Nigeria’s new central bank governor, who has been on a cleaning spree of the country’s financial sector in his first five months in office, is upbeat the banking system is on the path to recovery.
The banking sector is “now safe and recovering,” said Lamido Sanusi, who has sacked the heads of a third of the country’s banks in recent weeks.
“Here as elsewhere, the crisis stems from a combination of greed of shareholders and reckless management,” he told AFP, adding that banks audited results showed “large exposure to international risk”.
With a slim figure and often dressed in impeccable suits with bow-ties or a Mao-collared jacket, Sanusi, a former banker himself, went on a spring-cleaning campaign shortly after he took over the reins in June.
In just under two months, nine commercial banks have been bailed out to the tune of 620 billion naira (four billion dollars), and their chiefs dismissed, arrested and prosecuted.
Lists of Nigeria’s rich and powerful who have defaulted on their bank loans, including the country’s former vice president, have been published in newspapers.
Sanusi ordered a financial audit which showed that at least a third of the country’s 24 banks were wobbly due to under-performing loans doled out to mainly high profile debtors.
The country’s anti-corruption police, the Economic and Financial Crimes Commission (EFCC), is acting on the bad debtors.
Sanusi’s actions stand in sharp contrast to a statement by his predecessor, Chukwuma Soludo, who exactly a year ago gave the country’s banks a clean bill of health and swore that no Nigerian bank would fail.
“We have reached a point where enough is enough,” said Sanusi.
Apart from banks, Sanusi has had to deal with a host of other financial woes facing Africa’s most populous country and the world’s eighth largest oil exporter. The national currency, the naira, has been sliding against major currencies.
In October last year the naira traded at 118 to the US dollar, a year later it was at 150 for a greenback, a rate that Lamido Sanusi considers reasonable if it can be maintained there.
He has ruled out any further devaluation as “a non-effective weapon”.
The country’s foreign exchange reserves now stand at 40 billion dollars, from a record 67 billion dollars recorded during last year’s peak oil prices.
Nigeria draws more than 90 percent of its export earnings from oil, but production levels have plummeted by some 30 percent since the outbreak in 2006 of a rebellion in the oil producing Niger Delta region.
“For a country like Nigeria, stability, including financial, is very important. If we maintain stability, we can attract foreign investments,” said Sanusi.
On the famous presidential goal to take Nigeria into the “top 20” of world economies in 2020, Sanusi Lamido said: “In terms of ‘Could it happen?’, the answer is yes. In terms of ‘Has the government so far shown the capacity to execute?’ the answer is no”.
“My personal view is that there is a need to recognise that government should outsource the implementation of this objective and should insist more on PPP (public-private partnership),” he said.
Making reference to a 1999 inaugural speech by former president Olusegun Obasanjo when he took office in Nigeria’s first democratic elections ending decades of military rule, and pledged better infrastructure and power supply, Sanusi said: “Ten years later we are still where we were in 1999”.