Lagos — Critical reactions have continued to trail the recent May 2010 deadline for the repayment of the bailout funds made available by the Central Bank of Nigeria (CBN) to the nine troubled banks. In this interview with STAN OKENWA, a social analyst and Legal Practitioner Mr. Monday Onyekachi Ubani bares his mind on the matter, the emerging Assets Management Corporation (AMC) , mortgage financing and the economic implications of the power play at Aso Rock. Excerpts:

The Asset Management Company Bill (AMCB) is currently receiving attention at the National Assembly and indications are rife that early this month, the bill may be passed into law so as to allow investors to set up companies to buy up the banks' toxic assets for onward management after purchase at a discount rate. How do you think that this emerging sub-sector would survive in an economy like Nigeria?

You are aware that the effects of the financial meltdown are worldwide. It is equally important to note that all other economies of the world are devising strategic means to mitigate the problems created by the scourge especially as it affects the capital market. Nigeria cannot be an excerption.

The capital market in every economy is the pivot of development and growth and that is why both developed and developing economies are working out several means to step up the stability of the market. You are aware that the capital market is very important in the recovery of every collapsed or collapsing economy.

Now Central Bank of Nigeria (CBN) in its wisdom came up with the idea to create a market designed and structured to recover non-performing loans and other types of debts after an official buy over from the banks. The bill for this sector is currently receiving attention at the National Assembly.

If you listen to stakeholders, you would understand that they are very much interested in that bill because if it is passed, more jobs would be created as many private companies would be set up to mop up all the toxic debts with the aim of recovering them vide a legal means backed by law. The AMC is another way of stimulating the recovery of the capital market.

You know that if the capital market of any economy collapses, no doubt, the entire economy is in jeopardy. And that is more reason why the CBN and other financial regulatory agencies are working round the clock to see not only to the emergence of the AMCs, but the consolidation of the capital market.

Here in Nigeria, if you recall about two to three years ago, many Nigerians were investing in the market with hope and confidence. Unfortunately the system crumbled and heavy investors become heavy losers and that scourge is still fresh in their memories and that is why the authorities are encouraging the coming on stream of the AMCs so as to rebound the economy via the recovery of bad loans.

Every right thinking person in this country need to support the policy of the government to stimulate the capital market and that is part of what the AMC is designed to do apart from stabilizing troubled banks.

I am totally in support of that particular bill. The bill is in need of fast passage as a lot of survival strategies are dependent on it even though it is yet to come on stream.

A good number of investors would pull resources together to set up AMCs and with foreign partners who are experts in debt recovery, the sub-sector would blaze the trial.

Jobs would be created and the multiplier effects of the new sector would trickle down unprecedented growth of several small and medium scale businesses.

The sub-sector would further unlock huge funds that would have ordinarily been written off. But the target of the CBN is very clear; to stop those year end write offs of bad debts in the banking sector. The era seems to have come to an end if the AMC bill sails through.

Some strong insurance firms may set up AMC subsidiary but let us not preempt the position of the bill until its out.

Few days ago in far away Pretoria, South Africa, the CBN Governor, Mallam Sanusi Lamido Sanusi said that all the eight troubled must complete the repayment of the survival lifeline injected in them during the early phase of the banking reforms by May this year. Beyond that banks are now dusting their books ahead of the fourth quarter financial statements. Do you think that the affected banks can between now and end of April sell off their toxic assets, pay back to CBN what it gave them and at the same time retain enough capital base that can enable them present an appreciable report to their shareholders?

In the first instance, I may not totally agree with the CBN governor on the timetable he has reeled out on this issue. This is predicated on the fact that all most all the affected banks just as he said them were in bad shape as at the time of rescue and you and I know that not much may have been recovered by now or even by May.

Now to the extent the bank would be able to manage and wriggle out the mess just within a specified time; and then pay back all the bailout lifeline pumped into them by the apex bank; and be able to still make profit and declare dividends for their shareholders; to me, the whole scenario remain a wild ghost chase.

Put in a very simple way; giving them a short time limit say April or May is not feasible to me. The problems that affected those banks were very monumental in the first instance and I think that the CBN may not solve their puzzle in just less than one calendar month.

I believe that if those eight banks would be able to be strong on their own, one may be looking from October this year or even beyond. That time frame may not work after all. It needs to be adjusted even though the affected banks may not complain. It is natural. You don't talk with your mouth wide open when your lender is giving you debt recovery conditions. But the issue is still dicey. It may not work between now and May.

The banks are still in bad shape, more so when you now have uniform end of year account for all the banks. You know, for those that used to go and borrow via discount windows would not do that again because all of their results are expected the same time. There is no escape route and that is a heavy challenge for banks now.

What am saying is inter-bank borrowing to prop up account. The window in fact is now shut and every bank can only make do with what it has. The question is now what do they have between August last year to May this year. Am not speaking for them but you and I know that not much activities may have taken place within the period under review.

Now if those windows are no more there and banks are to close their account at the same time, then the era of books maneuverings are clearly over. Its either you have it or you do not have it.

As I said earlier, if there is going to be any recovery for those banks, we should lookout from October of beyond and not as near as May.

Moreover and having said that, this is the CBN governor dishing out instructions. He may have more facts more than we do. He may have all the knowledge of all the workings and that may be why he made the pronouncement after all. But within me, an outsider, I believe that that given time is too early unless the CBN wants to kill her patients in the intensive care unit which is unethical in the first instance.

Now some crack analysts say the ground master plan is to push the troubled banks to the wall, declare them completely distressed and auction them in a commando-styled hostile acquisition by currently faceless investors who may have been in the waiting for too long at the expiration of that May deadline. How do you react to that?

Now you are aware that recently the CBN governor has been accused of nursing an ulterior motive against some of these banks going by his utterances and positions at different fora. People say the way he manages information for those banks portends a lot. Some accuse him of opening his mouth too wide on issues concerning the eight troubled banks. Others say even America never travel allover the world opening her mouth wide against the domestic problems of her banking sector rather it was carefully developing and implementing workable solutions.

For me I will not accuse him of any bad motive because I have not seen any yet.

Having said that, I think, that the most important thing is that the CBN governor must factor in the interest of over 150 million Nigerians in all his actions and utterances in this on going banking sector reforms.

There must not be any personal or sectional interest otherwise the entire deal would back fire at the long run. So if his intention is to force these banks to go down so that they become kobo or less, he should not forget that Nigerians who I believe are more intelligent than before are seriously watching and taking statistics of every step taken so far.

Nigerians would not keep quiet if it becomes glaring that an unnecessary hostile takeover is setting by June. It may not work.

We are aware that it is his duty to track these banks back to profitability but that must be within an affordable time limit and not a time frame that would end by May. It's too short a time to have recovered unless these particular banks are not operating here in Nigeria again.

Ordinarily, all his moves should be in the best interest of the banks so he need to give them enough time to do their best and come out of the woods.

Any move towards a hostile takeover would be a straight move to kill the recuperating economy and many Nigerian would not subscribe to it.

The PMIs in the last few years are not doing very well as in the supply of affordable housing units for home seekers. What is the way out for the mortgage banking sector to bounce back into an era of flexible housing delivery?

The bug that infected the commercial banking sector since last two year no doubt has trickled down to every financial sector and the mortgage banking sector cannot be n excerption. If the main universal banking system is in turmoil, definitely every affiliate sector must be affected. Apart from the heavy hit received by the PMIs, even the microfinance banking sector is not left out in this crisis.

This is because their own economy is not different from the general economy. They operate exactly in the same market and when the market is in crisis, every one is involved.

You and I are aware that for the last three or two years, these banks have been struggling because of the macro problems that originated from the international economy. Our economy is not insulated from the global economy.

Talking about the success of the PMIs, it is important to bring to the fore that the regulating agency in the sub-sector has not done its roles either better. Am referring to the not too good performance of the Federal Mortgage Bank of Nigeria (FMBN) since it was created by the apex government.

As far as am concerned, Nigerians have not seen the bank pay the major role it was designed to do. One of the cardinal roles of the FMBN is to encourage the PMIs and not to compete with them.

FMBN should be a solution provider to PMIs and not a competitor. It's a regulatory body designed to be monitoring the activities of PMIs but the agency seems not to be doing just that. The bank has not been able to put a workable policy capable of pushing the PMIs to the next level of housing delivery. The government still needs a lot to do in FMBN considering the primary target of the creation.

The permutation is very clear; there is nothing the PMIs can do if the FMBN cannot put on ground, a resounding fund access system on long term basis that must be backed by other supporting policy guidelines to limit default or toxic assets on the long run as it affects the commercial banks now.

Before now, President Umaru Yar'Adua had been away in Jeddah, Saudi Arabia for impromptu medical vacation. Though there are speculations that he was bundled back recently, is there any way the unfolding waiting game at the presidency or his over 92 days stay abroad had affected the economy?

In the first instance, the unfolding scenario portends great danger for the economy. You see, no investor would venture into an economy that is shrouded with uncertainty. It's natural.

This is so because only stability and certainty are two major considerable factors by any genuine local or international investor. Nobody puts his money in an uncertain polity, no matter how the situation is painted.

If there is any uncertainty or any seemingly lacuna at the top hierarchy of the government, the economy is always the first to hit followed by the standard of living of citizens. This is true because no serious investor would have the courage to put down his money in an unpredictable polity.

Now the situation is even getting more dangerous. This is so because his commando-styled return has further raised the fear of uncertainty. The polity has been further heated up. These are signs of confusion and economy does not understand such scenarios.

The uncertainty as I said had tripled not only because of his alleged return but referring our acting president as vice in his very first media statement to Nigerians. It portends danger even though certain levels of clarifications have equally emerged from the same person that let the cat out of the dog. All these payouts do not help a budding economy like ours now.

Let me tell you, by the time these entire saga are sorted out, and you quantify what the economy has lost, you will find out that billions of naira had gone down the drains. Remember that while he was in Saudi Arabia, several delegation jamboreed into the city of Jeddah to see him without any success. Yes they did not succeed, but a lot was lost in terms of capital flights in an economy that is bedeviled with banking crisis, collapsed infrastructure systems and power opprobrious.

Come to talk of the demurrage paid on the presidential jet parked for over three months.

You are aware that few days before we heard that he is back, a delegation of the Federal Executive Council (FEC) flew out to see or thank the king of the city, I don't know but the issue is that millions of naira must have gone down the drain.

Political uncertainty allover the world remains the greatest enemy of any budding or consolidated economy and the scenario is taking its toll on the economy. There is no doubt about that.

Now when you take time to assess, quantify, scale and compute all the nation has lost as a result of the entire politicking, alignments and re-alignments, you will notice that the economy may have been taken aback too far and no recovery plan is still on ground rather the game has shifted to Aso Rock.

By the time this game would end, the economy expected to be among the top 20 in 2020 may be on her way to the ages past. You and I are aware that this development was never our expectations for this year. The whole game portends very great danger for the economy. That is the fact of the matter on our hands now. Shying away from it amounts to a disservice to our country Nigeria.

I believe that Nigeria and Nigerians should be able to sort out this puzzle and move on stronger and better. This need to be done as soon as possible before the international confidence on the economy is eroded beyond revival.

The first step should be for the FEC to rightly inform the National Assembly that he is incapacitated so as to enable the lawmakers set up a medical team for verification test after which they will declare him unfit and step up the Acting President to full fledged president with a vice or expressly impeach him and end this unnecessary time buying game with the destiny of over 150 million people.

Rigmaroling and maneuverings the polity cannot do us or the economy any good. Our economy is sliding instead of making progress.