As they Hail the Monetary Reforms

The Governor of Central Bank of Africa’s most populous nation, Mallam Sanusi Lamido Sanusi could be likened to a bus driver, a no nonsense one for that matter who the owner of the bus, initially late President Umaru Musa YarAdua and now President Goodluck Ebele Jonathan had entrusted with the enviable task of driving to the promised land.
 
To successfully drive the green white green bus christened the ‘Nigeria Banking Industry’ Sanusi, of course had to work with some bus conductors who in this instance are the top management staff and other categories of staff of the CBN.
 
The reforms, the actions and other steps taken to address monetary issues and fine-tune the financial system, in the last 12 months under Sanusi came with attendant criticism as well as accolades from local and international institutions.
 
In an environment where the elites hold sway and determine levels of public opinion, the current administration of President Goodluck Jonathan recently came out to commend the efforts of the Central Bank governor in reforming and repositioning the banking sector in Nigeria .
 
After a meeting of the Federal executive Council (FEC) professor Dora Akunyili, the Minister of Information and Communication, said CBN under Mr. Sanusi had ensured steady growth in Gross Domestic Products (GDP) and a moderation in inflation, interbank rates, and other money market, as well as lending rates, among other monetary indices.
 
This endorsement by the Federal Government came few weeks after similar accolades from the Senate President David Mark who reiterated the massive support of the National assembly for the ongoing banking reforms of CBN. At Arewa Consultative Forum in Kaduna , David Mark said the public rebuttal of the CBN and the EFCC by some elements in the system was wrong and amounts to engaging in guerrilla tactics to distract the government institution.
 
For its resolve and doggedness to sanitize the banking sector and ensure that operators play by the rules, the bank bagged the Regulator of the Year Award by the Leadership Newspapers Group Limited, just as the Governor of the Bank, Sanusi Lamido Sanusi was awarded the Person of the Year for his steadfastness in articulating the vision and policies that have helped to sanitise and instilled confidence in the banking sector and stem the economy from total collapse.
 
The first female Minister of Finance, Dr. Okonjo-Iweala also lauded the on-going reform in the banking sector. Okonjo-Iweala who is World Bank Managing Director however said the sector must be open and transparent, if the reform is to succeed. She spoke at the inaugural graduation ceremony of the African University of Science and Technology (AUST) Abuja which she chairs the Board.
 
According to her, “It is a good thing that we are transparent and open about our banking sector. The Central Bank Governor (Dr. Sanusi Lamido Sanusi) is doing a good job in that area. I think the consolidation of the banking sector was a good thing but now it is time to have a strong supervision and risk management and the CBN Governor is doing it. He is doing a good job, I should say.”
 
On its part European Investment Bank (EIB) has expressed satisfaction over the on-going reforms in the banking sector in Nigeria saying that they will stimulate sustainable growth, expand private sector.
 
The Vice President of the EIB, Plutarchos Sakellaris said the approach taken by the CBN is similar in substance to moves taken by financial regulators both across Europe and beyond at a time of global economic turmoil, challenge and questioned confidence. 
The vice president was particular about the CBN governor’s liquidity support and recapitalisation. He said measures to support liquidity in Nigeria’s banks and recapitalisation improved confidence not only in the potential of Nigerian banks to stimulate sustainable growth through proven best practice, but also play a greater role in helping the private sector to expand.
 
Other institutions have noted that the efforts of the CBN also mirrors the global best practice on investing in projects that promote economic growth and foster private development, especially where there is a strong potential for this benefit to be delivered to the wider region.
 
All these commendations came within first year of Sanusi’s tenure.
 
On June 4, 2009 when he took over the bus from its former driver, Prof Chukwuma C.Soludo, Sanusi, who had been one of the passengers in the bus knew what the condition of the bus was, what the former driver did well and what he did not do but should have done and other areas where the other driver failed.
 
Few weeks after taking over, Sanusi surprised the media with his simplicity and openness when he told them that they should not stand up for him but stay glued to their seats whenever he arrives to address them in the CBN Conference hall. He also permitted the media to freely ask as many questions as possible without any inhibition and on any topic under the sun concerning the Nigerian banking industry. Those singular acts endeared him to many journalists who most of the time did not really find fault with the way the mallam drives the reform bus.
 
The first thing he did, which is what all other good drivers will do on taking is to check the health of players in that sector. His finding was to say the least unsavoury. He was astonished that to see that amount outstanding for banks at the Expanded Discount Window [EDW] was N256.571billion, most of which were owed by five banks. Alarmed by this, Mallam Sanusi ordered examinations of the banks.
 
The result of the examination released on August 14, 2009 showed that five banks, Intercontinental Bank, Union Bank, Afribank, FinBank and Oceanic Bank were in a very precarious predicament. He did not waste time in giving the Managing Directors (MDs) of the banks the boot by replacing them. Three others, MDs of Bank PHB, Spring Bank and Equatorial Trust Bank were also replaced after the final audit examination.
 
For the sick banks to continue as a going concern, Sanusi injected N620billion while exploring other recapitalization options.
 
In spirited efforts to drive the reform bus to the promised destination, Sanusi outlined some steps such as the establishment of financial stability, enhancement of the quality of banks, enabling healthy financial sector evolution and ensuring that financial sector contributes to the financial economy.
 
Strategies line up to actualise these goals were the establishment of  Asset Management Corporation of Nigeria [AMCON] which is expected to absorb all the toxic assets of the sick banks running into N1.5trillion, mergers and acquisitions, banks’ categorization and formulation of licensing guidelines.
 
Other measures adopted included tighter regulations, adoption of risk based supervision, adequate consumer protection and the reform of the CBN itself.
 
Despite the outlined series of reforms, many of the stakeholders were not in agreement with the way he is driving the reform bus.
 
Though Sanusi averred that all his actions were in line with the relevant provisions of Banks and Other Financial Institution Act [BOFIA], many of the stakeholders disagreed, alleging that Sanusi had no right whatsoever to sack any bank boss without giving the officers concerned a fair hearing and allowing the shareholders of the banks to perform their constitutional roles as stated in the Company and Allied Matters Act [CAMA].
 
The shareholders also alleged that they were not carried along in the move to put up the ailing banks for sale, merger or acquisition and in the tenure fixing for banks CEO. They accused Sanusi of hiding under BOFIA to perpetrate what the shareholders des
cribed as unholy actions.
 
The shareholders further alleged that Sanusi had no right to sell any privately or public owned banks while they conceded to him the power to impose sanctions on banks that contravene rules and regulations.
 
Legal thoughts sought on Sanusi series of reforms by the Economic Confidential indicated that the development was about the sanctity of the law and the protection of basic rights as enshrined in the constitution of the Federal Republic of Nigeria.
 
The legal luminaries opined that Sanusi could not pass retroactive laws, stressing that BOFIA confers on him the power to approve licenses and appointments into the board and senior managements of banks but certainly did not grant the CBN governor power to remove them without any cause.
 
From the look of things , it is quite certain that Sanusi did not carry many of the stakeholders along in some of the actions he took, a situation which made them alleged that he was actually pursing a northern agenda in his reform processes.
 
However, Sanusi was quick to point out that the shareholders in the trouble banks had lost their shareholdings in these banks and thus could not have been laying claim on anything.
 
He has also been using every available fora to tell those who care to listen that the sales, merger/acquisition of the sick banks would not be handled by the apex Bank but by the board and management of these banks.
 
Pointing out that he was not pursuing any agenda, northern or southern, Sanusi sarcastically stated that if he actually wanted to pursue northern agenda’ the best northern agenda would have been to allow the sick banks to die so that everybody , both south and the north will now be on the same level.
 
He said his altruism action was borne out of the concern for million of bank depositors and creditors in these banks whom he said were the true owners of the banks and not the shareholders.
 
As it is now Sanusi is loved by many and hated by many as a result of his banking sector reform programmes.
 
While he is perceived to be operating an open door policy, his door, according to others is not open enough to accommodate other peoples’ ideas.
 
Whether Sanusi is playing his card well or not, those who employed him are not complaining, at least ,not yet, Sanusi still have four more years to prove that he is a very good driver of reforms, the audience, including the media are on standby to tell him whether the reform bus is on the right track or not.

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