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-à-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.
