Its the Sanusi effect.

By Louise Greenwood
Africa Business Report, BBC World News 


More than 500 skilled workers hope that Coleman's business will survive
Coleman Wires and Cables is a Lagos-based manufacturing firm, supplying cables to Nigeria's fledgling national grid.

With more than 500 skilled staff, it is exactly the kind of business that trade experts say Nigeria needs if it is to diversify away from oil production and create a more mixed economy.

Using borrowed cash, the firm moved to bigger premises in August, but just three weeks later received some devastating news from its two banks about its loan facility.

"The bank just told us pretty much, 'Look, we have to put a hold on this at least till next month, or the month after or until things die down,'" says David Onefowoken, director of Coleman Wires and Cables.

"The second one might slash [the loan] by half.

"A lot of these banks that were stopping these loans had actually helped us out before, to get up and running."

The reason?

A banking crisis entirely divorced from the global credit crunch.

Awaiting charges

Earlier this year, signs emerged of huge holes in the balance sheet of five of Nigeria's mid-tier banks.

An emergency audit led to the arrest of four managing directors.

A fifth is on the run, and being sought by Interpol.


Dr Ayo Teriba says there is no need for a clampdown on lending to small firms
It is claimed the group gave loans to non-existent companies, lent to firms in which they had a personal stake, and conspired with stockbrokers to ramp up share prices.

All plead not guilty, but a further 68 individuals are in custody awaiting charges.

The five banks over which the group presided - Afribank, Intercontinental Bank, Finbank, Oceanic Bank and Union Bank - have been taken into state control at a cost of $2.6bn (£1.6bn).

Do not panic

A tough new audit is underway of all of Nigeria's remaining lenders.

Until it concludes, banks have stopped lending and it is firms such as Coleman Wires and Cables that are bearing the brunt.

But government advisers insist there is no need for this clampdown.

The banks "didn't have a problem with small and medium sized borrowers", according to Dr Ayo Teriba from Nigeria's National Economics Intelligence Committee.


David Onefowoken has managed to secure funding from an overseas bank
"They had problems more with big borrowers, so I don't see why what is happening should close the credit tap.

"[Small firms] should not panic, there is nothing to panic about."

Lasting damage

But across the country, businesses are angry.

They feel they are paying the price for the alleged criminal actions of a tiny number of Nigeria's super-rich.

Mr Onefowoken has secured new funding from a bank overseas, but remains worried about the domino effect the crisis is having on his suppliers and customers.

And there are wider concerns about the long-term impact of the scandal.

Despite a national economic output of almost $300bn, more than half of all Nigerians live on less than a dollar a day.

The country's external debt is rising again and stands at $3.7bn, or 14% of its gross domestic product (GDP). Nigeria remains a net recipient of aid.

If workers at industries such as those at Coleman begin to lose their jobs, the fear is they will be forced back into the unskilled, subsistence economy, which Nigeria has spent its post-independence years fighting to escape.

http://news.bbc.co.uk/1/hi/business/8271450.stm

A banking crisis entirely divorced from the global credit crunch.

Sanusi brought cattle mentality into the hitherto bouyant banking industry.
Ever heard of a bull in a China shop?? It only leaves destruction afterward!!
He will definitely have to pay for this mess he has created!