. Empathy is better than sympathy. Humanity is first before business. Everyone is free to question Wigwe for giving N2bn to the Government- a wasteful and unthinking government when he could have protected his staff interest. How many of the 26 banks gave to the Government? Not all of them I believe Herbert was doing "Oju aye."

But then, he could have been threatened or coerced into paying the money. That is another angle. I don't believe people are coerced into making donations. Jack Ma wasn't coerced to send Africa PPEs. I guess Access Bank did a wrong CSR move, hurting their workers in that effect.

But nobody forced Access Bank to donate nonetheless.

The impact of COVID-19 has shown that millions will either be out of jobs or forced to take a pay cut until the situation gets better. My Canadian friend has lost her job. Air Canada fired over 4,000 staff. British Airways and millions of workers in Europe have been fired. Why is nobody dragging those companies because like my Canadian friend said, Government is paying them for the loss of their jobs. Everyone that gets a paycheck and support to stay home and fight the spread of COVID-19.

In Nigeria, the case is very different. No money, no job, no food, and yet mass robberies. I have said it repeatedly that we don't think. The bad leaders we have exploited our fragile unity to enrichen their lives. They are still the cause of the coronavirus entering our porous borders. People of Nigeria have chosen to let incompetency thrive and now that we are on the edge of a brink- between the devil and the deep blue sea, the nation is in shambles with a complete breakdown of law and order.

The same rule we made, we are breaking because our leaders never respected them. I still feel Nigerians are the only one that can dictate the kind of government they want for themselves as this government is not taking anyone anywhere. And there is no need for them to spend an extra day in there confused, overwhelmed and just waiting for Bill Gates vaccine.

CBN has come up with something to save retrenched workers. Is it possible to keep staff by force because you don't want them to lose their jobs? Where will the money to pays salaries come from? Read this press release below and form your answers.

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