Sanusi Lamido Sanusi Should Do A Second Term- THE CITIZEN

By The Citizen

There has never been a shortage of those aspiring to become the governor of the Central Bank of Nigeria when the tenure of the current helmsman, Mallam Sanusi Lamido Sanusi, expires in June 2014. At the last count, there were at least six economists who have expressed overt and muted interest in the top job; and their desire has been fuelled by Sanusi who confirmed that he would not be seeking another term on his job.

Almost as frightening as declining to continue in office after his tenure, is the fact that Sanusi stoked the seeming disaffection for him among some stakeholders and government officials. His recent pronouncements on the state of affairs in different sectors of the economy had been construed by some individuals as a ploy by Sanusi to position himself as a credible candidate for the presidency in 2015. Although it is clear that the government shares his concerns, it has not allayed suspicions that Sanusi has higher political aspirations. In December 2012, Sanusi had warned the federal government to reduce its pace of accumulating debt which would ultimately bring hardship to Nigerians. He lamented that Nigeria was 'borrowing more money today at a higher interest rate while leaving the heavy debt burden for our children and grandchildren'. At the time when the CBN governor made this pronouncement in London at the Honorary International investment Council Conference, Nigeria's external debt stood at $6.2billion as at September 30, 2012 and the domestic debt profile was N6.3 trillion.

There are reasons for increased trepidation for posterity, many economists have observed; which somehow lends credibility to Sanusi's fears about further debt liabilities for Nigeria.  Recent figures released by the Debt Management Office (DMO) showed that the country's debt profile now stands at N6.85 trillion for domestic stock and N1.217 trillion (about $7.7 billion) for external debts has further made Sanusi's outcry weighty.

Again, add this to Sanusi's bold orations on corruption and impunity which he said were fostered by the unpreparedness of the country to effectively sanction corrupt individuals and organisations, it becomes understandable the reasons why some individuals are determined to rock the foundations of Sanusi's tenure in office. It is not expected that the government will be comfortable with such assertions which is more like a home-grown version of the condemnation by the United States of America of endemic corruption in Nigeria. The litany of Sanusi's controversy keeps growing, though. He had drawn criticism from some individuals and non-governmental groups for donating N100 million to the victims of bomb blasts in Kano state which was seen as unethical by some groups because of his official position. Others alleged it had nepotistic undertones citing that he made the donation to victims from his state and was yet to make the same overtures to other victims of similar circumstances in other states. Yet, many commended the gesture for its humanitarian connotations which would alleviate the plight of victims of the activities of the religious insurgents.

It could be recalled that Sanusi made an audacious, and perhaps unintentional, foray into politics by affirming that the National Assembly was allocated 25 percent of the recurrent expenditure of the 2010 budget; the legislators were not quick to laugh it off and it is clear that it won him only critics and opponents to his reappointment as the CBN governor next year. Ironically, Sanusi introduced a humorous twist to the situation. Last year, he appeared at the CBN headquarters in Abuja in his chieftaincy regalia after being turbaned the 'Dan Maje Kano' by the Emir of Kano. As long as the ceremonial dress lingered on him that day so were the negative public sentiments. The CBN claimed that the governor was persuaded by the staff to make the royal entry into office, although in an unofficial capacity. However, some people refuted the evidence of such persuasion by the employees of the apex bank and expressed disdain and anger for what he did. But they had another reason to be angrier. Sanusi had courted public disaffection by recommending that the federal government should reduce its workforce by 50% as the country was spending 70% of its earnings on salaries and entitlements of civil servants; and it is so easy to appreciate the public outburst as many employees of CBN have friends and relatives on the payroll of the federal government.

However, we agree that much has changed positively since Sanusi assumed office in 2009. He had introduced a blend of reforms to check the systemic failure in the banking system. Sanusi too is confident of his achievements. 'With our monetary and fiscal policies, we have provided stability', he said. He meant the CBN'S audit of banks in Nigeria in 2009 which revealed that non-performing loans in eight banks (Afribank Plc, Bank PHB, Equatorial Trust Bank Limited, Finbank Plc, Intercontinential Bank Plc, Oceanic Bank Plc, Spring Bank Plc and Union Bank of Nigeria Plc) exceeded their share capital and shareholders' funds were eaten away by the provisions for bad loans. The bleak financial future was salvaged when vulnerable banks were offered to new investors which led to mergers and acquisitions. Access Bank merged with Intercontinental Bank; First City Monument Bank acquired Finbank; Sterling Bank took over Equatorial Trust Bank; and Ecobank Transnational (the parent company of Ecobank Nigeria Plc) acquired Oceanic Bank. In order to ensure that none of the existing banks failed, the CBN in collaboration with the Ministry of Finance set up the Asset Management Corporation of Nigeria (AMCON). Consequently, it injected N679 billion into the three bridged banks, namely Enterprise Bank Limited, Keystone Bank Limited and Mainstreet Bank Limited; which emerged in 2011 from the remains of Spring Bank, Bank PHB and Afribank, respectively when they could not meet the CBN's deadline to secure prospective investors for recapitalization.

The Asset Management Corporation of Nigeria (AMCON), which has emerged as the bad bank in the country provided sufficient capital to restore the banks to capital adequacy which was essential to their operations. Sanusi recently revealed that so far AMCON had taken over N4 trillion non -performing loans from Nigerian banks which have helped to stabilize the banking industry. He declared that 'AMCON is succeeding'; and the financial performance of Enterprise bank show an impressive profit before tax of N11.3 billion for 2012, so did Mainstreet and Keystone banks record outstanding profits.

Due to reforms introduced by Sanusi that led to the stability of the Nigerian banking industry, Nigeria can no longer be ignored by the international financial community. Three banks; Guaranty Trust Bank (GTB) Plc, Access Bank Plc and Fidelity Bank Plc have successfully issued Eurobonds which enabled them to raise dollar-denominated funds from the international market to support the local economy. Other banks such as First Bank, Diamond Bank, Sterling Bank, Wema Bank and Stanbic IBTC are also considering joining the euro bond market. However, analysts have suggested that the growing taste of Nigerian banks for Eurobonds highlights the need to monitor their operations given the potentials for cheap money accessed at low rates to precipitate a crisis or a financial bubble. Statistics from some case studies show that banks are prone to minimize risks and focus on profits when they have access to cheap money. Therefore, there is a need to effectively impose frameworks for operations for effective utilization of the bonds in order not to reverse the positive ratings of the Nigerian financial market. Observers agree that other contenders to the position of the CBN governor do not yet command a pan-industry confidence to sustain the financial tempo or handle any ensuing crises.

We believe that Sanusi's legacy of banking stability in Nigeria will be threatened if he makes good his decision not to be available for reappointment next year. They maintain that Sanusi is increasingly dismayed by the critics who had forgotten how uncertain the financial system was before he came into office. With a foreign reserve of nearly 50 billion dollars, stable exchange rate, strong banking sector and massive human and natural resources, Nigeria has become one of the most attractive investment destinations in the world'. It is also on record that the inflation rates in Nigeria have continued to slide downwards. Figures recently released by the National Bureau of Statistics (NBS) show that the inflation rate in Nigeria for the month of April 2013 was 9.1%; which is a single digit rate and leap from the average double-digit inflation rate of 12.5% as at December 2009. Observers agree that Sanusi's efficient management of the banking industry has put him in pole position to run the apex bank beyond his current mandate.

Granted, there is still the need to tread cautiously given the precarious nature of the global financial industry. There is also a need to seek modifications to the strategies to sustaining the positive strides that have been achieved in the banking industry. Opinions may differ on the scale of changes that the industry currently requires; but analysts are already supporting the retention of people who are ready to revolutionize the industry when there is a need for that. Presumably, they are referring to the number of bank chief executives and officials who were ousted by Sanusi and made to stand trials for clandestine financial transactions. It is evident that people with revolutionary instincts are in high demand and easily recognizable.

Therefore, as the tenure of the CBN governor winds down next year, it remains to be seen who will take up the mantle. Conventional official wisdom may lean towards an appointment of a new CBN head. But, considering the need for Nigeria to build on its current successes made possible by widely-acclaimed financial reforms introduced since 2009, it is most likely that the government will decide to keep things as they are; but that will also require a change of heart by the current CBN governor, Sanusi Lamido Sanusi, to make himself available for reappointment and continue on the job. In fact, he deserves re-appointment.