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Wednesday, February 20, 2013

SANUSI’S CBN: STILL BUSINESS AS USUAL


        The appointment of Sanusi Lamido Sanusi as the new governor of the central bank of Nigeria (CBN) in May 2009, heralded a new era in the management of the Nigerian banking industry, with many observers viewing the appointment as a watershed in the history of central banking in the country looking at his antecedents and state of the banking industry at that period; but as of today, one wonder whether the radical Sanusi the world knew at that time has moved to the other side. First of all let us start with his promise to bring down the cost of banking in the country. As things stand now (the end of his five year tenure at the bank) Sanusi has failed to achieve that goal he set for himself, rather the cost of banking has increased. Interest rate the most important cost item to the banking public remain high in tandem with the national rate of inflation which fail to come down to a single digit. The hidden charges banks subjected their customers to continue, albeit with some acquiring new names as they drop their former names under the disguise of abiding by CBN requirements for banks to remove certain charges perceived by the apex bank as responsible for the high cost of banking in the country. The fact that the number of queues has double in most bank’s halls is another cost to the banking public as it has negative effect on efficiency and productivity.
     It was a wrong position and a fallacy of generalization for those who saw Sanusi as pro-poor; by pointing out his radical views and his school days in ABU Zaria, as a proof of their argument. Yes in his writings and some of his public comments Sanusi is some kind of a sympathizer for the masses and pro-poor policies (we should not forget his well articulated exposition on the concept of Buharism), but his actions (more especially as governor of the central bank) betray him. Being a banker for most of his working life, though not all bankers are pro capitalism despite the fact that substantial numbers of them are, Sanusi is naturally a supporter of laissez-faire economic doctrine. His called for the reduction of federal workers (despite the nationwide unemployment and poverty in the land) smells of Washington consensus agenda; likewise his stand on fuel subsidy removal. His coming out from an aristocratic family might not necessarily make him antagonistic to policies that empower the masses, as there are many examples of members of royal families who were at the forefront of entrenchment of pro poor programs, Dr. Yusuf Bala Usman readily comes to mind. But, Sanusi’s wholehearted support for Jonathan’s World Bank-IMF economic policies which are in agreement with capitalism complete his depiction as a capitalist.  
   Though, it is to his credit that he has bring back a relative sanity into the banking industry by his proactive measures that saw him sacking the chief executive officers of some ill govern banks, blowing the whistle on chronic bank debtors and injecting money and CBN management to enable those banks to stand on their own; there are still more that need to be done. For example, it is more difficult now than before for an average businessman in need of capital to expand his business to secure loan from the present banks, the high cost of interest apart. This is not helping the Nigerian business climate in any way. In the foreign exchange market, there are still many shady activities going on, despite the CBN vow to streamline it. As it has become clear to almost every person in the country, US Dollar is on it way to become the official legal tender in the country, dethroning the Nigerian Naira from there the CBN itself, as our monetary policies will henceforth be coordinated from the Federal Reserve in Washington DC. Though, there are of recent some marginal increases in our foreign reserve, the value of our Naira against the US Dollar remain as it were since the coming of Sanusi as CBN governor. This to some people is called stability in the value of the Naira, but what of the devaluation in the value of the Naira against the Dollar.
     It is also another of his achievements that he has brought to an end the era when Nigerian banks were highly obsessed with becoming number one bank in this or that at the expense of the quality of their balance sheets; a period when banks spent what they don’t have to win awards bestowed by local and international newspapers. As we put that period behind us, there are still other concerns; recently there were fears concerning the soundness of some of these banks. It was alleged that some banks are hiding problems from the eyes of central bank’s inspectors, thereby, putting a question mark on their health. It will add to the integrity of Sanusi if he will ensure that he finishes his tenure at the apex bank without the return of what happened in the banking industry before him. The shadow of the financial crisis of 2008/09 in our local banking industry still remains; banks still fight to sort out the bad debts that accrued from that period. It is because of the ripple effects of that crisis in the industry that up till now most of the loans given out by these banks goes to the public sector, comprising federal and state governments. This has the effect of crowding out the private sector, hence, the earlier complains of the death of credit to the private sector.

Saturday, February 2, 2013

A LOOK AT OUR COMATOSE ECONOMY


          The last to be release global corruption index (annually authored by Transparency International’s team) ranked Nigeria among the most corrupt countries in the world. This is not the first time that Nigeria will be ranked at that level, as the previous rankings have shown. Corruption has become a kind of survival blood for Nigeria’s strange economic and political systems without which government and business could not function effectively. A minister and his directors in a typical Nigerian ministry expect you (a contractor) to disclose to them their share in a yet to be awarded contract before you get the assurance of getting the contract. A businessman lower the quality of work awarded to him in order to maximize his last profit. A middle level government employee or that of a business organisation expects you to give him a large chunk of money (at hand) before giving you an appointment letter to work in his organisation; or some percentage of your salary in the event that you do not possess the money cash in hand. A university lecturer award marks to you when you bring gifts to him or connect him with important people in government or business. A journalist expects a brown envelop to write a favourable story on you or your organisation or cancel a yet to be published damaging story on you. An employee of a local government refuses to go to office until at the end of the month when he is expecting his name to be included in that month salary Boucher. An average Nigerian religious leader surrenders his neutrality and fear of God in order to be at the service of the powerful in exchange for a share of their ill gotten wealth. A typical Nigerian voter expects some token amount before he queues in the sun to cast his vote for you.

   In one of the most exposing report about the Nigerian oil industry released by Nuhu Ribadu committee on the Nigerian oil industry, the country is said to have lost trillions of Naira to thievery by government officials in conjunction with international collaborators. But, the very government that set up the committee jettison it when it found out that the findings of the report is too much for it liken as the report touch many people connected to power in the country. Since the return to democracy in 1999, the Nigerian power sector has consumed trillions of Naira without improving the national supply of light beyond the level left to the civilian when the military hand over power. The power sector together with oil sector is one of the biggest corruption corridors in the country where corruption has become the order of the day. Nigerian newspaper editions of the last few weeks were filled with stories on the plan by ministry of agriculture to distribute mobile phone worth N60 Billion to rural farmers. What a waste of money and opportunity to steal public funds by those in power at the ministry! A ministry that cannot provide the Nigerian farmer with enough fertilizer and other farm inputs is talking of given mobile phone to farmers, what a lost of priorities! According to most estimates, Nigerian farmers account for about 70% of the country population and contribute more than 40% to the country’s gross domestic products; but all these notwithstanding; the sector is the most neglected in the country.


    On the state of infrastructures, the story is the same despite our claim to being the second biggest economy in Africa. Our roads kill thousands annually because of lack of maintenance of existing ones and construction of new ones. Though, the present regime is claiming to have rejuvenated the railway system, the journey from Lagos to Kano is as slow as donkey walk. The very distance that you cover in two to three hours on a Chinese train, takes more than twenty four hours to accomplish on our rejuvenated trains. There is no sign of such utilities as pipe born water, electric supply and good communication systems in most Nigerian villages. Therefore, leaving the rural dwellers with no other option than to migrate to urban centres; thereby, causing congestion and overcrowding in places such as Lagos, Kano, Kaduna, Ibadan, and Enugu. An average rural dweller in a Nigerian village, whether it is located in Bayelsa in the Niger Delta, or Katsina in the far North, earns less than a $1 dollar in a day; the equivalent of about N157 in Nigerian currency. Like all other segments of the Nigerian system, the judiciary has been compromised due to the greed of the judges, and the Nigerian mentality of ‘let get rich quick’. Your chance of getting fair hearing does not depend on how guilt-free you are, but how loaded with cash and connected to those in corridors of power. In such a scenario it will be difficult to convince an average foreign investor to invest his hard earned capital in our comatose economy, without some sort of guarantee either from the government, big private organisations or external body; in some cases it takes guarantee from all the three to secure investment.