The Governor, Central Bank of
Nigeria, Mr. Lamido Sanusi, says
those who failed to pay up loans
taken from banks will soon be
brought to book. He spoke at a
forum in Lagos; OYETUNJI ABIOYE
was there
What have been your major
achievements as the governor of the
Central Bank of Nigeria so far?
In the last three years, we have had
stability. From January to date, for the
first time since 2008, we have had a
consistent stretch of inflation at below
10 per cent. Last month, it was 8.2 per
cent. By the end of this year, we would
be under eight per cent and we will
keep inflation in single digit throughout
2014.
The naira has been stable between
January and August. Then, it lost 2.3
per cent of its value. Everyone has been
complaining about the loss. But, the
South African rand lost 17 per cent, the
Indian rupee lost about 20 per cent, and
the Indonesian rupiah lost 12 per cent.
Every single emerging market that you
can think of has lost value in excess of
10 per cent. We have had a stable
currency.
The banking system was on the brink of
collapse in 2009. We've been able to fix
the banks. We've come out of these
entire crises without a single creditor or
depositor losing a single kobo in a
Nigerian bank. Now, we've done this in
an environment in which a significant
percentage of the revenue of the
country is being looted; either with oil
literally being taking out of the pipeline
and being shipped out or simply having
all sorts of leakages in the revenue
system. We've had a very high
expenditure profile and increase in
minimum wage in 2010, 2011; increase
in non-discretionary government
spending and therefore a reduction in
excess crude account. In other words,
we have achieved stability in spite of
difficulties.
There are worries that banks are not
lending to the real sector; what are you
doing about this?
In this country, we spend foreign
exchange on things we should not. We
are one of the world's largest producers
of crude oil but one of the biggest
importers of petroleum products. We
have a population of 170 million people;
we have all the land; all the water; all
the fields; yet we import rice from Asia.
We import tomato paste from China.
We are the world's largest producer of
cassava, yet, we import starch; we
import ethanol. We spend our foreign
exchange to import what we produce.
We specialise in exporting what we
don't produce. This is the miracle of the
country.
So, if people say banks are not lending
to the real sector; I say, where is the
real sector without electricity, without
infrastructure, without competent and
highly skilled labour, without security?
Where is the viable real sector in the
economy? Is it the tomato farmer who is
going to use 40 to 50 per cent of his
output because there is neither storage
facility nor power? Is it the textile firm
that has to provide its own generator,
security, and build its own road?
Has AMCON really achieved what it was
set up to do?
If you go back to 2008/2009, you have
the global financial crises as well as our
own local crises. The Nigerian stock
market was the best performing stock
market in the world in 2007. The
Nigerian banking stock was one of the
most profitable. What people didn't
recognise was the strong correlation
between the price of oil and the asset
value in the stock exchange. The price
of oil went up to $147 per barrel at
some point in 2007. All that money
went into circulation. So, after the crises
when the price of oil went down, the
Nigerian Stock Exchange lost 70 per
cent of its valuation. That was the
beginning of the end because you had a
number of banks that had taken huge
exposure in the stock market. We
discovered that many of the so-called
consolidated banks never raised any
new capital. In addition, many of the
banks that had huge concentration in
the capital market also had huge
exposure to oil marketers that were
unprotected. The price of oil crashed;
the stock market crashed and the banks
had their capital wiped out from both
sides.
By the time we looked at the banks in
August 2009 and October 2009;
effectively banks were counting short of
40 per cent of total inventory assets; 30
per cent of total liabilities were gone. If
they had gone under, the entire
banking system would have gone. I
always say I do hope that this is not
what I will be remembered for because
there are more important things in
central banking than recapitalising
banks. What we faced in 2009, 2010,
2011 up to when the Asset
Management Corporation of Nigeria
took over three banks, I call it hygiene;
just to clean up. When you talk about
what we need to clean up, we talk about
what we have laid as foundation for
monetary policy and financial stability.
We had to provide emergency liquidity
which, guaranteed inter-bank market,
and provided liquidity for those banks.
We had to make sure that individuals
were held accountable for what they
did. That was why we had to remove
management in some banks and
replace them with other people and
some of them are still facing
prosecution. And we have to deal with
the big issue: how do we recapitalise
the banks because the money had
gone? People don't understand what
AMCON did. AMCON is one vehicle into
which you transfer all those banks that
were about to collapse from bad loans
that were never going to be recovered
fully. What AMCON did was to purchase
the bad loans and also recapitalised the
banks. When you add that; it is a lot of
money. If AMCON didn't put in the
money, depositors would have lost
faith.
People have been complaining about
the huge cost of bringing AMCON into
being. Are you not worried about this?
Whenever a bank fails, I don't know if
we keep statistics of how many old
women who had been keeping their
savings and had woken up to lose
them; of how many retired public
servants who kept all their savings and
their pensions and their gratuities in
the bank that lost them. How many
children dropped out of school not
because their parents didn't have the
money but because the money was lost
in a failed bank? How many people died
not because they could not afford to
pay for their healthcare but because
their money was in a failed bank and
were told they were insured up to only
N200, 000? I don't know if we ever
think about these people who faithfully
keep their daily savings in the bank and
then some people take the money, lend
it to themselves and refuse to pay.
Their friends buy private jets; they are
called captains of industries with
money taken from these poor people.
They contest elections and become
senators, governors and ministers, all
with money belonging to poor people
who have kept them in the banks. You
say the bank has failed, the CEO of the
bank moves on. After some years, he
gets a new banking licence or moves
into industry and becomes a
manufacturer or sets up a finance
house with your money. Those who
borrowed the money walk away.
What are you doing about this?
Of course, we will publish their names
and tell them you can't borrow from
Nigerian banks without paying. If they
don't like it, they should pay back.
That ideological change is perhaps the
single most important foundation for a
change in culture because there is
nothing that focuses the mind as the
knowledge that there are consequences
for crossing the red line. The days are
gone when you will sit down as the
bank CEO or bank director, take deposit
and lend yourself money, buy property
abroad then the bank fails and you walk
away.
How do you explain a country in which a
single family, taking advantage of the
control of a bank and acquired over 200
housing units of real estate in Dubai
with depositors' fund, in addition to
property in South Africa, property in
Washington? Nobody has any problem
with rich people. Dangote is one of the
richest people in the world; he doesn't
steal depositors' money. This is not a
war against rich people but against
those who take money from poor people
and pretend to be rich when they are
not. There are many Nigerians who are
rich and they are not rich; they are
parading themselves as rich people
having stolen enormous money
belonging to the poor. If you go and
steal a vessel of crude oil and sell it and
bring back the money, you can claim to
be rich but you are a thief. Everybody
can steal and be rich. The fact that
some people are doing it does not mean
we should let them go away with it.
So, for me, what happened in banking is
a representation of what is happening
across the country. And the question is:
why is it so impossible for what
happened in banking to happen in the
oil sector, to happen in all the other
sectors of this country where people are
taking advantage of when given the
opportunity and are destroying the
economy. There is no point having clean
banks. It is simply impossible to
insulate the banks from the general
economy.
PUNCH
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