When he was appointed as governor of the Central Bank of Nigeria (CBN) for years ago, expectations were high. Bukola Afolabi writes on the scorecard of Sanusi Lamido Sanusi as CBN governor
MALLAM Sanusi Lamido Sanusi assumed office as the 10th Governor (ninth indigenous) of the Central Bank of Nigeria, in June 2009, at a period when the global economy was in the thick of a recession.
Looking back in time, the last four years under the Sanusi-led CBN has been a mixed bag of worries, sighs and laughs.
The banking sector crisis
Not long after his confirmation by the Senate, the CBN governor, a specialist in risk management, swung into action. Barely a month after he took over the helm of affairs of the bank, a report was issued by an international organisation stating that only four Nigerian banks were healthy. The report, which caused huge panic among Nigerians, prompted Sanusi to appoint external auditors to examine the books of all the 24 Deposit Money Banks.The outcome of that exercise paved way for the post-consolidation reforms of the banking sector.
In an overview of what went wrong in Nigeria’s banking industry in 2009, the CBN governor said the sector witnessed dramatic growth post-consolidation. He, however, noted that neither the industry nor the regulators were sufficiently prepared to sustain and monitor the sector’s explosive growth, adding that prevailing sentiment and economic tenets encouraged this rapid growth, thus creating a blind spot to the risks that built up in the system.
The reports of the special examination team carried out by the CBN and the Nigerian Deposit Insurance Corporation revealed that nine out of the 24 banks were in a critical situation.
Non-performing loans in the 10 banks totalled N1.696tn, representing 44.38 per cent of total loans; and Capital Adequacy Ratio in the banks ranged between 1.01 and 7.41 per cent, which were below the minimum ratio of 10 per cent. According to Ayo Olomu, “Lamido has tried his best in CBN. Remember people will also look for one or two things to say good or bad, remember during Joseph Sanusi and also during Charles Soludo’s banking consolidation. People must talked only that it is what you do people will remember you for.”
Having identified the banks that were in dire situation, the CBN made preemptive moves to check further deterioration of the banks rather than suspending or revoking the licenses of the banks, which would have meant that the banks would be handed over to the NDIC.
Unlike what transpired in the past when banks were seen to have “failed,” Sanusi turned the tables by exposing those behind the “failures.” The CBN made a courageous move by publishing details of the extent of insider abuse in some of the banks. For the first time in Nigeria’s banking history, chief executives of banks were held responsible for the “failure” of their banks.
The development made the governor to sack on August 14, 2009, Erastus Akingbola of Intercontinental Bank Plc, Cecilia Ibru of Oceanic Bank International Plc, Barth Ebong of Union Bank Plc, Okey Nwosu of FinBank Plc and Sebastian Adigwe of Afribank Plc.
Reform programmes
Immediately after he removed the bank chiefs, Sanusi announced the blueprint for reforming the Nigerian financial system in the next 10 years.
The reform, which is built around four pillars, is geared towards enhancing the quality of banks; establishing financial stability; enabling healthy financial sector evolution; and ensuring the financial sector contributes to the real economy.
The CBN intervened by injecting N620bn into the nine banks; replaced the chief executive officers/executive directors of eight with new managers with experience and integrity; reaffirmed guarantee of the local interbank market to ensure continued liquidity for all banks; guaranteed foreign creditors and correspondent banks’ credit lines to ensure confidence and maintain important correspondent banking relationships. The capital injection enabled the nine banks to continue normal business operations and prevented a run on them.
Other reform strategies involved the setting up of a resolution mechanism such as the Asset Management Corporation of Nigeria; restructuring of the CBN, improving disclosure and transparency; adoption of risk-based supervision for banks; insistence on full disclosure and common year-end for financial statements; developing and improving new regulation that takes on board lessons from the recent crisis.
His many controversies
Besides his policies as the CBN governor, Sanusi’s views on national issues have attracted both criticisms and commendations.
The CBN governor is no stranger to such attacks. In 2011, he incurred the wrath of the National Assembly when at the 7th convocation lecture of the Igbinedion University, Okada, Edo State, he said that 25 per cent of the country’s overheads were being spent on the federal legislators.
The National Assembly members were embarrassed by the scrutiny Sanusi’s lecture attracted to them.
The Senate invited the CBN governor to appear before its Committee on Appropriation to defend himself.
A few months later, the CBN governor stirred up another controversy. It was in June 2011 when he unfolded the bank’s agenda on Islamic banking.Unlike the jumbo pay controversy, where he received the support of Nigerians, Sanusi’s insistence on Islamic banking divided the country along religious lines.While the Christian Association of Nigeria opposed his plan, Muslims groups gave him their backing.
Also when the fuel subsidy removal debate began, Sanusi was not left out of it. Amid protests against the removal, he said on January 5, 2012, “The limited resources of government should be allocated to support production, especially if we are running a budget deficit. We cannot keep borrowing to support conspicuous consumption. We cannot even begin to do this if 30 per cent of government expenditure is on fuel subsidy, if out of the balance, 70 per cent is recurrent spending, 10 per cent is for debt service, 10 per cent goes to the Niger Delta and only 10 per cent is capital expenditure.”
Experts’ assessment
Analysts, who spoke to our correspondent in separate interviews, expressed divergent views about the effectiveness of Sanusi’s policies as the central bank’s boss.
While some rated him very high, others said his performance was just average, especially his monetary policy which has consistently pushed interest rate to average at between 22 – 25 per cent all year round.
President, Manufacturers Association of Nigeria (MAN), Chief Kola Jamodu, carpeted the Monetary Policy Committee (MPC’s) resolve to continue to maintain tight monetary supply policy.
The MAN chief who was former commerce and industry minister, lamented that the current regime of double digit interest on loans was a disincentive to the growth of the manufacturing.
Head, Research and Strategy, BGL Plc, Mr. Femi Ademola, has a different view. In his assessment of the tenure of Sanusi said, “As CBN governor, Sanusi’s performance assessment is not easy to determine. One issue with the performance rating is the lack of appropriate benchmark or target to measure his performance to.
“Sanusi achieved some very impressive results. He made the monetary policy very popular in Nigeria and is believed to have saved the financial system from a supposed imminent collapse by cleaning up the rot in the banking sector.”
But the Registrar, Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi, said the governor had performed well.
He said, “Sanusi has performed well as governor of CBN. If you look at most of the policies that he introduced since he assumed office, they have gone a long way in ensuring stability in the economy.
“For instance, the cash-less policy has today been helpful in business transactions as well as reducing the rate at which people lose money to armed robbery attacks.”
The Monetary Policy Committee (MPC) has also continued to ensure price stability. Consistent with the aspirations of the government and management of the bank, the CBN has succeeded in designing an exchange rate regime, which has limited the volatility of the exchange rate.
