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Economic Recession: Banks, Insurance Firms Slash Workers’ Salaries

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First Bank Nigeria Plc

Hit by the current economic recession in the country, most money deposit banks and insurance firms have slashed their workers’ salaries by between 20 and 50 per cent.

Investigations revealed that Diamond Bank Plc, Heritage Bank Plc, Zenith Bank Plc, First Bank Plc and Wema Bank Plc have reduced their workers’ salaries as of August 31, 2016. This has also been confirmed by management sources and workers in the affected banks.

While Diamond Bank was said to have slashed salaries by 30 per cent, Heritage by 30 per cent, First Bank and Wema Bank workers’ salaries were slashed by 20 per cent each.

It was learnt that the banks tied the decision to cut salaries to workers’ ability to meet deposit targets, which have become unrealistically high in recent time. Hence, workers who failed to meet their targets had their salaries slashed.

Investigations also revealed that some insurance companies have extended the targets of premium generation to their employees.

Before, the marketing departments of the underwriting firms and insurance agents were responsible for generating premium for the companies.

Due to the economic crisis in the country, many insurance firms increased the targets for their marketing departments’ workers with threats of not paying them salaries if they failed to meet it (targets). As such, insurance workers who failed to meet their premium targets, according to industry sources, also had their salaries slashed.

An insurance employee, who spoke to one of our correspondents, said, “Before, it was only the marketers that they used to give targets to. Now, some of us also have targets ranging between N40, 000 and N100, 000 monthly and our promotion and salaries are tied to our performance.”

A Zenith Bank worker, who simply identified herself as Nkem, confirmed the slash in salaries.

Nkem said she resumed work after her annual vacation only to discover that she didn’t get the same salary that she had always received.

Similarly, another Zenith Bank employee, who spoke on condition of anonymity, told one of our correspondents that there was eight per cent cut in their salaries, beginning from August.

The source said the reason given by the bank was that the workers had not been paying the correct tax, hence, the bank had to start the deduction to regularise the tax payable.

On the fear that some workers could be sacked, the source said such fear had always been there, but the current one was beyond description.

He said, “The problem now is that there has not been any promotion since last year, which seems strange.”

An employee of First Bank, who spoke on condition of anonymity, said he had been sleeping and waking up in worry in the past two weeks due to fear of being sacked.

The banker, who just got married in Lagos, said workers had received an email from the bank’s Managing Director about a “new development soon.”

He said, “We have been receiving hints of more lay-offs due to the economic recession in the country, which has deeply affected the banking sector. Some employees lost their jobs two months ago. We also learned that another set of people will be laid off between September and October.”

Ecobank has yet to slash its workers’ salaries, but there is apprehension among the bank’s employees that their pay might be slashed any moment from now.

One of the bank’s senior members of staff, who preferred to be addressed as Handsome Guy, said it had become a tradition among Nigeria’s banks to be imitating one another’s policies, especially those affecting workers’ welfare.

A worker with First Bank Plc, who simply identified himself as Jimson, confirmed to one of our correspondents on Thursday that most bank workers now go to work with the fear that they could be sacked anytime.

“There is perpetual fear in all banks. Every category of workers in the banks is affected by the economic crisis,” he said.

He, however, noted that some bank workers had been resigning and travelling abroad, especially the United States and Canada, to avoid being sacked.

Jimson said, “One of my colleagues just resigned last month because of the fear of losing his job and travelled to the U.S to seek greener pastures. But those who are not interested in leaving Nigeria have devised many means to survive the harsh economy should their letters of sacking come anytime. They are setting up small scale businesses.

“The most common ones are laundry services and restaurants which require capital outlay of N500, 000.

“The academically-sound ones among them have been moving to private universities to take appointments there. The problem is on the high side now. There is perpetual fear among bank workers that they can be fired at anytime.”

The National Union of Banks, Insurance and Financial Institutions’ Employees confirmed the development in the banks.

NUBIFIE Secretary General, Mohammad Sheick, said the issue had become a serious concern to the union.

Sheick said, “There is apprehension in the banking sector. Recently, there was mass sacking by banks and the Federal Government directed that those who were sacked during that period should be recalled.

“We have had about two meetings with the Federal Ministry of Labour on the issue and we are hopefully looking at the possibility of the ministry calling us to another meeting so that we can have an understanding on how to respond to the emerging issues like economic recession and other factors that are affecting the operations of banks.

“Even before the economic recession, the banks have always responded to any policy of the government negatively. The first thing that came to the mind of the banks’ management, which the union has always disagreed with, is to lay off workers.

“They (banks) have to think outside the box and objectively. If they want to cut cost or reduce certain expenditure because of certain government’s policy, then the reality is that they should know where they should direct their attention.

“I can volunteer to say that the thing that eats deep into banks profit and loss is nothing other than the kind of lifestyle of the management staff of the banks. For example, the monthly salary of one executive director is more than the salaries of 100 workers. This is apart from other privileges and perks attached to him as an executive director.”

The Head, Corporate Communications, First Bank, Mr. Babatunde Lasaki, denied that the lender cut its employees’ salaries.

In a response to an emailed question, he said, “This is totally incorrect and unfounded. First Bank staff salaries, allowances and bonuses are being fully paid as and when due.”

The spokesperson of Zenith Bank, Mr. Akin Olaniyan, could not be reached on the telephone. Text message and email questions sent to him were not responded to.

The spokesperson, Diamond Bank, Mike Omeife, denied that the bank had cut the salaries of some of its workers.

The Director-General, Nigerian Insurers Association, Mr. Sunday Thomas, said everybody is a marketer in the insurance firms because they need the premium to operate all the departments.

“It will not be out of order for the companies to give employees targets except the target is unrealistic,” he said.

However, economists said the high deposit targets and the attendant fear by bank and insurance workers could be a strategy by the two industries to survive the current economic reality in the country.

A renowned Economist and Managing Director, Cocosheen Nigeria Limited, Ikeja, Lagos State, Mr. Henry Boyo, agreed that such a measure could be a strategy by banks to remain in business.

He said, “Every sector in the country is affected by the economic crisis, not only the banks. For instance, if a company asks you to pick between being sacked and your salary being reduced, I think most people would prefer the latter option. This could be what is happening.”

Another Lagos-based economist, Dr. Babatunde Abrahams, predicts the mass sacking of workers in banks and insurance firms going by the latest development.

He said, “If anyone has been watching economic trends for a while in the country, you will discover that the sacking of workers is inevitable. Banks trade with customers’ deposits, but I can tell you that very few people have money in banks in this harsh economic period.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Energy

Africa Day 2022: Energy Key to Ending African Food Crisis – ECP

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Brent crude oil - Investors King

Energy Capital & Power (ECP) says enhancing investment and development of the African energy sector will help drive the development of the continent.  

ECP said this on Wednesday while marking the 2022 Africa Day tagged: The Year of Nutrition. It said “Energy is the backbone of every economy. Energy is a fundamental enabler and key driver of Africa’s development. 

“Access to reliable, affordable, and sustainable energy goes beyond simply keeping the lights on, however, but drives industrialisation, agriculture, and infrastructure expansion while improving access to medical, education, and food services,” ECP added. 

Africa’s leading investment platform for the energy sector stated that it remains fully focused on enhancing investment and development across the African energy sector, making a strong case for energy as a key driver of food resilience and climate change mitigation.

According to its official report made available to Investors King, ECP revealed that “Africa is facing a mounting food crisis which has only been worsened by the COVID-19 pandemic. 

“Climate change, political and economic crises, and regional conflict and displacement have resulted in over 346 million people suffering from severe food insecurity while 452 million suffer from moderate food insecurity. 

“While this insecurity continues to have significant consequences on the physical, mental and physiological development of the population, the burden of malnutrition transcends into the socioeconomic space, with the Cost of Hunger in Africa Study estimating that African countries are losing the equivalent of between 1.9 and 16.5 per cent of their gross domestic profit due to child under-nutrition. Accordingly, this year’s Africa Day is being celebrated under the theme, ‘Strengthening Resilience in Nutrition and Food Security on the African Continent,’ centered around the need to strengthen agro-food systems and health and social protection systems for the acceleration of human, social and economic capital development,” the statement added. 

ECP said it believes that ongoing efforts to achieve net zero hunger can be strengthened through the expansion and improvement of energy systems across Africa. Currently, 65 per cent of Africa’s population relies on subsistence farming, and in order to tackle food insecurity, governments across the continent are looking at deploying large-scale modern agricultural systems, systems which require significant energy at every stage of the production stage.

“By scaling up investment in key energy industries, Africa has the opportunity to address two imminent crises: energy and food insecurity. The correlation between improved energy and food security is evident: by strengthening energy access and affordability, countries can strengthen agro-food systems continent wide, tackling food security and driving socioeconomic growth,” said Laila Bastati, Managing Director, ECP.

The African Development Bank Group’s Board of Directors had on Monday approved a $1.5bn Emergency Food Production Facility to help tackle the global food crisis sparked by the Russian-Ukraine conflict. 

Africa’s only AAA-rated financial institution added that the funds will help 20 million African farmers produce an extra 38 million metric tons of food to address growing fears of starvation and food insecurity on the continent.

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Energy

Refining Sector Accounts For 3% of Global Emission – ARDA

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oil refinery

The African Refiners and Distributors Association (ARDA) has revealed that the refining sector only accounts for 3% of the global energy sector emission. 

Oil and Refining Research Analyst, Maryro Mendez, stated this at the second Refining and Specifications Virtual Workshop organised by the ARDA and monitored by Investors King.

According to Mendez, “the refining sector accounts for only three percent of the global energy sector emissions. While refineries’ contribution to global energy sector emissions is low, the opportunities for reducing them are significant.

“Refineries globally have started thinking about measuring, monitoring and reducing carbon emissions and environmental sustainability has to be a priority for refiners and Africa is no exception.”

According to her, because fuel combustion accounts for 80% of refinery carbon emissions, fuel source and energy optimization would provide the greatest chance to minimize emissions.

“The challenge is not technical but is commercial with facilities requiring sufficient incentive and capital to invest without impacting on their competitive position”, she added.

The association further revealed that Nigeria and other African countries would need to minimize sulphur levels while noting that upgrading their existing refineries would require at least $15.7 billion.

Anibor Kragha, ARDA’s Executive Secretary stated that adopting a standardized specification will prevent the importation of fuels that do not match AFRI specifications into Africa.

“New process units required are to improve key fuel specifications, especially Naptha Hydrotreater (NHdT), Diesel Hydro-desulph. (DHDS), Benzene Extraction, Sulphur, and Hydrogen Plants.

“Another key focus area is for African countries, especially those sharing common fuel supply chains to develop an integrated policy covering both fuel quality and vehicle exhaust emissions.

“This is to achieve the ultimate objective of clean air in our African cities. Without this integrated and coordinated policy, the objective of clean air will not be realized whether by imports or local production,” he said.

The idea for an African refinery association was conceived in the late 1970s, and the first sub-Saharan African initiative – the Association of Refiners and Distributors of Oil Products (ARDIP) – was launched in September 1980, led by the SIR refinery in Cote D’Ivoire, with counterpart refineries in Senegal, Sierra Leone, Liberia, Ghana, and Gabon.

Mr Joel Dervain, the then Managing Director of SIR, re-activated the campaign for an association to promote technical and commercial best practices among African refiners and their stakeholders in 2006. The African Refiners Association (ARDA) was then created on March 23, 2006 in Cape Town, South Africa, with the help of his colleagues at SONARA, SAR, TOR, SOGARA, and NATREF.

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Energy

African Energy Chamber to Host Energy Transition Forum at The 2022 Energy Week  

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Oil

African Energy Chamber (AEC) says it will host the Energy Transition Forum, in partnership with public and private sector organisations, government representatives, energy stakeholders and investors in October. 

In a statement made available to Investors King AEC stated that “The Energy Transition Forum will address critical issues such as the lack of adequate funding, the diversification of the energy mix, workforce development, and regulatory reforms necessary to enable Africa to expand its energy sector to address energy security, affordability, access, and sustainability matters”.

“With some 600 million people across the continent living in energy poverty and over 900 million without access to clean cooking, Africa needs to exploit all of its vast natural resources in order to make energy poverty history by 2030. In this respect, stakeholders across the continent are opting for an integrated approach to developing energy resources whereby every resource is utilized in order to kickstart economic growth and electrification. With over 125.3 billion barrels of crude oil, 620 trillion cubic feet of gas, and nearly 16.4 billion short tons of coal, the continent is well-positioned to drive economic growth,” it added. 

Executive Chairman of the AEC, NJ Ayuk, said: “With nearly 66 per cent of the world’s population living without electricity access based in Africa, the continent needs to ramp up the production of all its energy resources including gas, oil, wind and solar to ensure energy poverty is history by 2030. The AEC is honored to host the Energy Transition Forum at AEW 2022 where an African narrative of a just and inclusive energy transition that is fit for Africa will be developed. We will go from Cape to Cairo with a well-defined African message. Africans and the energy sector have a rare chance to define the narrative and we must.” 

The Energy Transition Forum is bringing together investors, regulatory authorities and energy market players to discuss the role of gas in Africa’s energy future and energy transition. The challenges of limited investments in gas exploration, production, and infrastructure development in gas-rich countries such as Nigeria, Algeria, Egypt, Niger, and Mozambique will also be addressed.

According to the AEC, climate change continues to impact Africa, leading to an increasing number of African countries such as Nigeria, Namibia, Morocco, South Africa, Uganda, and Kenya introducing policy reforms and initiatives to scale up renewable energy penetration in Africa. 

Investors King gathered that Nigeria has vowed to achieve climate neutrality by 2060 by increasing the share of natural gas and renewables in its energy mix while Namibia aims to make the development of hydrogen central to its energy policy. At the same time, South Africa has introduced its Hydrogen Society Roadmap to fast-forward the development of local content and hydrogen infrastructure whilst Morocco’s Law 13-09 and Egypt’s net metering scheme aims to expand distributed renewables development.

The chamber added that the AEW 2022, under the theme – “Exploring and Investing in Africa’s Energy Future while Driving an Enabling Environment” will feature high-level meetings and panel discussions where government ministers, investors, academia, and energy market stakeholders will discuss how Africa can attract funding to boost exploration, production and infrastructure development to ensure secure supply while remaining a climate champion. 

The African Energy Week is scheduled to take place from 18th – 21st October 2022 in South Africa at Africa’s premier event for the oil and gas sector.

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