A few weeks ago, the Governor of Central Bank of Nigeria, Lamido Sanusi, said he would not be seeking a second term in office at the country’s apex financial institution at the expiration of his first five-year tenure in June 2014.
Sanusi was appointed to replace Chukwuma Soludo, a professor of economics whose tenure was as eventful as it was controversial in many ways, in June 2009.
On assumption of office, as if his briefing was to dismantle his predecessor’s legacies, Sanusi’s first major move was to expose the decay in the nation’s banking sector triggered by non-performing loan portfolio and reckless lifestyle of many operators, which had eroded the gains of the immediate past consolidation of the sector. The dismissal of the hitherto powerful chief executives of seven banks and the bail-out of eight financial institutions were seen by many as critical interventions in the sector, which saved hundreds of depositors’ funds from going down the drain. The move readily conferred on Sanusi the toga of a reformer both within and outside the shores of the country.
The exposure of the weakness and the large scale fraud in the banking sector were an eye-opener to many who had been made to believe that our banking system was immune to the ferocious financial melt-down ravaging the world financial system during the period.
By the way, only a few months earlier, Soludo, whose tenure witnessed a major reform of the banking sector that saw the number of banks reduced from 89 to 24 with the 25-fold jacked up in banks capital base, had assured the whole world that the Nigerian banking sector was safe and secure.
Soludo had told whosoever cared to listen then that his banking consolidation process was a well-thought out policy that foresaw the future of the world financial system and protected Nigeria’s financial sector ahead of the disaster.
Apart from his stride in exposing the rot in the financial sector, his singular devotion to combating inflation, using monetary policy instrument, had received worldwide acclaim, Sanusi’s fiercely independent view on issues beyond the purview of the central bank, including politics has earned him a reputation of an opposition within the government and endeared him to those who view this as a refreshing difference from the known position of people in government.
But Sanusi’s constant penchant to dabble in politics through his public outbursts may have been his undoing, perhaps the reason for his unwillingness to seek a second term in office. A number of analysts have said even if he desired a second term, the government of President Goodluck Jonathan would not oblige him due to his consistent criticisms of the growing corruption in government and the techniques and methods of tackling the nation’s many problems.
From available records, no central bank governor since the late Abdulkadir Ahmed, whose nine years tenure was the longest, has spent more than a term in office. Despite the intense lobby by Joseph Sanusi to renew his term, President Olusegun Obasanjo gave it to Soludo, same with President Umaru Yar’Adua, who discountenanced the mounting pressure from Soludo and appointed Sanusi to replace him.
Also, Sanusi’s reform of the banking sector has failed to impress a number of locals, especially shareholders in some of the rescued banks who lost billions of naira in investments when some of the rescued banks were nationalised. Besides, the acquisitions of Intercontinental Bank by Access Bank and Finbank by First City Monument Bank were seen not to have conformed strictly with his public view on transparency. The massive loss of job in the banking industry due to the manner the reform was managed was also showcased as the evidence that his reform was a mere fluke to deceive the world in pursuance of a perceived regional agenda. Sanusi was accused of vendetta against former chief executive of Intercontinental bank, Erastus Akingbola, over the issue of rivalry in the industry, while his decision to spare some banks whose books were considered worse than the ones rescued was also seen as a minus to his intervention in the industry.
Nonetheless, Sanusi’s performance in the saddle has be rated excellent and his landmark achievement in the banking industry will remain for a long time a reference point.
However, top on the list of the contenders jostling to replace Sanusi are the outgoing chief executive officer of Access Bank, Aigboje Aig-Imoukhuede, and chairman of Stanbic-IBTC, Atedo Peterside. Analysts are of the view that whoever the President chooses next year to take over from Sanusi must equally gird his loins for some drastic change in the industry. Against the backdrop of declining loan portfolio and inability of the financial sector to assist Small and Medium size businesses in terms of financing, the incoming CBN governor should direct his energy on policies to redress this. Equally of importance is the need to ensure monetary policy stability and a safe and sound financial sector through constant monitoring of operators ensuring that the experience of 2009 does not repeat itself.
Nigeria needs a central banker who will be firm and ensure that government is discouraged from destabilising the system with reckless spending, especially as we approach a general election in 2015. The choice of a successor to Sanusi should also be devoid of ethnic or political consideration to promote confidence in the financial system. While the need to choose someone with clear experience in the banking industry is compelling, the government should avoid the pitfall of choosing someone with vested interest in order to protect the credibility of the system and prevent the sector from being hijacked to the detriment of the larger society.