Being a copy of my latest article for publication in Nigerian dailies: SANUSI’S REFORMS: A TALE OF TWO PREDICTIONS
By:XXXXX XXXXX
Since Mr. Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria, announced the sack of the Chief Executive Officers of five of the nation’s banks a couple of weeks ago, newspapers and internet discussion forums have been flooded with series of analyses and commentaries, some objective and informed, and many sentiments-filled. Opinions are sharply divided over the intentions of the Kano prince. One camp of analysts and commentators believe Sanusi’s actions are altruistic and in order, while another believe he has some hidden agenda up his sleeves. Northern and sharia agenda they call it.
The ‘strongest’ evidence put forward by the ‘northern-agenda’ critics is a cover report by Vanguard newspaper of March 23, 2009, titled: “Nigeria: Group Plots Takeover of Five Top Banks”. The internet is now filled with copies of this Vanguard story and the anti-Sanusi ‘internet warriors’ (apology, Professor Pat Utomi) are basking in euphoria of having killed off every argument put forward in support of Sanusi’s actions. A group has even gone ahead to publish the Vanguard article as advertorial in some national dailies. The article is now the hottest story in town, and may be in contention for newspaper story of the year!
Reading through the story, it is very difficult to dismiss the claims with a wave of hand, especially as the steps outlined for the wrecking and subsequent take-over of the banks appear to be in tune with what is currently happening. For example, a part of the article reads: “A CBN official who spoke on condition of anonymity said that it is unfortunate that top five banks are the target. The banks, he said, are sound.” Could it be a co-incidence that the number of banks mentioned here agrees with the number Sanusi’s axe fell on? This is the most difficult thing to counter, as the ‘soundness’ and ‘top’ claims can easily be dismissed; after all everybody now agrees that the banks were not as sound as portrayed and two of the them do not qualify to be called top banks.
Another striking area in the Vanguard prophesy is the opening paragraph that reads: “Anti-consolidation forces have regrouped with the hope of dismantling the structures and forcing a takeover of the top five banks in the country, Vanguard can now reveal.
The grand plan by the group is to cause panic and uncertainty in the industry and make the target banks look unsafe for depositors”. There is no denying the fact that there is panic in the system at the moment, consequent upon CBN’s actions, and the take-over song by Mr. Sanusi makes it difficult to shut up the ‘Sanusi-is-playing-a-script’ analysts.
Vanguard newspaper further claimed that their investigations revealed that “the aim of the anti-consolidation forces is to cause loss of public confidence in the banking industry and compel the Federal Government to move in by injecting funds.” The funds injections prophesy also appears to have come to pass. And to cap it all, the newspaper reported the Arewa Consultative Forum as saying: “All that seem obvious is that our commercial banks had lent out too much money to too many people who had invested them in stocks or petroleum importation but who are now unable to pay back. Beyond that, the public has no clear idea as how or why the loans were given and on what terms." How did this ACF’s claim support the outcome of Sanusi’s audit exercise? This is another question that seems to lend credence to the northernization argument.
However, as a religious follower of the current debate as it has been unfolding in the last couple of weeks, I have read virtually every material that analyzes or retrospectively reviews the motives for and consequences of Sanusi’s actions. I have also laid my hands on the past articles which are now being referenced as predictions of the current series of events.
Strongly justifying the necessity of Sanusi’s decision is a series on the Nigerian banking sector run by BusinessDay, Nigeria’s leading business daily, from February 16-20, 2009. This came earlier than the oft-quoted Vanguard article and the newspaper aptly exposed the abracadabra going on in the banking system which Sanusi’s reforms have come to buttress.
In it’s cover story of February 17, 2009, titled: ‘How regulatory failure created margin loan crisis’, the paper wrote: “A failure of regulatory oversight by the monetary authorities, charged with the responsibility to monitor and supervise how banks lend and disburse loans in the financial system, has been identified for the massive margin loan crisis hanging over the banking industry”.
“The banking regulator, the Central Bank of Nigeria (CBN) is believed to have taken its eye off the ball while a number of banks moved recklessly into the capital market to perpetrate unwholesome practices designed and calculated to shore up the value of their shares in the capital market.”, BusinessDay further stated.
In another story in the series, the newspaper quoted a banker as saying: “all over the world, when you reach out to the lender of last resort, what you get is at a premium. BUT HERE BANKS WERE TO ALL INTENTS AND PURPOSES BEING REWARDED INSTEAD OF BEING PUNISHED.” (Capitalization mine). The banker was responding to the decision to open wider the Expanded Discount Window(EDW) by the CBN.
Furthermore, on the same February 19, 2009 edition of BusinessDay, the newspaper ran a story titled ‘With blurred supervision, banks are back to cooking the books’. In the story, the paper wrote, “Declarations of bogus profits and failure to disclose toxic assets have crept into Nigeria’s banking system. And analysts, worried by the trend, say banking in the country has gone back to the old days when banks kept more than one statement of account for different purposes”.
“But the understanding of many was that the Central Bank of Nigeria would be up to the task of supervising and discouraging banks from cutting corners. Information reaching BusinessDay indicates that the apex bank may have been looking the other way while banks cheated their shareholders of billions of naira.”
Rounding up the series on Friday, February 20, 2009, the paper hinted on why Soludo may not be deserving of a re-appointment. Read them: “Soludo’s current five-year tenure ends in May. While Soludo gained widespread international respect for his leadership in pushing banking sector reforms and a massive consolidation of the Nigerian banking system under the Obasanjo administration, his recent miscues on the direction of inflation and currency policy have left his much vaunted credibility damaged.”
“Whoever replaces Soludo from Yar’Adua’s inner circle”, the paper predicted, “is likely to be more strongly market interventionist than Soludo, who had until recently been fairly neo-liberal in his policies.” Shortly emerged a risk expert in Sanusi Lamido Sanusi and his plethora of market interventionist policies. What an accurate prediction!
While the Vanguard’s prediction basically bordered on motive, BusinessDay’s centred on the issues and corroborated Mr. Sanusi’s findings. Given the enormity of the rot in the system, as alerted by BusinessDay far back six months ago, I personally believe any CBN governor that took over from Soludo and refused to do what Sanusi did will be a non-performer. If BusinessDay editors and economists sincerely believed what they saw and called our attention to, I believe they would have toed a similar path with Sanusi, if given the opportunity to cleanse the system, in which case, the steps will look like what was predicted by Vanguard and I wonder if that will be called an eastern agenda,going by the fact that most of BusinessDay’s economists and editors are from that part of the country. This is why I personally believe that BusinessDay’s analyses and predictions are more relevant in looking at current issues than Vanguard’s report. BusinessDay, to cap it all, has no other business than reporting and analyzing the financial system and the economy at large.
While the northern agenda propagandists can continue to invoke their Vanguard story, I, as a believer in Sanusi’s reforms (at least for now, and so long as he doesn’t deviate) will not get tired of tendering BusinessDay’s reports that justify the necessity of Sanusi’s actions and buttress the fact that anybody determined to uproot the problem would not have done less. Any thing less than that is compromise.
Finally, putting aside the two ‘prophetic’ reports, nobody has been able to prove that the sacked superbankers did not perpetrate the crimes leveled against them. More and more cans of worms are being blown open every day about the atrocities committed by the bank chiefs. If what, from all indications, appears to be a genuine effort at sanitizing our financial system, is a northern agenda, I wonder if financial recklessness and wanton disregard for professional ethics is a southern agenda.
XXXXXX, an Economist, Accountant and Public Affairs commentator wrote from Victoria Island, Lagos. Coming Soon: A HUNTER'S MISFIRING SHOTS: A look at Dele Momodu's recent write-ups and the widespread debates generated. |
I must confess this is a nice ,thought provoking piece.
It is hearthening to see you state the obvious coincidences between Sanusi's actions and the Vanguard report which is making it too difficult for some to trust Sanusi.
I for one have not based my doubts on any paper report (Vanguard or Business day), In fact I doubt if one needs a report to ask Sanusi to show fairness and respect for due process in carrying out his duties.
I do not need a VANGAURD report to ask Sanusi to soft pedal in this his quest to sell the banks even when further audits are ongoing in the 5 "indicted" banks to ascertain their true value.
I do not need a report to remind Sanusi that if and when the banks would be sold, it musts be by[b] collective agreement between the SHAREHOLDERS,NDIC and the Board of CBN and not the one-man show he seems to be running.[/b]
I do not need a Vanguard report to caution Sanusi that in an attempt to rubbish Soludo's tenure and blacklist it as a failed attempt at economic development of the nation, he is not only boxing himself, but also endangering the entire economy.
I do not need a Vanguard report to remind Sanusi that the Job of CBN governor is largely conservative where a single misguided utterance can cause serious setback to the Economy.
I will stop here for now. |
Jarus!!! Nice article, no doubt! It's very logical & well articulated.
But I'm sure you know, I very much disagree with you.
Comparing Vanguard's article with that of Businessday doesn't exactly fit.
Businessday's article says: There is a rat in your car, so you check your car and wow! there really is a rat!
Vanguard's article says: There is going to be a rat in your car in some days time. You check today, there is no rat, then some days later, you find a rat!
The two articles are different. Businessday reported on a situation as it were, Vanguard reported on a plan that was being hatched.
@Na_So
Thank you ! You re right on point.
Vanguard report or not, you don't need an astrologist to tell you that with the way Sanusi is going, whatever is left of the Nigerian economy is about being destroyed. |
