An Exploration of the Nigerian Banking Industry

SGOXXX10.1177/2158244013491950SAGE OpenDumbili 491950research-article2013 Article SAGE Open April-June 2013: 1 –12 McDonaldization and Job Insecurity: © The Author(s) 2013 DOI: 10.1177/2158244013491950 An Exploration of the Nigerian sgo.sagepub.com Banking Industry Emeka W. Dumbili1 Abstract The article examines how and why the McDonaldization of banking system in Nigeria engenders job insecurity. This is imperative because it provides an explicit revelation of the root causes of job insecurity in the sector that other scholars have totally omitted. No Nigerian scholar has applied the thesis in relation to job insecurity, which is the major problem in Nigeria’s banking industry. The article based on the analysis of secondary data and observations, therefore, draws on McDonaldization thesis to examine the upsurge of rationalization in the sector since consolidation exercise began in 2005. The article argues that the sector’s rising rationalization and ensuing efficiency, calculability, predictability, and control are necessary. However, these have inevitably engendered job insecurity and its adverse consequences. Based on the critical analyses of available evidence, the article concludes that the best option is to commence resistance of the McDonaldization processes, especially those that replace human with nonhuman technology or make customers unpaid workers. Keywords consolidation, labor casualization, job insecurity, McDonaldization, Nigerian banking industry, rationalization Introduction collapse of the global oil market that the nation heavily relied on, and on the other hand, the economic crunch orchestrated The banking industry occupies a crucial position in any by poor planning and recklessness on the part of leaders dur- nation’s economy because it sets the financial pace for other ing the oil boom (Fapohunda, 2012; Ogujiuba & Obiechina, sectors to follow. It is the backbone of the economy and 2011). The distress in the economy led to the introduction of plays the role of financial intermediary and facilitator for the Structural Adjustment Programme (SAP) in 1986. The dis- implementation of every other monetary policy. Success of tress further resulted in major reforms in the banking sector the sector engenders the development of other sectors it ser- (Fapohunda, 2012; Ogujiuba & Obiechina, 2011). vices, while failure may orchestrate a threat to the develop- The reforms gave rise to deregulation and neo-liberal pol- ment of the rest of the economy. In what is now known as icy by the then government that attracted many people into Nigeria, the sector has been in existence since 1892 follow- the banking sector. The reforms and the eventual introduc- ing the establishment of the African Banking Corporation tion of contract employment marked the point of departure that later became known as Standard Bank (Ogujiuba & for job insecurity in the Nigerian economy. Irrespective of Obiechina, 2011). the reforms, the sector was still ailing, and this gave rise to The establishment of Standard Bank served as an impetus other reforms in the 1990s. A major feature of the reforms is for other banks to commence operation in Nigeria. This gave that each time it takes place, bank workers will lose their rise to the establishment of indigenous banks and the sector jobs. Between 1996 and 1998, the sector witnessed six merg- began to grow to a point where there were more than 20 ers (due to different reforms) and lost “88 net job” (Gunu & indigenous banks in 1947 (Samuel, Osinowo, & Chipunza, Olabisi, 2011, p. 35). The sector continued to lose staff due 2009), but the growth was not without a problem. In fact, to failures of banks to the point that, between 1990 and 2000, between 1947 and 1952, for reasons related to corruption, abuse of power and improper regulations, and so on, 21 1Department of Sociology and Anthropology, Nnamdi Azikiwe University, indigenous banks collapsed leaving only 4 banks in opera- Awka, Nigeria tion (Samuel et al., 2009). Nigeria obtained its independence in 1960 and soon after Corresponding Author: Emeka W. Dumbili, Nnamdi Azikiwe University, experienced an oil boom that seemingly normalized the sec- PMB 5025, Awka Anambra State, Awka, 234, Nigeria. tor. This was short-lived again following in part to the Email: [email protected] Downloaded from by guest on June 5, 2016 2 SAGE Open 24,222 bank employees lost their positions and the major revealing the role of McDonaldization that postconsolidated reason for this was that in 1998, 26 banks ceased operation banks pursued as the creator of job insecurity in the sector. It due to bankruptcy (Gunu & Olabisi, 2011). not only contributes to the literature by exploring this in light The failure in the sector, therefore, necessitated another of a developing economy but also furthers the debate by reform in 2004, and the Central Bank of Nigeria (CBN) in explicating how and why McDonaldization process and con- charge of the reform mandated each of the 89 existing banks solidation can generate more job insecurities in a fragile to recapitalize to increase their capital reserve from two to economy such as Nigeria than it does in a more stable econ- twenty-five billion naira. This recapitalization was to be omy. The article is divided into five sections. The section completed before December 31, 2005, or the failed bank “Theoretical Framework” will deal with an overview of the would be liquidated (Abefe-Balogun & Nwankpa, 2012; theoretical framework that will be followed by the concep- Ogujiuba & Obiechina, 2011). This led to bank mergers or tual clarification of job insecurity. Then, it examines based acquisitions, and that reduced the number from 89 to 25, on available evidence how and why the McDonaldization while 14 that could not beat the deadline were liquidated process engenders job insecurity in the consolidated Nigerian (Elumilade, 2010). This merger meant a major threat to jobs banking industry in the section “McDonaldization of the (Gunu & Olabisi, 2011) because it precipitated massive Nigerian Banks and Job Insecurity” before the concluding retrenchment. The postconsolidated era that began in 2006 remark. engendered internal reforms among the surviving banks and all the banks adopted different aggressive measures to ensure they remained relevant in business. Theoretical Framework There was a massive explosion of technology that gave The McDonaldization Theory rise to “techno-based banking” (Dumbili, 2013). This is because the surviving banks began to acquire information and This was a sociological term coined in 1993 by George Ritzer, communication technology (ICT) that never existed in the the American sociologist, in his book The McDonaldization preconsolidation era and aggressive marketing and extreme of Society (Ritzer, 2000), where he explained the increasing competition became the norms. Emphasis on efficiency and rationalization of modern human society. Ritzer used the need to satisfy customers at the shortest possible time now McDonaldization to reconceptualize Weber’s rationalization attracted attention (Dumbili, 2013). The innovation led to the of bureaucratic organizations and how it operates in introduction of an electronic banking system nationwide McDonald’s restaurants. He went further to show how the (Abefe-Balogun & Nwankpa, 2012), and one of the impacts McDonaldization process has spread to every sphere of post- was that many bank employees lost their jobs, while those modern society (Ritzer, 2000). He pointed out that the process who were lucky not to have been sacked began to live in fear of McDonald’s fast-food industry, which is highly rational- of losing their jobs any time. Although few recent studies ized, has increasingly dominated, not just American life, but (e.g., Adeleye, 2011; Adenugba & Oteyowo, 2012; Gunu & is becoming widely spread globally. Olabisi, 2011) have pointed out different reasons for the job McDonaldization to him is “the process by which the insecurities, however, there is inconsistency in the line of principles of fast-food restaurant[s] are coming to dominate their arguments on the causal factors. more and more sectors of American society as well as of the Against this backdrop, the article draws on Ritzer’s rest of the world” (Ritzer, 2000, p. 1). Ritzer explained that McDonaldization thesis to examine how and why the ratio- in a typical McDonalds restaurant, four main principles nalization of the sector leads to the incessant job insecurity in direct the operation of food production from preparation, the Nigerian banking industry. This article, which draws on serving, and down to the consumption of food. These prin- secondary materials and personal observation, argues that ciples are efficiency, calculability, predictability, and con- even though the sector has experienced job insecurity prior trol (Ritzer, 2000) or replacement of human with nonhuman to 2005, the postconsolidated era that incorporated ICT- technology (Ritzer & Stillman, 2001). He added that the based banking in quest for efficiency and cost cutting, applications of these principles often result in the fifth increased the malaise. The article aims at examining the dimension that (mostly unintended) he referred to as irratio- extent to which the introduction of techno-based banking nality of rationality (Ritzer, 2000). McDonaldization con- and other features of McDonaldization (since consolidation notes increasing rationalization of everything or departure began) in quest for efficiency facilitated massive retrench- from traditional to

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