Regular followers of this blog will be wondering why shall I be advocating for second tenureship of Sanusi Lamido Sanusi (SLS) after his current tenure expired at the end of May 2014? Adding more weight to their argument by citing my past write ups on this blog, where I criticized the man and some of his policies. But, a lot has changed since then, and looking at the longer view and the uncertainty of appointing a new person with its impact on investors’ confidence on the economy, the man Sanusi deserves a second tenure. Beside, as the saying goes, ‘the devil you know is better than the angel you don’t know’. The outgoing US Federal Reserve chairman Ben Bernanke was allowed to finish his complete two terms as reward for the good jobs he executed in managing the US economy at a period of a serious global economic catastrophe. Thus, the same apply to the case of SLS who has done what Ben Bernanke did to US economy to our Nigerian economy. Though, SLS himself has continuously said he was not interested in second return at the CBN, I will here suggest that he reconsider his stand in the interest of the Nigerian nation and its economy who needs him the most at this period of transition. Below are ten reasons why I see it advisable for the Nigerian authorities to consider given SLS second chance:
One, control of inflation; in almost a decade our inflation rate has never come down this low, this is possible thanks to good management from the apex bank. In a period of global inflation this is no small achievement; especially now that the apex bank has promised a far lower rate as time moves on. Hence, the more reason why SLS should be return in order to continue with the good work he started in the fight against inflation.
Two, stabilization of the banking industry; at the eve of the appointment of SLS into the apex bank’s top job, a sizeable number of Nigerian banks where at a point of collapse, at the same time millions of Nigerian depositors were afraid of what would happen to their deposits in these banks. Thanks to SLS that was not allowed to happen, the rest is history as no single individual depositor was allowed to lose his money. Nigerians banks, as they are today, are more stable and sound than when SLS found them when he was appointed in 2009.
Three, relative stability in the value of naira: Though Naira has never gone back to its pre-crisis value against the Dollar, SLS has managed (in midst of many challenges) to restrict the gyration in the value of Naira against the US Dollar within some narrow ranges. This is commendable because a volatile and unpredictable Naira would be bad for the economy of this nation, and especially for foreign investment coming to the country.
Four, rebounding of growth in credit to business and Agriculture: credit to agriculture has increased from N3 billion in 2012 to N20 billion this year. This was made possible by CBN guaranteeing of the risks involve in dashing out credit to farmers by commercial banks; today many farmers are accessing these loans. Overall there is growth (though slowly) in credit given to the private sector by the banks. But, a major obstacle that remains to date is banks obsession with given out most of their credits to the public sector, thereby crowding out the private sector. SLS should do more to improve on this when he gets a second tenure.
Five, increase awareness on the functions and activities of the apex bank: the level of transparency in the activities of CBN in the country has increased, thanks to the level of openness with which SLS carried out his functions in the apex bank. Many Nigerians are now very much aware of what CBN is doing or is going to do, unlike in the past when a number of CBN activities are shrouded in secrecy. Around the world transparency is one of the key elements embodied in the philosophy of the most successful Central Banks around the world. With transparency comes democracy, many staffs of the apex bank have testified to the democratic way SLS is running the institution unlike what happen before his appointment.
Six, boosting of investors confidence in the economy as can be seen from the performance of the Nigerian stock exchange. The total portfolio investment that come into the country this year through Nigeria stock exchange was put by CBN at $6.7 billion making up the higher percentage of all foreign investment coming into the country. Total foreign investment coming into the country has increased from $4.5 Billion in the second quarter of 2012 to $7.79 Billion in the second quarter of this year.
Seven, restructuring of the banking industry: after the global economic crisis of 2008, the world wide obsession with universal banking by the financial industry was brought into scrutiny, looking at the devastation the banking crisis has brought to the world economy. Questions where asked about the suitability of universal banking in the midst of new classes of risks that were arising every day; that explain SLS decision to substitute the universal banking he inherited from Soludo with the diversify holding structure that would later reduce the concentration of certain types of risky exposure in the banking industry. Other models of banking were also introduced by SLS, most prominent in this regard was the introduction of non-interest Islamic banking into the economy, which was before that period seen as controversial but now more people are seeing the wisdoms behind the novel banking model.
Eight, control of interest rate and other charges by banks on their clients: though, there are still some charges that Nigerian banks unnecessarily impose on their customers, CBN under SLS has managed to reduce them. The introduction of cashless policy by the CBN is geared towards reducing the cost of transactions in the industry, thereby transmitting the same to the banks customers. The continuing hike in the interest rate charged by Nigerian banks has been controlled as CBN now monitor the interest rates at which banks issue out loans to the public.
Nine, improvements in corporate governance of the banking industry and fight against corruption: the shenanigans discovered in 2009 in the banking sector by SLS alerted the world on the rots in the Nigerian banking industry that were continued (as at then) to be shielded from the public eyes by the CBN before 2009. The rots and level of corruption was of monumental proportion, and SLS determination to expose it and all those behind it was applauded worldwide as unprecedented in the history of the apex bank. Corporate governance in the industry was strengthen by such measures as limiting of the number of years a CEO can serve as the head of a bank to ten years, who should serve as non executive director of a bank, and restrictions in credit exposure by banks to certain class of risk.
Ten, overall growth in the economy; since the inception of governorship of SLS in 2009 Nigerian economy has grown at around 5-7% despite the global economic crisis that devastated the economy in 2008/9. According to global economic watchdogs Nigeria is expected to surpass South Africa as Africa’s largest economy with GDP above $500 billion. Today, Nigerian businessman Aliko Dangote is ranked among the top 25 richest people in the world, with most of his wealth generated from investments in the Nigerian economy.