It is no longer news that the CBN has uncovered a minefield of irregular practices in our banking industry following an initial audit. This industry has been one of the areas where Nigerians have given kudos to the Obasanjo regime. Professor Soludo must be weeping or angry where he is now. I guess if he was still the CBN Governor this revelation might have been handled differently.

I must confess that the way we do things in Nigeria has never ceased to amaze me. When we try to correct our mistakes, we would rather prefer to do things in a way that people cannot understand and possibly confuse us the more. I was recently interrogated by a Caucasian colleague of mine who had read the advertorial by CBN of the numerous debtors to various banks in the country why my country is so much in the news about corruption and what is being done to correct the situation. I quickly told him that the new EFCC has stepped into the matter and I am sure none of them will escape without paying the funds they owed. He was impressed and gave kudos to our financial crime fighting agency. I cannot agree with him less at least they are doing something considering the fact that Mrs Clinton had just berated their capability to do their constitutional role. I must also say that the President’s desire to fight this type of ‘big man’ crime is welcome. I understand he is supporting Sanusi to the full.

I am actually very delighted by the impact Sanusi’s action has had so far whether good or bad. I read that some of the banks have already recovered part of the non performing loans. Some big men borrowers have also started paying back. I guess this is what Nigerians really need i.e. to be pushed to act and conform. However, the fact cannot be hidden that this is a shame for all of these big people who are opportunists and never realise that they have been deceiving Nigerian masses. Some bank managing directors have been sending text messages to their customers not to panic because CBN is giving them money to survive. One bank managing director wrote in the text sent to customers that his bank will be receiving about one hundred billion Naira and this money will help to stabilise the bank.

To come back to the discussion with my Caucasian friend; my friend pointed to the fact that the CBN has announced that it will be injecting just over four hundred (400) billion Naira into the banks. And I asked what is wrong with that? He then asked me where the money is coming from. This I could not answer as I do not work with the CBN but I reminded him that the CBN can print money. I have thought that this might be naive and I therefore thought it wise to ask publicly. Where is the 400 billion coming from? How was this discussed and approved? I thought these banks are private banks i.e. public limited companies not government owned banks. Is this a loan to them? If yes what is the security or collateral? How much is given to each of the banks? Is this a temporary action and when are they going to pay back? Is this tax payers’ money? What is the role of the two legislative houses and the Finance Ministry in approving tax payers’ money for public limited companies?

I am not against ensuring that our economy stays afloat as the fact that the Central Bank is willing to act as a lender of last resort should be reassuring to the public. What I am worried about is the arbitrariness in the provision of the funds. I am worried that as a Nigerian I do not know what due process was followed for such an amount to be given to private companies. When Northern Rock and other banks in the UK had problems, people knew who was providing the funds and where the funds were coming from. The legislative houses were informed and questions were asked and answered. In the USA, President Obama went to the legislative houses and asked to do what he did. Why do we in Nigeria do things in so much a different way? This money to be given to the banks belongs to Nigerians. We must know how it will be spent, what interest it will yield and for how long it will be given to these private banks. Is the Government acquiring shares in these banks? These are questions that the public need to be clear about.

The injection of such an amount should be for a stake in such public limited companies. This is what we would like the CBN to tell Nigerians. What is the stake for Nigerians in these banks now that they are being given tax payers’ money to help them out? What will the money given to them be used for? Is it to just shove up their capital base? If yes then could these banks which recently recapitalised really meet the standards set by the CBN? Do we need to look back at the recapitalisation exercise?

I am not a monetary expert but as a stake holder in my country, what I expect of the CBN is that it can inject tax payers’ money to protect the interest of Nigerians and have a stake in these banks on behalf of Nigerians and this should be made public or the money should be given at a named interest rate and a duration known for when the loan will be paid back. If not we shall be back to a situation where monies are given to these banks and their managers  could do what they like with the monies as has been shown already. I hope that if what we read of Sanusi that he is a risk expert in banking is true then I am hopeful. However what is worth doing is worth doing well. Nigerians will want to be in the know about what is happening and the due process followed.

Finally, I do hope that the Farida Waziri led EFCC will do what is required of them to ensure that there is a deterrent for others who will do this type of thing in future. There are too many high profile cases which come to  naught following so called investigations. I believe we need to see people who cheat the people of our country Nigeria to pay for their actions if the country will move forward. This is going to be a test for our confidence in the CBN and the EFCC and the outside world is also watching.

Robot  # 1 | 28.08.2009 21:58

...Read the full article.

Eace  # 2 | 29.08.2009 07:21

Sir, It does seem odd that the Nigerian political system is constantly compared to others in the West perhaps because Nigeria ostensibly practises 'a democracy'. The UK Parliament and, the American Legislature are law-making structures that exist on their own; they are not changeable structures that alter their focus and practice according to the notions or whims of the executive. The financial systems in these countries have also had the benefit of long and tested existence as is the allocation of public money by the government for whatever purposes. We do not understand where the 400 billion is coming from because we have no clear idea of how Nigeria makes its money; who keeps it; where it is kept; and what it is kept for. Worse, we don't really know if the 'rescue operation' will work on the long run not just because we have no past records to work with but because even this rescue is probably another 'test run'. As usual, we will hope and pray it works rather than get our educational/research institutions to study the Nigerian financial market (not just borrow Western ideas) and propose solutions for our problems. Alas, ASUU is on strike so that research will have to be put on hold.

Enyi  # 3 | 29.08.2009 14:43

=Eace;384611>Sir, It does seem odd that the Nigerian political system is constantly compared to others in the West perhaps because Nigeria ostensibly practises 'a democracy'. The UK Parliament and, the American Legislature are law-making structures that exist on their own; they are not changeable structures that alter their focus and practice according to the notions or whims of the executive. The financial systems in these countries have also had the benefit of long and tested existence as is the allocation of public money by the government for whatever purposes. We do not understand where the 400 billion is coming from because we have no clear idea of how Nigeria makes its money; who keeps it; where it is kept; and what it is kept for. Worse, we don't really know if the 'rescue operation' will work on the long run not just because we have no past records to work with but because even this rescue is probably another 'test run'. As usual, we will hope and pray it works rather than get our educational/research institutions to study the Nigerian financial market (not just borrow Western ideas) and propose solutions for our problems. Alas, ASUU is on strike so that research will have to be put on hold. I am glad you said that Nigeria ostensibly practises 'a democracy'. I have to comment on this because in recent times the senate president and PDP in reaction to Clinton's remarks have said that we are practising our own brand of democracy. In reality we have a civilian rule and not a democracy. Civilian rule and democracy are not synonymous. In case we have forgotten, the East European countries in the past had civilian governments, periodically held elections but did not have democracy. The fulcrum of democracy is the right of the people to freely choose their leaders. In our current dispensation, even the political parties lack ideologies and internal democracy. The result of this is that politicians run from one party to the other seeking opportunity to contest and win elections and not necessarily because they share common ideologies. A review of the so called party conventions and primaries will show that these are all charade. Some years ago, I was under the mistaken impression that in our presidential system electorate vote for individuals and not parties. I was therefore stunned in 2003 when INEC announced that PDP won the senate and house of assembly seats in Anambra but that the names of the winners will be announced later. The list of winners kept on changing. Names were being added and removed by unknown forces and the courts had to finally decide who actually contested and won. Similar events occurred in 2007 in other parts of the country. The courts have subsequently reaffirmed in some cases that electorate votes for parties and not individuals. This is indeed strange. As an aside, I am not sure why the parliamentary system was replaced. During the parliamentary system, parties who fielded weak or dubious candidates ended up losing those seats irrespective of how attractive their manifesto was.

Eace  # 4 | 29.08.2009 15:58

=Enyi;384687> In reality we have a civilian rule and not a democracy. Civilian rule and democracy are not synonymous. I couldn't have put it better. Unfortunately, our country men and women still don't understand this distinction or perhaps the politicians understand but prefer to 'practise their own brand of democracy' I was therefore stunned in 2003 when INEC announced that PDP won the senate and house of assembly seats in Anambra but that the names of the winners will be announced later. The list of winners kept on changing. Names were being added and removed by unknown forces and the courts had to finally decide who actually contested and won. Similar events occurred in 2007 in other parts of the country. The courts have subsequently reaffirmed in some cases that electorate votes for parties and not individuals. This is indeed strange. Nigeria is a strange test case of what constitutes a State As an aside, I am not sure why the parliamentary system was replaced. During the parliamentary system, parties who fielded weak or dubious candidates ended up losing those seats irrespective of how attractive their manifesto was. The parliamentary system was replaced because the subsequent government thought the system was too tedious, too demanding and anyway, they wanted to toy with a new system preferably one that would suit whatever motives they had.

Enyi  # 5 | 30.08.2009 11:25

=Eace;384704>The parliamentary system was replaced because the subsequent government thought the system was too tedious, too demanding and anyway, they wanted to toy with a new system preferably one that would suit whatever motives they had. Given the unnecessarily bloated cost of our presidential system, is it not time to consider reverting to the parliamentary system that was in vogue during the first republic? That system had no room for so many hangers on and sycophants that suck us dry?