The recent patriotic friction generated by the alleged unremitted $49.8 billion oil money has simmered and the relationship between both parties normalized even as CBN governor Sanusi Lamido Sanusi had assured the President of his respect to his exalted office.
All things being equal, Sanusi will exit as the CBN governor in June this year, even as his intention not to seek reappointment has continued to evoke concern from analysts and pundits on the fate of the financial system and economy on his exit.
The financial system is the axle on which the wheel of economy revolves and the role of CBN is to play a second line of defense to ensure financial stability and economic growth through fiscal measures in order to ensure risk management, compliance to rules and regulations, monitoring and assessing activities to identify vulnerability and risks in the financial system. Some of the vulnerability variables include interest, inflation, budget deficit, equity price etc.
After four years of rigorous and effective central banking, Sanusi could pass as the Governor of Governors, in the chronicles of central banking in Nigeria. He is cerebral, sophisticated and result oriented. The CBN governor is innovative, focused and dynamic with cutting edge speaking skill to boot. He has zero tolerance for unethical practice.
On the basis of his track record and psychology, Sanusi seem to possess the moral rectitude and patriot fervour needed to confront vested interests who have hemorrhaged the country through ethical rascality, greed, avarice and penchant for primitive acquisition.
On his appointment in 2009 in the middle of the global financial crisis, Sanusi was resolute as he took on the ‘fat cats’ of the banking industry. ‘’There was no choice but to attack the many powerful and interrelated interests who were exploiting the financial system,’’ he had said in an interview with the Financial Times of London. The banking system has remained strong since and the stress test conducted by CBN in 2012 showed increased resilience to shocks by the banking industry.
The CBN governor anchored his reform blue print on four cardinal objectives namely; establishing financial stability, enhancing the quality of banks, ensuring that the financial system contribute to the real economy and enabling solution evolution.
Between 2009 and 2013, CBN recorded a galaxy of achievements, powered by its remedial and pro-active measures which engendered macroeconomic stability. In two straight years inflation rate anchored at between 10 per cent and 12 per cent and later dipped to a single digit of 8.6 per cent. The exchange rate also remained stable within the period with minimal fluctuation, while the reference interest rate- the Monetary Policy Rate (MPR) stood consistently at 12 per cent. All these engendered a stable business environment which enabled businesses and firms to plan conveniently.
The banking reform also reduced corporate rascality in the banking system to the barest minimum. Banks and other stakeholders became more compliant to regulatory requirements. And for effect, CBN launched a corporate governance project to eliminate ambiguities and help stakeholders be up to scratch with global best practices.
Thereafter, banks became banks and have been performing traditional banking services instead of merely purchasing government bonds.
It remarkable that the banking reform did not produce any casualty as no bank failed, and no depositor or creditor lost money. The Asset Management Corporation of Nigeria (AMCON), established by CBN in 2011 through an Act by the Nigerian parliament played a very strategic role in addressing the problem of non performing loans (NPL). The ‘’bad bank’’ as AMCON is also known acquired toxic loans valued at over N1.2 trillion, and further injected N1.6 trillion to suck up some more of it without recourse to the national treasury. The financing was through the Bankers’ Committee which set aside 0.3 per cent of their annual profit while CBN committed N500 billion over a span of 10 years.
AMCON’s performance has been superlative. In her influential back page column in Thisday newspaper of Monday, January 13, 2014, the sophisticated editor of the newspaper, Ms Ijeoma Nwogwugwu had written among other things: Something of major significance took place on December 30, 2013. On the said date, AMCON redeemed the N1 trillion series one, two, three and four bonds held by institutions outside the Central Bank of Nigeria. That AMCON has started to repay its obligations well before the seven years period provided by the Act establishing the corporation is note worthy. Indeed it is very rare to come across a Nigerian institution that voluntarily redeems its debts within the stipulated time frame that is expected of it’’, adding ‘’should AMCON continued along this part, it will be a win-win for all parties concerned, starting from the federal government, the bad bank and CBN, to the bad debtors whose loans were assumed by the AMCON but were given life lines to keep afloat’’.
The AMCON’s exceptional performance and the other achievements of CBN point to the shape of things to come in Nigeria if the right people assume strategic leadership positions including the highest office in the land. CBN’s performance exacted positive influence in the economy. In 2012, the economy recorded the fastest growth rate of 6.5 per cent even as the IMF/World Bank projected growth at about 7 per cent in 2013.
In response to a report in 2010 that Nigeria was a middle level player in Financial Inclusion in the sub-Saharan banking sector and lagged behind some of its peers in Africa, CBN pushed financial inclusion to the front burner, and it is now believed that financial inclusion has reached 60 per cent in Nigeria, with deposit money banks accounting for 50 per cent More over, the apex bank expressed commitment to further push it to a target that will reduce the unbanked from 46 per cent to 20 per cent in 2020.Financial Inclusion is about improving access to financial services for the poor people through the safe and sound spread of new approaches. Some of the innovative strategies adopted by CBN to drive financial inclusion include the Cashless policy, which is fast gaining acceptance even in the face of infrastructural deficit and the initial skepticism which greeted the policy, Agent banking which is expected to trigger nation wide deposit explosion, Banking Consumer protection which ensures the welfare of consumers and engenders trust and confidence in the financial system, and Tiered KYC(Know your customer), which helps in reducing the incidence of identity fraud.
By: Arize Nwobu
