Being in charge of banking activities is a form of racketeering? You fix a maximum interest rate for cash deposit and charge anything you want as interests on loans, penalties and different kinds of committals by which corporations are enslaved as cash cows. The money you are operating with is public money, not yours. Let us say you are sitting on 7000 billion dollars and you pay 5 percent interest while grossing 20 percent as revenue from loan interests, overdraft charges, bank draft charges, credit card charges and other cosmetic charges. That will be a cool 15 percent of 7 thousand billion dollars taken by people who are not directly involved in growing the economy. A people who still had to be bailed out in the US by the government when they caused an economic crunch by not looking before they leaped.

This is why I believe the future lies in totally nationalising the banking industry. The revenue they make are like taxes and the system is best controlled by the government to serve as a source of revenue that augments taxes. In effect bank commissioners should be appointed like police commissioners and commercial banking should be a department of the Central bank because if the banking industry fails, it will affect the nation more than any industry, though the industry is performing an abstract function. The function of government too is abstract and both are similarly important and should be grouped together.

If you want to get an idea of what is going on in the banking industry, look at companies like MTN and Globalcom in Nigeria. These are companies essentially working for banks from their inception. The general notion is that they are making a lot of money in Nigeria but the reality is that they are working for banks in Nigeria, in Europe and elsewhere.

When their activities were to be kicked off, they parted with 20 million dollars each to qualify to enter the bidding room to bid for the GSM licenses. MTN and ECONET paid 285 million dollars each for their licenses and Globalcom paid 220 million dollars a few years later. Those were monies for some pieces of papers and not part of the required capital outlay or investment for their operation. When their activities started, it used to cost around one million dollars to set up a single mast. Consider the number of masts in Lagos state alone. I do not know how much it costs now. Then there are many other infrastructures supplied and maintained through contracts by companies like Alcatel, General Electric and etc all of which run into tens of billions of dollars. All of these were financed by banks. There is no other way of financing such projects. It always comes with the banks coming up with conditions that will keep the corporations tied to their apron strings forever. They keep paying interest loans and restructuring the debts till eternity. It often starts in the form of the bank acquiring shares in the company but not ordinary shares that can be easily detected but shares in forms like debentures and etc. This is acceptable to the companies since the companies have no form of collateral for the loans they are seeking. This is the premise on which the goal posts are constantly shifted to maintain these corporations as cash cows of the banks.

So if a company like MTN declares a revenue of 4 billion dollars in Nigeria, between 1 and 2 billion dollars of it might be going to banks for all we know. They still have salaries, diesel and many other expenses to contend with. I do not know the state of their finances but I know MTN is constantly indebted to banks in Nigeria, not to talk of bigger banks in South Africa, Europe and etc. They use high interest utilities like commercial papers.

In many ways, we are all slaves of the bankers and this is one reason I will like to see the cartel crash. The collapse of the banking industry will be very welcomed as it will open the way for a new order of nationalised banks whose income will augment taxes. The institution taking income tax should be the only one with a banking license.

This does not mean some corporations are not doing very well but most of them are corporations built by innovation and/or grit like Apple, Microsoft and etc.

I really do appreciate your analyses for I know not there exist a master-slave relationship between these telcos and banking corporation, however if your pointer is an excuse to justify the terrible services these telecommunication companies provides us in the expired amalgamation borne of a British experiment called Nigeria then I beg to disagree.

ghostofsparta:
I really do appreciate your analyses for I know not there exist a master-slave relationship between these telcos and banking corporation, however if your pointer is an excuse to justify the terrible services these telecommunication companies provides us in the expired amalgamation borne of a British experiment called Nigeria then I beg to disagree.

I am not using this post to justify incompetence. Not at all. It is to make a case for a new kind of economic system where commercial banking is run as an arm of government and where interests from loans augment tax revenue.

There are many other ways through which the telecom can raise there capitals of which bank loan is one.
Why can't the telecom coy explore other means of finance. Venture capital financing, Stock exchange, leasing, infrastructure subleting are one of the mean of financing their projects.

Not capital will come free, but the finance cost may be reduce through a good loan portfolio management.

omowolewa:
There are many other ways through which the telecom can raise there capitals of which bank loan is one.
Why can't the telecom coy explore other means of finance. Venture capital financing, Stock exchange, leasing, infrastructure subleting are one of the mean of financing their projects.

Not capital will come free, but the finance cost may be reduce through a good loan portfolio management.

Company boards use loans because venture capital changes ownership structure. A 100 million dollar company can get a 5 billion dollar loan if the business is lucrative and they can convince the bank board. That was obviously how Globalcom was financed. The banks will become technical owners of the business if the business owners are not able to come out of the debt as fast as envisaged and they won't be able to.