The autonomy of the Central Bank of Nigeria (CBN), a cash-less society, the suspended N5,000 banknote and a “suffocating” interest rate regime dominated discussions at the 2012 Annual Public Lecture organised by J-K Gadzama & Partners LLP, reports JOSEPH JIBUEZE.
• How to realise cash-less economy, by ex-minister
Is the Central Bank of Nigeria (CBN) too powerful? Some think so, arguing that it should be brought under legislative control so that some of its policies can be thoroughly examined before implementation. For others, no one should tamper with the bank’s autonomy.
Speakers at the 2012 Annual Public Lecture organised by the law firm of J-K Gadzama & Partners held divergent views on whether CBN’s powers should be whittled down.
To a former Information Minister Frank Nweke (Jr), who delivered the lecture entitled: Nigeria in the Year 2012: The Vision of a Cashless Economy, the National Assembly must not tamper with CBN’s autonomy.
Nweke, Director-General of the Nigerian Economic Summit Group, described as “unhealthy” what he said was a deliberate effort to by the government to “subordinate” the CBN.
“This is unhealthy and clearly portends danger for the management of Nigeria’s monetary policy management. In order for the CBN to be effective, their work must be devoid of any political considerations and or interference
“The precedents which are now being laid by the National Assembly with the proposed amendment of critical sections of the CBN Act 2007 to strip it of its autonomy, and most recent interference in the project CURE, run against the grain of global best practices.
“Whatever may be the concern of the National Assembly or other arms of government in the way and manner the CBN discharges its mandate can be handled more pragmatically through consultation and dialogue rather than setting a precedent which will subject the CBN perpetually to the whims of political actors of the day,” he said.
CBN Governor, Sanusi Lamido Sanusi, represented by the CBN Deputy Governor, Corporate Services, Alhaji Suleiman Barau, who chaired the event, also warned against political control of the bank.
According to him, politicians who “think short term” would be more concerned about pleasing the electorate with a view to winning election, and could try to hold the CBN back from certain policies that may appear unpopular.
The CBN, he said, “thinks long term”; therefore allowing politicians to control it would not augur well for the economy’s lasting well-being.
“Politicians will never allow us to manage inflation, interest rate simply because they want to win election,” Sanusi said.
Executive Director, Community Development Foundation, Mr Akin Akintola, believes the CBN should have “100 per cent independence.”
He however, said the bank “should not run too fast to get policies through in a manner that people suffer.”
But a former Chairman, Senate Committee on Banking, Senator Nkechi Nwogwu, said the CBN “is not an island” and cannot be absolutely independent.
She said: “There’s no agency that is an Island. We’re saying that there are some CBN projects need democratic review. Certain monetary policies must be brought before the legislature for a review. That’s what we’re concerned about.
“We’re not at loggerheads with CBN at all. All we’re saying is that they should consider the opinions of Nigerians.”
Chief Anthony Idigbe (SAN) agreed, saying the CBN should not be given the freedom of power without control, because, according to him, absolute power can lead to corruption.
“The greatest fear of Nigerians is arbitrariness in implementation of policies. There should be some level of oversight over the CBN,” he said.
Meanwhile, for other jurists at the event, the CBN should do more to reduce interest rates than bothering with introducing new naira notes.
Chief Judge of Lagos, Justice Ayotunde Phillips, would want to see a reduction in the charges banks impose on transactions.
“I am not happy with the bank charges,” she said.
Nigerian Bar Association (NBA) President Okey Wali (SAN), represented by Dr Joseph Nwobike (SAN) described interest rate regime in Nigeria as “suffocating”.
“Businesses should be encouraged to grow,” he said, adding: “The interest rate regime here is suffocating.
“Over 60 per cent of businesses that borrow money from banks ultimately fail. Those of them who are operating do so on pretentious grounds. The issue of interest rate is more important to us Nigerians.
“There is nothing with introducing N5000 banknote. What is wrong is access to it, and not whether or not it is introduced. In any case, the CBN Governor is doing very well. He’s an intellectual. But I think he has to do more in managing interest rate.
“Just a few years ago, my account officer called me and said: ‘Doctor, do you have N50million? I’ll give you 50 per cent for 90 days.’ I said, ‘wow!’ And when I did my calculation, perhaps I don’t need to practice again. If I earn that amount in 90 days, I think that pays my salary.
“So it is important for us to do something. The interest rate regime is going back to what it used to be. Banks are paying 15 per cent interest on deposits. The question is: What are they using that deposit to do?
“We can’t see the businesses anymore. And if you look at a recent CBN publication, about 60 per cent of corporate Nigeria is bare.
“The CBN, please do something, let us have 3, 4, 5 per cent interest rate for businesses to grow, so that our children and friends and nephews and nieces will have jobs.”
A former justice of the Supreme Court, George Oguntade, also decried high interest rate, saying it is “curtailing growth.” “Something urgent needs to be done about it,” he said, urging Barau to take the message to Sanusi.
Justice Oguntade recalled that he discouraged his wife from obtaining a bank loan to run a private school “because repaying is difficult.”
Idigbe, who discussed Nweke’s paper, said even law firms need credit to carry on successful practices that can compete globally. “We need to rethink our proposition. There’s nothing wrong in having a firm of 600 lawyers,” he said.
On the cash-less policy, Idigbe said cyber law are inadequate, and existing ones have gaps. He wondered, for instance, whether if someone sends scam messages and is caught, it amounts to internet fraud even if no one has actually been defrauded. New laws, he said, are needed to specify the crime.
Insolvency laws too need to be looked at, he said, adding: “No one has ever looked at the bankruptcy law. It doesn’t have any business recovery provision.”
Idigbe claimed there is no strategic focus on commercial law reform, even as there are conflicting bills. He urged the Attorney-General of the Federation to do more in that area. “The Attorney-General needs to focus on law reforms,” he said.
He also suggested splitting the office of the Attorney-General from the Minister of Justice so that, according to him, one can actually do the work of law reforms, while the other “can sleep in Aso Rock playing politics.”
Akintola criticised the imposition of penalties on Cash-lite Lagos, saying CBN should have encouraged incentives rather than fines. According to him, the government should also pay the penalties.
Head of Chambers, J-K Gadzama & Partners LLP, Abuja Office, Mr Henry Michael-Ihunde, called for a strong regulatory regime for the legal profession.
He said some lawyers may unwittingly encourage money laundering by not questioning the sources of their clients’ income.
He said when a clients is ready to pay a lawyer cash with a huge sum, the lawyer should be concerned. “Every firm must have a money-laundering policy,” he said.
Micheal-Ihunde also called for the establishment of an Independent Financial Ombudsman to address issues raised by bank customers in the cash-less regime.
The Ombudsman, he said, should comprise people of diverse backgrounds who would investigate claims and sanction the banks when found culpable.
“The banks are stealing our money and we have to do something about this,” he said. “We pay so much for poor services. Call their customer care, and no one will answer you.”
Nweke in the lecture identified the pre-conditions for a nationwide take-off of the Cash-less policy in 2013. The first, he said, is the payment infrastructure.
“The upscaling of the nation’s power supply capacity, in particular, is perhaps the singular most important success factor in sustaining the nationwide cash-less policy by reducing the downtime in operational equipment caused by power outages or lack of power supply,” he said.
Also needed is a better approach to governance. Nweke said: “Government was conceived to cater to the welfare of the people and should therefore exist for the sole purpose of benefiting the people.”
He added that the un-banked majority should be engaged “to reign in the significant portion of currency outside banks held by them.”
The country, he said, is in need of a comprehensive legal and regulatory framework of policies that covers the most modern forms of financial activities and global standards of transparency and disclosure.
Nweke also called for a modernised law enforcement approach to tackle cyber-crime and internet fraud.
“The vision of a cash-less economy can indeed only be achieved when the socio-economic parameters of this geographical entity collectively ensure favourable standards of living for over 100 million Nigerians in absolute poverty which form 62 per cent majority of the population of the country.
“Only then can this lofty vision of the cash-less economy be truly a reality,” he said.
Chief Joe-Kyari Gadzama (SAN), whose firm organised the lecture, said it was in fulfilment of their corporate responsibility to the society.
“By our mission and vision as a firm, we seek to contribute not only to the growth and progress of the legal profession in Nigeria, but the nation as a whole. This, we intend to achieve, through our Annual Public Lecture.
“Over the years, issues affecting the Nigerian populace have been analysed and solutions proffered.
“The annual event is part of efforts aimed at giving back a little to the society that has given us all we have today, especially now that we are not just a law firm, but a Limited Liability Partnership,” he said.
Also at the event were former Head of Interim National Government, Chief Ernest Shonekan, Deacon Dele Adesina (SAN), Mr Fabian Ajogwu (SAN), among others.
