The Nigerian media carried a report last week that the Senate Committee on Banking, Insurance and Other Financial Institutions has summoned the Finance Minister, Central Bank Governor, the Chief Economic Adviser to the President and the Minister of National Planning for a discussion on the global financial crisis and its implications for Nigeria. That such a meeting has been summoned is hardly surprising given the severity of the crisis and the interconnection between international financial markets. What is truly mind-boggling, however, is that the Senate hearing has been scheduled for October 21 – almost three whole weeks after a motion entitled "Global Credit Crisis and Its Impact on Nigeria" – was tabled at the Senate!

Some questions that come readily to mind are:

(a) Does the inexplicable delay in the date of the hearing suggest that the Finance Minister, Central Bank Governor etc have been asleep amidst the global chaos and need to spend the next couple of weeks trying to figure out what is going on and how the Nigerian economy is likely to be affected or is it the Senate that needs to put its house in order? Either way, a knowledgeable senior government official should have come out, ages ago, with an authoritative (as opposed to vacuous) pronouncement about Nigeria's preparedness to weather the ongoing global financial storm to instill a sense of confidence in Nigerians;

(b) Which foreign banks are holding Nigeria's foreign reserves presently? How much of the country's reserves is each bank holding and what is the financial position of each bank? (One is, of course, hoping that divulging this information will not be classified as a threat to national security). Such vital information should have been released, without prompting, almost as soon as the big US investment banks started to go under;

(c) What is the Finance Minister's take on the reports about a stock market intervention fund by a consortium of local banks that has been bandied around recently? On the face of it, such an intervention would appear to be a hair-brained scheme as the proverbial horse has already bolted and even then a bucking stallion cannot be held back by a piece of string. If there is an esoteric rationale underpinning the planned intervention, surely it should have been promptly and fully explained to Nigerians as opposed to leaving people in the dark and suspecting some ulterior motive to protect certain vested interests. In stark contrast, government interventions witnessed in recent weeks from the US to the UK to Iceland to Germany have centred on preventing banks from going under - due to the obvious implications for depositors and the individual economies concerned - as opposed to embarking on an exercise in futility by trying to prevent their stock markets from nose-diving. .

These questions, which are obviously not exhaustive, are rather basic but commonsensical given the extremely volatile nature of global financial markets. Not a day passes without the emergence of a new casualty from the financial meltdown. One recent example is Pakistan that is teetering on the edge of insolvency. It is presently and desperately trying to urge Pakistanis in the Diaspora to contribute $10 billion to a fund that will be invested in Pakistani government stocks which the government says offer good value. With its war against terror being far from resolved, Pakistan's economic indicators have gone haywire. The truth of the matter is that it is extremely unlikely that non-resident Pakistanis will take the bait being dangled by their government for one simple reason. Expectations. They expect that the market will get worse before it gets better and many will simply not want to take the risk.

After basically following the example of the UK and US by lowering interest rates in order to stimulate the economy, the Nigerian Central Bank Governor was recently quoted as saying that the impact of the global financial crisis on the Nigerian economy was likely to be limited due to the fact that the economy's fundamentals remain strong. That is the kind of frighteningly simplistic and short-sighted talk that makes one lose sleep. While one is not saying that Soludo should be a prophet of doom, he should be realistic, factual and truthful. Just watching television reports about G-8 finance ministers criss-crossing the globe over the past couple of weeks (in some cases, clearly suffering from sleep deprivation), coming out with regular policy statements or updates, in some cases crafting innovative bail-out plans on the hop has been instructive. The finance ministers' actions have shown that governments, and particularly the financial authorities, need to be nimble, capable of thinking on their feet and sleeping with both eyes open.

Let us think about how insulated Nigeria really is from the ongoing global financial turmoil. All Nigeria needs is for one large local bank, just one, to go under for whatever reason and the entire financial system could come tumbling down like a pack of cards for the very same reason Pakistanis in the Diaspora are unlikely to invest in their country right now. Expectations. The failure of a Nigerian bank could be due to anything from deliberate overstatement of accounts (such as what happened to Cadbury Nigeria Plc) to margin trading gone wrong where the bank has overextended credit to customers to buy shares in a stock market whose bottom has caved in as is being witnessed in Nigeria presently. As word gets around that bank A has a problem, banks in general would no longer be seen as safe havens and runs on banks would become commonplace as depositors withdraw their money, literally, for safe-keeping under their mattresses or for investment in alternative assets such as foreign currency.

Since the beginning of the global financial crisis, the silence from Nigeria's army of self-appointed banking gurus in terms of the way forward has been deafening. The sole exception that I am aware of is one bank chairman who was interviewed in a local newspaper over the weekend. He showed a very clear understanding of the fundamental issues at stake in terms of the interplay between global financial markets – especially commodity-driven economies such as Nigeria – and urged caution among commentators as opposed to making sweeping generalizations. He also made a poignant call for those who have nothing pertinent to say about such matters to keep quiet. However, in the midst of a global crisis of such colossal proportions, when individuals and institutions that should be calming frayed nerves are either doing or saying nothing at all or advocating remedies that are adding to the uncertainty, we are seeing yet further confirmation of a much larger crisis of leadership in the country.

Olayitan Oke

London

Robot  # 1 | 14.10.2008 09:06

Since the beginning of the global financial crisis, the silence from Nigeria's army of self-appointed banking gurus in terms of the way forward has been deafening. The sole exception that I am aware o...Read the full article.

ozoodoo  # 2 | 14.10.2008 16:12

the Nigerian Central Bank Governor was recently quoted as saying that the impact of the global financial crisis on the Nigerian economy was likely to be limited due to the fact that the economy's fundamentals remain strong. Bros which one you dey. It was the same assurance (in bold) that Bush and his gangs gave americans some weeks ago, until the bubble bursted big time. You know know say we sabi follow follow. But my banking guru brothers would have showed americans real class if the issue is how to assist crooked politicians and thieving civil (evil) servants plunder public treasuries. Our "financial gurus" are presently in a confused state. They dont know which of the actions taken by the West so far in response to the financial crisis to copy. Infact the spokesman of SEC said recently that there is no crisis in Nigerian Stock Market even though you can hardly get a buyer for 5,000 units of Zenith Bank shares (in order words, liquidity has dried up in the market. If you have investment in Nigerian stock market today and you need to sell the stocks immediately to meet an urgent need, you are going to be rudely disappointed because buyers have disappeared from the market).

Idi-ogi  # 3 | 14.10.2008 17:34

Our leaders are not interested in stocks and NSE. With so much oil money to steal, how dare we mere mortals expect urgent action? According to Soludo, between March 2008 and now, 3.5 billion dollars have been withdrawn from NSE largely by foreign investors. If we have credible elections rather than selections, the government will be more responsible to the populace. Imagine how long it is taking UMYA to reshuffle his kitchen cabinet. We shall eventually see some action but it will be too little too late. My concern is that no matter how UMYA bungles his way at this time, he'll seek for a second term (even if from his deathbed) and win in a landslide. He will then claim legitimacy and our rudderless governance continues.

ikechukwu  # 4 | 15.10.2008 05:56

Nigerian banks are just stealing depositors' money. Their own idea of banking is robbery, Period. From very criminal interest rates , hidden interest charges to plain outright deductions from depositors' money. The issue of global financial meltdown is alien to them because they are not into banking, they are into stealing. If global meltdown comes against thieves may be it would affect them, but for now the stealing continues.

Dapxin  # 5 | 15.10.2008 17:42

I stopped bothering about this FG when serious (brain required)issues are in question....cant even read....I am sorry. 9ija FG = Mediocrity X 5 Billion Log 10 raised to the powa of 1trillion + Obasanjo-mania X 99Zillion corruption-nomics!. O da bo.