Adil Najam
This Muslim Commercial bank (MCB) advertisement prominently covers a quarter of the front page of today’s Dawn newspaper (6 August, 2006). I, of course, have no objections to newspapers selling advertising or to advertisers making whatever ads they want. That is their right.
But it is also my right, and our duty, to point out the silliness – and in this case dangers – of the social messaging contained in some ads.
I have long argued that the emergence of a true and well-managed market for credit is amongst the most important things for Pakistan’s future economic progress, because it will level the economic playing field and enhance both opportunity and choice. Having said that, credit is a tricky commodity and needs to be handled – and marketed – with care.
Even in advanced industrialized economies it can go out of hand — in the US total consumer debt is now nearly US$1 Trillion and can lead to countless wrecked lives.
But, back to Pakistan. The type of aggressive — some will say ruthless — advertising of credit that could lead to immense personal tragedy in the future.
Lets looks at this advert. The young, needlessly exuberant, artificially excited, young man in the ad seems to believe and wants us to believe that the best way to ‘celebrate life’ is to buy a bunch of high-end, imported, luxury item that he can otherwise not afford and probably does not need (a guitar, a top-end cell phone/PDA, an even more top end sound system, and a computer ‘literally’ thrown in). Even if he has to get a loan to do so!
This ad is aimed explicitly at students who are told the loan is ‘Fast, Flexible, Affordable.’ Of course, one does not expect MCB to discuss here what better uses a loan could be put to by a student (tuition and education costs, or an entrepreneurial experiment, for example). But one does expect a reasonable bank to advise young people (as they do in many parts of the world) about thinking carefully about credit.
Loans have to be paid back. Targeting this is an age when young people are just moving from a life where someone else paid their bills to when they have to do so themselves. It can be hard enough keeping on top of current bills and thinking about future loan payments can sound too complicated and too far away, while the excitement of that iPod is immediate gratification and an immediate sense of kool!
Even in countries that can afford otherwise, the habits (and mechanisms) of saving so that when they start their life they have something to start it with. Why are we celebrating so excitedly (see, he is literally jumping with joy!) the prospect of our young leaving college with large and unnecessary debts to MCB?
I know this is unimportant but more i see this picture more i think it is doctored. the angle of teh legs and teh torso do not match. seems like they patched two pictures together. you really want to bank with someone who does that!
I wonder…does Pakistan have central credit reporting agencies that comercial banks report customer information to, and that are then consulted by banks, credit card companies, etc to check a prospective customer’s credit history? Because if not, these banks and their shareholders may be getting more than they bargained for in letting loose these ads.
On a positive note, this caricature may just be ridiculous, cynical, egregiously irresponsible and therefore amusing enough to precipitate an interesting series of news stories / features on the real potential but also the great risks of credit.
Banks are awash with cash and not many places for them to invest. Babar Sattar recently wrote a nice article on how the stock exchange is essentially meaningless for investment since only a few companies trade publicly anyways, and a few large shareholders have the means to manipulate the markets.
In such a scenario, it is sad that instead of developing early stage venture funds to promote entrepreneurship, our banks and financial institutions are looking at these kinds of ways of loaning their money for wasteful spending.
For sucess of venture funds we need two ingredients: (a) early stage investments into cool new ideas, (b) exit strategies via public markets (IPO) or acquisition by existing large companies. Both would require banks to play a significant role but they simply haven’t been able to step up to the plate. is it because existing banking staff has no idea how these systems work?
Banks are awash with cash and not many places for them to invest. Babar Sattar recently wrote a nice article on how the stock exchange is essentially meaningless for investment sinc eonly a few companies trade publicly anyways, and a few larhe shareholders retain the rights to manipulate the markets.
In such a scenario, it is sad that instead of developing early stage venture funds to promote entrepreneurship, our banks and financial institutions are looking at these kinds of ways of loaning their money.
For sucess of venture funds we need two ingredients: (a) early stage investments into cool new ideas, (b) exit strategies via public markets (IPO) or acquisition by existing large companies. Both would require banks to play a significant role but they simply haven’t been able to step up to the plate. is it because existing banking staff has no idea how these systems work?
you have a point but banks cannot be responsible for customer stupidity!