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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.

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