Leadership (Abuja)
Abba Mahmood
7 August 2008
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Professor Chukwuma Soludo started coming to limelight as the director of African Institute for Applied Economics, Enugu. In that capacity, he organised the first Pius Okigbo Lecture where the chief economic adviser to US President Bill Clinton, Prof. Stiglitz, was the guest speaker. I attended that event out of my respect for Dr. Okigbo, that distinguished Nigerian economist who has contributed so much to our national economic policies and development since independence. Those were the days of home-grown, practical and feasible development plans. Dr. Okigbo belonged to the category of Prof. Adebayo Adedeji, the former executive secretary of the UN Economic Commission for Africa.
Soludo, then, became a consultant on economic policy to a presidential aspirant in 2002/2003 from where that great lady whom I respect very well, Dr. Ngozi Okonjo-Iweala, brought him into her team. He was the chief economic adviser to President Obasanjo where he started experimenting with our national economy. In that capacity, he produced a booklet, National Economic Empowerment and Development Strategy (NEEDS), which tried unsuccessfully to copy Abacha's Vision 2010 blueprint.
Full of zeal and theories, he was appointed to succeed an accomplished banker, Chief Joseph Sanusi, as governor of the Central Bank of Nigeria. That was the point Soludo became more confident to continue his experiments with our economy. Knowledge is supposed to mould one into a better and more humble personality. I never thought that the Soludo I first saw in Enugu could be so transformed into such a controversial figure who is now being associated with financial recklessness.
His most-talked-about achievement was the banking consolidation exercise during which a set date was given for all Nigerian banks to achieve a minimum N25 billion capital base or stop business. There is no economy anywhere in the world where you can have only big banks, except here. The recapitalisation has taken place and there have been mergers and acquisitions leading to the current 25 mega banks operating in the country. Everyone is aware of the necessity for reforms in the banking industry, but many were in doubt as to whether Soludo's reform was sufficiently well thought through and if enough empirical experience had been brought to bear in formulating this reform.
In a widely published open letter to the president dated June 13, 2007, Reverend Cannon Segun Agbetuyi, a banker of over 30 years and chairman of Spring Bank Plc., wrote thus on the post-consolidation Nigerian banks: "In a self-fulfilling prophecy of Professor Soludo's 'dissertation' at the inauguration of his Banking Consolidation and Reform Agenda, mind-boggling figures of performance and strength are fed to the world daily. This power house of propaganda has, in less than two years, made Nigerian banks become not only international players but world champions. Suddenly, Nigerian banks have 'overtaken' world-renowned financial behemoths who, through stable and transparent management across centuries in stable and highly accountable climates, seem to have now recessed into oblivion as tiny specks in the rear-view mirror of our new Nigerian banking wizards.
"But banking is more than propaganda and academic dissertation. It may call for foresighted and informed discourse, but banking stretches far beyond the confines of polemics. Banking is Real Life, Real Time. At the commercial and grassroots level, it is about the lives, the aspirations, the savings, the plans, the careers of individuals, families, businesses and governments. By nature, therefore, banking and propaganda should not, and cannot, go safely together."
The same Spring Bank chairman opined that the banking sector is only a component, albeit a key one, of the total economy in which it exists. Against the worsening run on its host economy, the Nigerian banking sector is churning out mind-blowing performance figures which all go to "buttress" the success of the banking sector that it has fundamentally re-arranged the flow of investment capital, sucking funds through the capital market and drying up the manufacturing and production sectors – the real economy. In short, the bridge has become wider than the river!
The dust raised by the banking consolidation exercise had barely settled when Soludo started another pet project of his – the Africa Finance Corporation – a distorted copying of the World Bank's International Finance Corporation (IFC). It was so controversial that a committee was set up by the federal government to investigate the whole AFC matter. The committee found that "the decision of the CBN Board under his (Soludo's) leadership to commit funds to the AFC in November 2007 before it had legally become operational (even by the terms of its agreement which required the signatures of at least two African countries), was hasty, procedurally wrong and legally flawed. The committee further noted that under section 26(i) of the 1991 CBN Act (the new Section 31(1) and (2) of the CBN Act No. 24 of 2007) under which a Board approval was secured for the AFC investment, the investments anticipated by the laws were in domestic economy and not for multilateral ventures such as the AFC".
The committee then further noted: "The acceptance by Prof. Soludo of the chairmanship of the Board of the AFC in his personal capacity on June 4, 2007, was a contravention of Section 9 of the CBN Act 2007 which forbids the Governor from holding any such position except by virtue of his office as Governor of the Central Bank of Nigeria." In conclusion, said the report, "the Committee finds Prof. Chukwuma C. Soludo liable for gross negligence, recklessness and gross abuse of office".
All the problems of Soludo are self-inflicted. He has the tendency to take unilateral actions such as when he recently tried to change the naira's value without presidential approval. He should know that it is not without reason that God gave us two ears but only one mouth – it means we should listen more and talk less. This probe is so far restricted to only the AFC contraption. What if his whole tenure is investigated? Even if this government is not courageous enough to do so, there is surely going to be a day when no man or woman, however powerful, can intervene on behalf of anybody. Soludo must bear this in mind. Ours is just to remind him. God save Nigeria.
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