Comfort Ekeleme
7 November 2009
The Central Bank of Nigeria (CBN) Governor, Mallam Lamido Sanusi has soft-pedalled on the controversial issue of Non Performing Loans which has so far led to the sack of eight bank chief executive officers. This is even as he alleged that a substantial percentage of billions of such funds published by the apex bank where stolen money
The CBN boss said the money was borrowed from the banks by some unidentified persons who siphoned the same out of the country. Some N171 billion of such loans have been recovered by the Economic and Financial Crimes Commission (EFCC). A total of over N700bn has been categorized as non-performing.
He declared, "If you look at the list of the billions of the non performing loans published by us, how many of them were agric project, how many of them were manufacturers. The money was stolen; people lend money to themselves and took the money out of the economy, people lent and speculated on the stock market, people speculated on the foreign exchange market.
Sanusi, who spoke in Lagos at the annual dinner of Chartered Institute of Bankers of Nigeria (CIBN), stated that at the first quarter of the year, the Nigerian economy grew by 7.2 percent in real terms, while the growth recorded at the third quarter was over seven per cent.
"These were growth achieved at the time we were auditing the banks, and at a time when there is a credit squeeze. It will tell us that the banks were never lending to the real sectors, the economy can go on without the banks, there is no economy where every body complain that there is no credit and yet the economy grow at seven per cent," he said.
Sanusi also disclosed that the recorded growth in the nation's economy came from agriculture, wholesale and retail trade, stressing that the nation had been deprived of growth in manufacturing as a result of lack of finance
He said the growth of credit to the private sector recorded in the last few years were largely fake, saying, "If anyone ever doubted those who said that the banks were not lending to the real sector, the evidence is in the growth of the Nigerian economy in the last two quarters when banks were not lending".
The CBN boss also stressed that Nigeria does not have banking crisis, 'not a single depositor has lost a single kobo in the Nigerian bank, not a single bank has defaulted in its obligations to its creditors, and not a single correspondent bank has shot its line. Some banks CEOs have crisis, some borrower who had refused to pay have a crisis, but the banking system does not have a crisis and if we had not created crisis for those people the banking system would have had crisis. We have avoided the crisis and place it on their heads'.
He also said that the on going sanitization process in the sector would not be limited to the banks, adding that the regulators would as well be held accountable where appropriate. He said the major issue to be improved substantially in post reform era is compliance of code of conduct of corporate governance by management of financial institutions.
"I can confidently say that I have the insight of every Nigerian bank and I know what the problem is, and I will continue invading and intruding so long as I am the CBN governor, and if I see a problem coming, I will take care of it before it land on my head. If we had waited a few months we would have had a big explosion and then we would not have been in control of the situation".
"The confidence in the market was shaken when people felt they were not told the truth. The confidence actually came back when we said this is the situation, this is the problem and we are in control of it and we will continue to disclose as honestly and transparently as possible and we will continue to deal with the problem, the problem is not beyond the Nigerian government."
The apex bank boss who noted that the banks were not set up to finance the chief executive officers, but to preserve peoples fund and to channel savings to productive investment, disclosed that CBN is embarking on proactive measures to stop further mismanagement of depositors' fund.
He said investors are now making it clear that they are not willing to foot the bill for corruption, saying, "commit any fund and miss management, before committing any fund investors increasingly require evidence that companies are ran according to sound business practice and minimize the possibility for corruption and miss management".
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