Daily Independent (Lagos)
Emmanuel Tiko Okoye
8 July 2009
opinion
Lagos — The new Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi (a.k.a. SLS), spoke recently with Financial Times of London's West Africa correspondent Matthew Green about his agenda for the finance and banking sector.
The first thing that struck me about the interview was the high quality of questions asked by the correspondent. It made me wonder why finance reporters in the nation lack the technical skills to ask 'thinking' questions instead of fawningly beating around the bush. Then again, maybe they are not given the space to ask such questions because our public officials are suffering from inferiority complex - rating white skins and foreign accents higher than black skins and local accents. Whichever be the case, the body that superintends the professional activities of finance journalists must matter-of-factly evolve a road map for burnishing their image.
SLS is without question a perfect poster-boy for the nation's finance industry - what with his handsome features and boyish grin. I'm a latter-day convert to Sanusi-ism because on a net-net basis he has proved he got President Yar'Adua's nod for the top CBN post on merit, not because of the need to fill a particular quota. There's a certain degree of confidence and elan in his speeches that's both refreshing and intoxicating. I now can better appreciate what American novelist F. Scott Fitzgerald meant when he said "You can stroke people with words"! I can understand the rationale for 'selling' SLS to the international finance community given the controversy that initially dogged his nomination, hence interviews like that with the Financial Times. But he must tread very carefully in this re-branding project because there's a wide chasm between the C.E.O. of FBN (his former job) and governor of CBN - their utterances, for instance, carry different weights. My advice to SLS is to apply the brakes on public speaking. His counterparts elsewhere hardly speak because when they do the markets react. American poet and naturalist Henry Thoreau averred that "It is the man that determines what is said, not the words." Besides, a Burmese proverb says that "Too much talk will include errors." Remarks made to impress and/or uttered off the cuff may come back to haunt the governor when and where it hurts the most.
There are sections of the interview where I agreed completely with SLS, sections that got my qualified assent and others that I totally repudiate. I agree that the nation's monetary policy isn't hostage to world oil prices but to fiscal dominance. I agree that an asset management company should be created to buy up banks' toxic assets - to be assumed at written-down values, not at cost. I totally agree with his declaration of government-appointed boards as a no-brainer considering the ruin they caused the industry in the late 80s and 90s. I agree that affected banks should be made to bite the bullet by recognizing their non-performing loans (with appropriate loss provisions) much sooner than later but the CBN must be on the lookout for incidences of 'Chinese window-dressing' - banks lending new loans to debtors to repay outstanding interest and give the semblance of performing loans! I agree on the need to impose more stringent disclosure regulations to boost the evaluation process. I believe the market would indeed understand if banks are made to disclose all perceived problems - including toxic margin and energy-related loans - but let me caution that why candor is a desirable quality, discretion is even better. Washing the sector's dirty linens in the public is more than likely to cause panic in the system and culminate in a self-fulfilling prophecy. I agree on the need for more consolidation in the banking sector - SLS is aiming at 15 but I think six is optimal. One comment though: since Soludo's 'sin' in the eyes of the northern establishment is the alleged pauperization of the region with the post-consolidation emergence of only one 'Northern' bank - Unity Bank - won't it be worse for SLS if Unity Bank just happens to a 'victim' of another round of consolidation?
I agree with SLS that there needs to be better coordination between the CBN and the Finance Ministry in managing the economy but I believe he's putting the wrong foot forward. There is a cogent reason why a separation of powers exists between the government (managers of fiscal policy) and the central bank (managers of monetary policy). Fiscal policies are largely driven by political and partisan considerations while monetary policies are supposed to be more rational. Mixing both is like mixing gunpowder and fire! SLS says the insistence of the three tiers of government on sharing - rather than saving - excess crude revenues has an adverse effect on monetary policy. This should be a wakeup call to him because as far as the political elite are concerned, an 'agreeable man' is one who completely agrees with their point of view without questions asked! SLS says he doesn't want to don the puritanical professional garb of the governor of the Bank of England or chairman of the American Federal Reserve Bank; he wants to be a quasi-politician. Good luck to him! He must, however, remember that he that plays with cats must blame no one but himself when he's scratched! I agree that in formulating monetary policy to tackle challenges posed by inflation as well as interest and foreign exchange rates - the CBN shouldn't be afraid of thinking out of the box, but change just for the sake of change isn't a desirable thing. I totally disagree with his plan to review an existing policy that limits foreigners to owning only a minority interest in a top-tier Nigerian bank (he can raise it though to a maximum of 40%). If the market is so lucrative, let them start theirs from scratch since there are no restrictions on start-ups. The top-tier banks are too important in developing the domestic economy and we don't want operators whose interests may conflict with this vision to control them. If the problem, as SLS canvasses, is the case of mystery nominees owning bank shares then let the appropriate laws be amended; you don't solve a problem just to create a bigger one.
My eyebrows rose several notches when I read SLS gloating about "coming here to clean up the system." As far as I know, almost all the top management staff still working with him date back to his predecessor's tenure or is he already thinking of throwing away the baby with the bath water? On the whole, it was an excellent interview but SLS must resist the temptation of counting his chickens before they hatch; humility should be his watchword. A Chinese philosopher once said that "A dog is not considered good because of his barking, and a man is not considered clever because of his ability to talk" or, as another proverb poignantly points out: "Talk does not cook rice"! As time progresses - and push turns to shove - it'll be interesting to ascertain whether SLS spoke from his guts or from the overcoat pocket of his attractive suit.
This week's award goes to Senate President David Mark, for urging visiting Spanish Prime Minister Jose Luis Rodriguez Zapatero to support Nigeria's quest for a permanent seat at the UN Security Council because "it is a legitimate demand that we rightly deserve." What arrogance! Need I remind the No.3 Citizen that you hardly get what you deserve in life but what you earn? What the nation yearns for won't come by throwing petulant tantrums and making puerile demands but by getting its act together to command the respect and envy of other nations.
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