by Tunji Andrews
At a time where the once ailing private sector, which now rests on its deathbed, and even the funds available to them being very costly to access at between 24%PA to 30%PA; would it not have been better for the CBN to focus on means to reduce the Monetary Policy Rate (MPR) so that banks can reduce the interest rate charged on loans?
I came across an article recently, which centred on the personality of people who had been in positions for far too long and refused to give it up, irrespective of their diminishing contributions to the position. It cited a few reasons why such a person wouldn’t want to admit that he/she had held onto that position too long; reasons like, the person not being the type to ‘walk away’ from things, or that the person can not see a single good enough reason to leave, or even that it may have become a game to see if he/she can outlast other people. Whichever way, it showed the classic example of a hugger; holding on tightly, even past the period of productivity.
Having heard the recent resignation story of the Pope, I’m sure no one can describe him as a hugger, having stepped down from a position quite a few regard as being the closest possible human position to God, yes, God, and still he quit.
Shall we then ask if this same anointing could be placed upon the civil servants/politicians in Nigeria, who even after serving their complete tenures, do all they can to hang around the corridors of power as long as they possibly can. At this point, my mind wandered to a man who I believe is one of the most intelligent minds Nigeria has ever produced, Mallam Sanusi Lamido Sanusi. Sanusi’s career path is anything short of inspiring, having joined Icon Limited (Merchant Bankers), a subsidiary of Morgan Guaranty Trust Bank of New York in 1985, and then Baring Brothers of London. He later moved to the United Bank for Africa in 1997 in the Credit and Risk Management Division, rising to the position of a General Manager. In September 2005, he joined the Board of First Bank of Nigeria as an Executive Director in charge of Risk and Management Control, and was appointed Group Managing Director (CEO) in January 2009. He was also the Chairman, Kakawa Discount House and sat on the Board of FBN Bank (UK) Limited. Sanusi, for those who don’t know made a name for himself in the banking industry for his contribution towards developing a Risk Management culture in the Nigerian banking sector.
He came to the notice of the entire nation in 2009, when he was appointed as the Governor of the CBN. For me, he was the ideal choice having been appointed around the 2008 global recession. His tempered mien, an obvious opposite to the more aloof disposition of his predecessor, Charles Chukwuma Soludo and his credit risk background was what we needed to bring stability to our very shaky economy via stricter controls.
As expected, he hit the ground running, with what many called the ‘Sanusi Tsunami’. In August 2009, he led the CBN to disrupt Afribank, Intercontinental Bank, Union Bank, Oceanic Bank and Finbank under the guise of bailing them out with 400 billion naira of public money, and dismissed their CEOs. According to him, that move was to send a strong signal that such recklessness on the part of bank executives will no longer be tolerated. Several senior bank officials faced charges that included fraud, lending to fake companies, giving loans to companies, they had a personal interest in and conspiring with stockbrokers to boost share prices. For those of us on the side-lines watching, it was indeed something to cheer; and this proved to be only the beginning of many more bold moves coming from the apex bank under Sanusi’s leadership.
Having enjoyed his early days as CBN governor, which led to names of chronic bank debtors being published and several senior bank executives investigated, resulting in convictions (remember our dear Mrs. Ibru); it becomes important to ask where our dear decisive, clear, and envisioned Sanusi disappeared to? This question troubled my mind as I read an article a few days ago of a new policy by the CBN on categorisation of bank accounts. The CBN policy has categorised bank customers into Low Value Accounts (Level One); Medium Value Accounts (Level two) and High Value Accounts (Level three), to be based on turn-over on account; setting new deposit and withdrawal limits for each category of account holders and introduced a three-tier Know Your Customer (KYC) requirements for banks. Having independently publicised the cash-less policy for over 6 months on the business solutions program I produce, anchor and air simultaneously on Smooth98.1fm, Nigeria Info 99.3fm and City 105.1fm; I could not feel more disappointed, with a sense of maybe I wasted my time with all the publicity.
The new policy was announced last month by the CBN via a circular to all banks and other financial institutions (OFIs). The circular which was signed by the Director, Financial Policy and Regulations Department, Chris Chukwu, set maximum single deposit amount of N20,000 and N50,000 for Low and Medium Value Accounts respectively, with a maximum cumulative balance for Low Value Accounts at N200,000 at any point in time and a maximum cumulative balance of N400,000 on the Medium Value Account. However, for the High Value Account, no limit was placed on cumulative balance.
About a month before the Cashless policy went live in Lagos, the CBN issued an upward review in the withdrawal and deposit limits of banks from one hundred and fifty thousand, to five hundred thousand for individuals and from One million to three million for corporate entities. This move not only sent confusion through the banking sector with banks failing to adequately pass on information on the review to their staff, it also proved to be the first blow to the policy itself. The question we all need to ask is that how many Nigerians regularly write cheques of five hundred thousand or make deposits of such amount of cash? I would not even want to go into why the CBN refused to grant any of the telcos licences to run mobile money. As far as I’m concerned, that singular act made the policy itself stillborn. Knowing that the entire cashless policy lay on their shoulders, I wonder why the CBN didn’t think it wise to give the telcos an incentive to want to ramp up their capacity in the hope of expanding their business, but that is a story for another day.
Forgive my disposition, if it is wrong, but, what this new policy says to me is “Hey! We are taking away the cashless policy limits to your banking transactions, but, only if you can afford to do high banking turnovers regularly”. At a time where the once ailing private sector, which now rests on its deathbed, with the manufacturing sector suffering from lack of funds; and even the funds available to them being very costly to access at between 24%PA to 30%PA; would it not have been better for the CBN to focus on means to reduce the Monetary Policy Rate (MPR) so that banks can reduce the interest rate charged on loans?
From the basic mandate of the CBN, which is Issuance of Legal Tender Currency Notes and coins, Maintenance of Nigeria’s External Reserves, Promotion and Maintenance of Monetary Stability and a Sound and Efficient Financial System, Banker and Financial Adviser to the Federal Government and Banker and Lender of Last Resort to Banks, I think the CBN may have lost focus, especially in the area of Promotion and Maintenance of Monetary Stability and a Sound and Efficient Financial System. In its own words, as seen on its website, the CBN says “The effectiveness of any central bank in executing its functions hinges crucially on its ability to promote monetary stability. Price stability is indispensable for money to perform its role of medium exchange, store of value, standard of deferred payments and unit of account. Attainment of monetary stability rests on a central bank’s ability to evolve effective monetary policy and to implement it effectively. Since June 30, 1993 when the CBN adopted the market-based mechanism for the conduct of monetary policy, Open Market Operations (OMO) has constituted the primary tool of monetary management supported by reserve requirements and discount window operations for enhanced effectiveness in liquidity management. Specifically, liquidity management by the Central Bank of Nigeria involves the routine control of the level of liquidity in the system in order to maintain monetary stability. Periodically, the CBN determines target growth rates of money supply, which are compatible with overall policy goals. It also seeks to align commercial and merchant banking activities with the overall target. The CBN through its surveillance activities over banks and non-bank financial institutions seeks to promote a sound and efficient financial system in Nigeria”. Can we still possibly say that under Sanusi, the CBN is still effectively performing this function or has just been trying to recycle the wheel, looking to run down the clock, having 16 months left in office?
Now all the above may be forgiven due to his earlier achievements, but then, there is this issue of a Ding-Dong battle between him and the national assembly which having gone on for a while, recently saw project CURE and the five thousand Naira note initiative killed and then came the CBN’s stance on not being able to meet the directives of the NASS to ban the use of dollars for local transactions? CBN’s VP, Tunde Lemo (a man I greatly respect) came across as childish and lame when saying the CBN didn’t have the enforcement capabilities to enforce such a law; with an undertone of since you killed my baby, I will not help bring yours to life. Highly pathetic.
I only ask that if the pope, seeing he could not give anything more to his present position, resigned, shouldn’t people like Sanusi begin to strongly consider this as a clear indication of selfless service to the nation.
Tunji Andrews is the anchor of Business Lounge on Smooth FM 98.1, Nigerian Info 99.3 and City FM 105.1
Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.