Following a directive by the Central Bank of Nigeria (CBN), banks in the country have started to publish in newspapers the names of their delinquent debtors. But some of the people whose names have been published as owing banks are disputing the debts ascribed them with a few actually threatening litigation.
The publication of the names of debtors is coming on the heels of the July 31, 2015 deadline set by the apex bank for the debtors to pay up. But aside the publications, the debtors are to be blacklisted and banned from participating in the foreign exchange market, as well as trading in the Nigerian government securities market.
To the extent that the impact of taking money from banks and not paying back is felt by the larger society with serious implications for the economy, naming and shaming culprits is a good idea which we support in principle. It is also an action that resonates with the Nigerian public and critical stakeholders. “I think the banks have done well by publishing the names of debtors because it is not good for anyone to borrow money and not pay back; it endangers the economy,” said the Nigeria Labour Congress (NLC) Secretary, Dr. Peter Eson-Ozo.
However, we must also point out that the exercise is not without its downsides. One key tenet of capitalism is the right of customers to some privacy. So publishing the names of bank debtors does indeed violate the confidentiality bond with their customers. It becomes even more egregious if the people so named as debtors turn out to be innocent of the infractions ascribed to them. In any case, the avenues open to banks for recovering sticky loans are many and such include recourse to prosecution and appropriating the collaterals attached to these credits. But the real challenge here is whether most of the loans are collateralised and if they are not, who should bear responsibility for that.
There is another challenge that is peculiarly Nigerian. Many registered companies list the names of their friends and relations as directors, especially if such names are prominent, without necessarily informing them. That perhaps explains why we have seen in recent days many people coming out to dispute the debts charged against them because their names were advertised as directors of companies they claim to know nothing about. In a society where most people hardly read beyond the headlines and where the worst is often believed of our prominent people, reputations could easily be damaged, in some cases, unjustly.
We can understand the intent of the new administration to sanitise our overall public and private sector environments. And we can also see the desperation of some actors who may be out to impress. But there is a need to differentiate between genuine entrepreneurs and business people and the hordes of buccaneers who are all over the place and have for years been indulged by the same bankers who now seem desperate. While we will not suggest that those who borrow from banks should default recklessly on their facilities, the banks must also avoid allowing their professional operational codes to come under undue political stress. Whatever may be the short term gains of the current exercise, we hope it will ultimately not come back to hurt the system.
It bears repeating to state that we are not opposed to the idea of banks recovering their loans and we believe that naming and shaming may be good in a milieu where some people have perfected the art of living on other people’s money. However, in dealing with matters that could impinge on the confidence of the financial system and may affect the reputation of innocent people, caution should guide the approach of the banking authorities
