By NBF News
Listen to article

Professor Maduabuchi Dukor's piece, which appeared in the Daily Sun Newspaper of Wednesday, June 2, 2010 'constraints of revolution in the banking industry', was both romantic and full of idealism.

My summation of the purport of the article is as follows: First, Sanusi Lamido Sanusi, the Governor of Central Bank of Nigeria, being a capitalist is incapable of carrying out a revolution in the banking industry; the Nature of corruption in the capitalist society will not allow for a real revolution; and, the poor and Labour power, are the only class, capable of carrying out a revolution in our society.

It should be noted that Sanusi is today being celebrated by many, not because they do not see him as a capitalist, rather, because they see him as somebody who understands that even within a capitalist economy, there are certain fundamental pillars that must be in place to survive.

It is possible that Sanusi is an arch capitalist, though foresighted enough to realize that if things continue the way they are, the poor, dispossessed, and hopeless army of our people may rise up in arms and annihilate their oppressors. No doubt what Sanusi has done is to save the bourgeoisie from itself. To halt a system where people who professed to be capitalist did nothing to enhance capitalism.

They created no real capital. All that happened was for bankers to create paper money, through dubious creation of share certificates, without a corresponding creation of real value. He halted a system which allowed bank executive managers and their shareholders, bereaved of all notions of capitalist production, but awash with naira realized from dubious public offers, and not knowing what to do with such money started speculating in land and properties.

We saw how without any new infrastructural development within an area, land values skyrocketed overnight. Traditional modes of capitalist banking, which emphasized creation of long term assets with potential for long-term revenue streams, where jettisoned. In its place huge risk assets were created in favour of import of oil and gas, margin trading, and other short-term transactions.

When confronted with this aberration, the banks response was that because they received short term deposits, they could not use such deposits to fund long term assets. What a lie. In a capitalist economy, it is possible to fund long term assets with short term deposits. All that the bank needs is to sustain a continuous flow of deposits to match the asset so created. The same banks that say they are unable to create long term risk assets with short term funds, when their short term portfolios go bad, fill the hole so created through this process of continuous inflow of deposits.

Sanusi's value stems from his hands on experience in the banking industry and his will and determination to point to a direction different from the bandwagon. As an insider, he knew that banking institutions had in their employment first class Accounting graduates and ICAN highbreed, whose only qualification for the promotions they got regularly, was their ability to cook up fantastic balance sheets and profit and loss accounts. He was also aware that over 70 per cent of the loans given by those banks were none performing or bad, yet dividends were being paid for profits arising from such false accounting. Bonuses were being paid to senior and junior staff on non-existent profits.

Banks were recruiting and paying staff salaries that no other institution outside the oil industry could match or near, and which their real profits could not justify. Luxury cars where being bought daily for executives who were generating no profit except paper profit. Some had four or five luxury cars with their retinue of servants. Sanusi knew the industry was extremely sick, and needed urgent and radical medication to save itself. He knew the action he was about to take would equally expose First bank, where he was chief executive. How many of us will take the actions he has so far taken, knowing its effect on the last business we managed. We have seen his actions affect the fortunes of First bank.

What else can anybody ask of!
Beyond the issue of courage, the difference between Sanusi and Soludo was hands on experience. Soludo before he was made CBN Governor was a theoretical intellectual in the Ivory tower, who knew little about the real world, but could postulate on best economic principles. Sanusi, though not being less intellectually endowed, had day to day experience on what was going on in his bank and other banks. While theory is foundational and imperative in any exercise, its convergence with reality is mostly notional. The ideal is to have the benefit of both. We have in our recent history seen the mess to which those plucked from the ivory tower and saddled with very high responsibilities, have put us.

What Sanusi has done for which we must give him credit, is to make the banks truthful to themselves and know their feet are made of clay. The unrealistic ambition to be the biggest in Africa and maybe the world has abated, if not abandoned. The race amongst bank Chief executives on whose aero plane is bigger is no longer fashionable. The tendency to see God as another Nigerian that can be compromised, by buying aero planes and luxurious cars for pastors and overseers is unthinkable now.

Non shareholding or minority shareholding chief executives of Banks are no longer thinking of becoming majority shareholders by making public offers in the capital market, then borrow depositors' funds from their banks to buy majority stake in the bank, without bringing in fresh equity. In our very eyes, banks that hitherto made it a habit to grow their balance sheet, deposit and profit base by more than 100% annually, have suddenly shrunk their balance sheet size, and, are in some cases posting losses.

What Sanusi has been able to do is by all means revolutionary. It need not be a revolution to obliterate capitalism in our country before we call it a revolution. It is a revolution in the banking industry to the extent that it has not just questioned the old ways of doing things, but has introduced new rules that have thrown the old rules overboard. A revolution to change the political economy of a country, in any case is not within the purview of a C.B.N Governor, but that of the national government.

A revolution does not cease to be one, simply because the initiator of the revolution is a member of the old order or profited from it. In fact benefiting from the old existing order could be the armour needed to fight it. Karl Marx, the greatest revolutionary of all, anti capitalist, inventor of Dialectical materialism, was a rich lawyer's son and married a wife from a rich family. He attended the best schools in Germany and his background helped him obtain a PHD at Twenty years of age.

It was the advantage of his education that opened up his mind, after so much study in law, history, economics and mathematics. It is doubtful, if he would have achieved much if he was a poor man's son without education. His lifelong intellectual collaborator, Fredrick Engels was the son of a rich capitalist in Manchester. Engels used part of the gains from his father's factory to support a lot of their intellectual works. The theory of Dialectics explains this negation.

Professor Dukor limited his analyses on corruption to the slave, feudal and capitalist modes of production, excepting socialist economies.

Our recent experience with socialism or communism in old Soviet Union and what is happening in china and North Korea, shows that we need new vistas to explain corruption outside of Ideology. It is obvious ideology or the mode of production or exchange, simplicita, does not explain corruption. We may go back to Locke, Hume, Kant or even Proudhon for an explanation. Sociologists and psychologist may offer answers.

I subscribe to the view that capitalism by its very nature breeds corruption. But it does not explain the Nigerian situation. The West is practicing capitalism. People in those countries, do not loot their treasuries. Neither do their banks lend money only to the very wealthy and those who have huge security to back the loans. In those countries, banks grant loans to even poor people who have ideas to start up business and for educational purposes.

Rules are made within their economy to maintain fairness among operators. It is possible that if Nigerian capitalism is capitalism as Marx understood and explained it, things might have been better. Today, what we have is not capitalism as it is known, but a free market founded on primitive accumulation.

It is important in our appraisal to appreciate Marx's sincere respect for the wonderful progress that capitalism had wrought on mankind, through the vast technological improvement it brought. His main problem was that since production is social in nature, it was wrong for the provider of capital to appropriate surplus value, alone to the exclusion of labour, a very necessary factor of production.

It is possible that if Marx where alive today, with the improved working conditions of the worker, bonuses in the work place, profit sharing and increased wages, he may have reviewed some aspects of his work. The same way those purist capitalists, the choir men of free markets, and purveyors of the ideology of winner takes all, have had to provide free health care and education for the poor and sometimes, free accommodation and unemployment benefits. So much has been done in capitalist economies to provide for the poor and labour, that capitalism now resembles socialism.

Finally, when professor Dukor re-affirms the role the poor and labour play in a proletarian revolution, the question is which poor?

Which labour? Maybe the poor and labour of other countries, not Nigeria. It is possible that over the years, our policies have so shattered the poor and labour, that the resentment against the petit bourgeoisie and the bourgeoisie has turned into admiration by the poor in our society. All he hopes is an opportunity to be like his oppressor, and not to create an equitable society. So in the workplace he does very little work, but expects payment far above the value he adds.

Corruption arising more out of greed, than want, has taken over his soul. His worldview is obfuscated by images of home video he watches. He has no interest in learning. Ignorance takes over and his worship for money has no boundaries. Mobilizing him for any revolution is a mirage. Those hoping for a proletarian revolution in Nigeria must begin by raising their consciousness.

• Jackson Agbai Abbah,
Lawyer and Businessman writes from, Lekki, Lagos.

Disclaimer: "The views/contents expressed in this article are the sole responsibility of the author(s) and do not necessarily reflect those of The Nigerian Voice. The Nigerian Voice will not be responsible or liable for any inaccurate or incorrect statements contained in this article."