FINANCIAL PUBLIC RELATIONS By Yushau A. Shuaib

Financial Institutions

Home
Foreward by Prof. Jerry Gana
Preface by Senator J. M. Kuye
Introduction
Financial Environment
Public Finance
Financial Institutions
Public Relations Concepts
Financial Public Relations
Marketing Concepts
Advertising and Integrated Communication
In-House and Consultancy
Target Publics
Research in PR
Budgeting in PR
Planning in PR
Regulating Financial Information
Getting Started and PR Unit
Basic Functions
Requirement for Media Event
Annual Events
Publications
Social Responsibility
Information Technology
Reputation Management
Crises Management
Media of FPR
Corporate Identification
Building Brand
Membership of Professional Bodies
Conduct and Ethical Standards
Conclusion
Appendix NIPR Code
Appendix II: IPR Code
Appendix III: PRSA Code
Appendix IV: IPRA Code
BIBLIOGRAPHY
Contributions and Reviews

FINANCIAL INSTITUTIONS

Many people always have the perception that financial institutions end with profit making. There are several institutions operating within the financial system, engaging in financial activities but are not operating like the popular banking sector. A renowned Nigerian economist, Dr. Pius Okigbo(1998) notes that “Financial institutions and entities perform a wide set of functions.” He observed that there are those who ensure that there is an adequate stock of money to service the need of the economy. Such institutions are called monetary financial institutions, e.g. the Central Bank, and commercial banks. He argued further that not all financial institutions, however, perform these roles for this function applies only to those institutions that can increase or decrease the stock of money through their actions. There are others, the non-monetary institutions, whose function   is to facilitate the transfer of money between economic units. The actions of both types of financial institutions affect the level of employment, income and prices.

            Financial Public Relations is viewed vis--vis the financial institutions operating within a dynamic financial system. A Financial Institution is defined as “any institution that deals or trades in the use of money”(Agene 1990). Financial institutions are responsible for the introduction, utilisation and protection of financial instruments as well as engage in borrowing and lending of money.

            The objective of employing public relations in well-established financial institutions is   to establish and maintain effective contact with the stakeholders. Firstly are their customers, shareholders, and employees who directly influence the major decisions of the companies. Then, there are the government, regulatory bodies, the legislature, the media and the general public. The understanding and cooperation of all the stakeholders is essential to success. Effective strategies are planned towards securing and promoting organisations and indirectly, their services and products in a highly competitive world.

            Financial institutions require the application of public relations attitude and practice.  The correct attitude is necessary towards securing favourable public opinion by the conduct of the employees to the customers. That is why a comprehensive code of conduct on good bahaviour, training in the art of communication and adequate knowledge of the economy and the financial terrain are must for public relations man in financial organisation.     

            Notable financial institutions in the country include the Ministry of Finance, revenue agencies, central bank, commercial and merchant banks, development banks, insurance firms and the stock exchange.

            The roles of financial public relations cannot be over-emphasised when we examine the number of financial institutions springing up everyday and the dynamism of the media in digging into any organisation’s operation, activities and programmes and reporting their findings without clearance.

            It may take clear distinction between products and services offered by the financial institutions before one can differentiate their individual roles to the economic advancement of a nation. The services come in various shapes and degrees. Most of the time, the services, unlike products, which are visible and physical, are intangible and invisible. Some of these services offered to the public include current, fixed and short deposit accounts transactions; loans, advances and overdraft facilities; money transfer and signing of performance bonds, financial advisory roles and several others. On the public sector, the financial services are the economic policies of the government, which may include those geared towards addressing price control, salaries and wages, credit restriction, fiscal and monetary policies, among others.

Hardly is there a news medium that does not allocate space or time to financial reports, feature articles on economic issues or business programmes (electronic media) on a regular basis, as the public develops unprecedented interest in economic activities around.

            When sponsored seminars, conferences, annual general meetings, press briefings and social activities organised by financial institutions toward creating public awareness, fail to achieve expected results, the intervention of a professional public relations person with adequate knowledge of economic matters becomes inevitable.

            To fully understand the roles of financial institutions in the country, it becomes imperative to examine briefly some of them and their functions in the financial sector.

 

REVENUE AND REGULATORY AGENCIES

Since government relies solely on its revenue agencies to achieve its fiscal goals, it has the entire citizenry as its customers and clients. Any levy or tax imposed on them must be widely acceptable to avoid mass evasion. Notable government revenues are attainable through its established relevant revenue generating agencies. Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) are the major government agencies that monitor and collect revenues for the government. Their responsibilities go a long way in determining the country’s annual budget. Even though it may be argued that FIRS is charged with collection of VAT and the Nigerian Customs Service with collection of import duties, there are other levies and taxes, which are under their control. Such taxes besides VAT, include income tax, export tax, excise tax, import duties, expenditure tax and sales tax, among others.

            Despite the fact that other government agencies are charged with collecting revenues on their behalf, FIRS and NCS have an existing cordial relationship that ensures tremendous revenue generation to the government coffers from the non-oil sectors.

            According to J. K. Naiyeju, in his book, Value-Added Tax: the Facts of a Positive Tax in Nigeria, the cooperation of the two agencies is very unique and lends greater support to the success of the VAT scheme in the country. He added that it was possible to harness the technical skills and professional experience of the two collection agents for the success of their task.

            The importance of public awareness in influencing the taxable and leviable individuals and groups to cooperate with the agencies is glaring. Tax imposition on the public can only succeed once the reasons and benefits derivable by the citizenry are made known to them. In fact, in the observation of Naiyeju, any tax can easily be misconstrued as a strategy by government to squeeze life out of certain individuals and industries to raise money unduly or to promote inflation if there is no adequate information to allay their fears.

            On the other side are also the regulatory bodies that monitor the activities in the financial environment. Notable are the Securities and Exchange Commission (SEC), which regulates the capital markets, viz the Nigerian Stock Exchange, the Commodities Exchange, and the Nigeria Deposit Insurance Corporation (NDIC) which monitors the banking sector’s compliance with the rules on investors’ funds. On the insurance industry, the National Insurance Commission ( NAICOM) has been very active in promoting good ethics of the profession and strikes whenever necessary, if any insurance firm defaults in its dealing with its clients or fails to abide by the statutory provisions.  

 

 CENTRAL BANK OF NIGERIA (CBN)

The Central Bank of Nigeria, which was established by the Central Bank Act of 1958, to formulate and execute monetary policies, provides financial services ranging from issuing and destroying legal tender currency as necessary.

            It is a banker to the government, bankers’ bank and participates in contracting external loans for the country.  The bank likewise floats and underwrites loans on behalf of the government.  It plays significant roles in the efficiency and success of clearing houses and facilitates banks’ interactions.

            Another notable objective of the Central Bank is providing sound monetary policies such as relative price stability, interest rate structure, reserve requirement, banking supervision, protection of the financial system, employment growth, curtailing inflation, determining the liquidity and asset ratio and developing specialised financial institutions in the public sector.

 

COMMERCIAL BANKS

Commercial banks are institutions authorised to provide retail-banking services to the public.  The first commercial banks in Nigeria were Bank of British West Africa (First bank) and Barclays Bank (Union bank), which operated between 1894 and 1933 before the first indigenous bank- National Bank of Nigeria came in 1933. Commercial banks, over the years, are noted for providing services including savings, current and term/fixed deposit accounts, lending, payment and transfer of money now facilitated by recently introduced online banking.  The commercial banks in the country are also facilitating the transformation of rural areas by extending banking services there.

            They also offer professional advice to their clients on viable businesses and international trade.  Apart from being the channels for the implementation of monetary policies from the Central Bank, they also act as authorised foreign exchange dealers in providing such facilities.  Customs agencies, Nigeria Telecommunications Limited (NITEL), Federal Inland Revenue Service (FIRS), as well as other government and non-governmental agencies, use the bank to collect their dues from their respective clients and customers.  With the sophistication of the financial system in the country, some commercial banks sponsor companies seeking quotation on the Nigerian Stock Exchange.  They buy and sell securities on behalf of their customers and boost the securities in the capital market.

 

MERCHANT BANKS

Merchant banks started operations in 1961 with the establishment of Philip Hill (Nigeria) Limited which later merged with Nigerian Acceptances Limited in 1969.  Other merchant banks later followed suit.  Due to the non-recognition of universal banking then, the merchant banks in Nigeria operate wholesale banking, which involves loan syndication, equity and debt issues, ventures capital and equipment leasing.  They play prominent roles in pooling a consortium of banks, where the borrowing required exceeds availability of funds from commercial or any other bank.  They also introduce their big clients to the Nigerian Stock Exchange and handle international transactions through a global network of affiliated banks. The banks are usually sited at urban areas and provide services to large organisations and extremely wealthy individuals.

 

UNIVERSAL BANKING

Until recently when the Federal Government introduced the Universal Banking concept, operators of merchant banks had complained that their poor performances over the years was due to a banking system that they claimed favoured commercial banks. The clamour for one-stop-supermarket bank became noticed in the mid 1990's when the financial system was swept by the distress in the banking sector. This virtually wrecked havoc on the economy. Many people have observed that the distinction between commercial and merchant banking is out-dated and no longer fashionable in other developed countries.

The harmonised banking service is seen as cost-effective for providing a level playing field, where a customer can open an account and engage in all banking and insurance transactions from one bank to the other. The new banking concept offers a wider range of banking services, which include retailed banking, capital market activities and insurance business. The banking environment will no longer be restricted to certain functions. The new banking services commenced in January 2001.

 

INSURANCE FIRMS

Insurance firms provide financial compensations for a specified loss or damage resulting from risk of any sort by a customer who pays regular premiums on contracts.  They are the undertakers of life and general risk of financial loss in return for the receipts of a premium, which they charge clients, depending on the class of insurance required. The first insurance company in Nigeria was Royal Exchange Assurance, established in 1921.  Insurance providers go by many names, which include insurers, re-insurers and loss adjusters.

 

DEVELOPMENT BANKS

Development banks were established by the government, to promote national economic development. They tend to address issues of low income, insufficient savings and inadequate investment.  The government and multilateral agencies sponsor the banks. The first development finance institution is the Nigerian Local Development Board, which was established in 1946 and charged with the responsibility of giving loans and grants to native authorities, cooperative societies and other public bodies for prescribed development projects (Agene 1990). Notable development banks include, Nigerian Industrial Development Bank, Federal Mortgage Bank of Nigeria, Nigerian Bank for Commerce and Industry, Nigerian Agricultural and Cooperative Bank, Peoples Bank of Nigeria and Nigerian Educational Bank. Others include, National Economic Recovery Fund (NERFUND), Community Banks, etc.

 

LISTED COMPANIES

There are other companies that are big and profit-oriented which are quoted on the stock exchange. Such companies are also requested to publish their annual statement of account and have a large public which they must communicate with regularly. Some of those firms include those dealing in manufacturing, conglomerate, pharmaceuticals, agro-allied, telecommunications and Information Technology. Others are into food and beverages, industrial and domestic products, printing and publishing, construction and engineering and petroleum marketing.


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