Sanusi’s four years of value creation at CBN
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| CBN Governor, Sanusi Lamido Sanusi |
As a critical success factor in the nation’s meaningful and sustainable development, the Central Bank of Nigeria [CBN] is a financial & economic adviser to the Federal Government, with the mandate to instil sanity in the financial system and build a framework for managing a modern economy.
The imperatives for effective leadership and management of this strategic institution cannot, therefore, be over-stressed.
This brings into marked focus, the giant stride of Mallam Sanusi Lamido Sanusi who has been in the saddle for the past four years. A Commander of the Order of the Niger [CON] and Africa Central Bank Governor of Year 2013, Mallam Sanusi has variously initiated and taken decisive policy decisions with tremendous impacts on the financial system, corporate governance and the real economy.
The Sanusi-led CBN management undertook comprehensive Banking Reforms with the amazing results of no failed bank, no loss to depositors or creditors, and at minimal fiscal costs, as the banks themselves were persuaded to bear some of the costs.
Today, capital adequacy ratio averages over 20 per cent, while non-performing loans are down to under-5 per cent. As acknowledged locally and internationally, Nigerian banks are no longer mere fora to purchase Government bonds and fund blue-chip companies; but are increasingly focused on the real sector [including long-neglected agriculture and manufacturing] where jobs are created and meaningful growth occurs.
As a broad resolution strategy to tackle the challenges of Non-Performing Loans [NPLs], the Assets Management Corporation of Nigeria [AMCON] was established in 2011. It duly acquired the initial NPLs from banks valued at over N1.2 trillion and injected some N1.6 trillion to further absorb other toxic from the banks.
More revealing is that the national treasury did not fund the exercise. Under the auspices of the Bankers’ Committee, AMCON’s operations are financed by 0.3 per cent of banks’ annual profits and CBN’s N500 billion spread over 10 years. The Recapitalization Policy of the CBN was concluded in 2011. The Sanusi dispensation has ensured a Macro-Economic Stability through strengthening its regulatory structures and functions.
Some aspects of this regime include review of Prudential Guidelines to boost lending to the real sector; enhanced reporting standards & uniform year-end financial reporting; compulsory disengagement Bank CEOs with 10 years’ service; strict enforcement of the 12-year tenure limit for non-executive directors, mandatory appointment of fresh external auditors after 10 years; and improved liaison with such other relevant regulators as SEC, PenCom and NDIC for system stability.
The CBN’ Financial Stability Committee works closely with a re-invigorated Financial Services Regulation Coordinating Committee – the umbrella platform to co-ordinate activities of the various financial regulators in the system. Happily, all stakeholders appreciate the need to integrate regulations among various sub-sectors of the financial sector.
Today, Nigeria boasts one of the most advanced financial sectors in Africa even as quite a number of its banks now operate branches in other countries.
The IMF & World Bank acknowledge that the Nigerian economy posted one of the fastest growth rates [6.5 per cent] above the global rate of 3.5 per cent and project it to grow at some 7 per cent in 2013. Indeed, the country has a current account surplus equivalent to about 8 per cent of the GDP even as its Debt—GDP ratio is less than 20 per cent. For the first time in many years, the CBN has achieved Low Inflation Rate.
As at end-February 2013, Nigeria recorded a 9.5 per cent inflation rate vis-a-vis the December 2009 figure of 13.9 per cent. The CBN has consistently held the Monetary Policy Rate [reference interest rate] at 12 per cent, such that enterprises can decently plan in anticipation of stable business environment. It also introduced the Cashless Policy to change our cash-driven economy and ease operational costs usually passed on to customers. The policy is operational in Lagos State, and will soon be extended to Abia, Abuja, Anambra, Kano, Rivers and Ogun States.
With improved macro-economic stability and for two consecutive years, the Nigerian Naira Exchange Rate averaged N158.30 to the US$ and remained stable against other major currencies. In the same vein, there has been an upward trend in the nation’s External Reserves, which hit US$49 billion in 1st Quarter 2013. This is the first of its kind in the last three years. The boost in foreign reserves is readily measured by the increase in the flow of Foreign Direct Investment [FDI] and portfolio investments into the Nigerian economy.
The introduction of Non-Interest Banking by the Sanusi management provides more opportunities to attract some erstwhile unbanked persons and organizations into the banking community. There is also Financial Inclusion strategy to reduce the number of adults without access to financial services from 46.3 per cent to 20 per cent by 2020. The scheme affords access to such services as credit, payments, savings and products; including channels like the ATMs, PoS, retail agents, DMB branch network, among others.
The tiered Know Your Customers [KYC] policy is also further boosting financial inclusion and reducing the incidence of identity fraud in the system.
Meanwhile, the entry barrier for low-income earners desirous to operate bank accounts has been reduced with the elimination of some stringent requirements. With its massive Interventions in the Real Sector, the CBN is actively involved in such special schemes and Funds as the Micro, Small & Medium Enterprises Development Fund [MSMEDF], Commercial Agriculture Credit Scheme [CACS], Small & Medium Scale Enterprises Guarantee Scheme [SMECGS], Power and Aviation Fund [PAIF], Restructuring & Refinancing Fund [RRF] and Nigerian Incentive Based-Risk Sharing System for Agriculture Lending [ain collaboration with UNIDO and Alliance for a Green Revolution in Africa]. The Sanusi-led management is very sensitive to Women Empowerment.
The Bankers’ Committee declared 2013, the Year of Women Empowerment as the banks collectively agreed that by 2014, 40 per cent of senior management, and 30 per cent of board level positions should be occupied by women. The CBN is also engaged with Entrepreneurship Development Centres as part of efforts to create employment, empower people, grow small enterprises, and accelerate Nigeria’s economic growth. Similarly, the NYSC Venture Price Competition was introduced to sensitize and create awareness in Nigerian youths, awaken their entrepreneurial instincts, and orientate serving youth corps members towards seeking alternative employment options, in particular, self-employment.
In the knowledge that Corporate Governance is crucial to modern economic management, the Sanusi-led CBN implemented a Corporate Governance Project. This is steadily strengthening governance practices, eliminating ambiguities in due process and aligning with current realities and global best practices. The banking system relies on the effective operation of a range of integrity systems to hold institutions and their managements transparent and accountable.
The Shared Services project is to reduce costs in the financial sector by about 30 per cent over the next three years. Elements of this project include sharing of data centres, infrastructure, ATMs, banking applications and power supply. An informed commentator on historical and contemporary issues, Mallam Sanusi Lamido Sanusi has regularly inspired public discourse on societal development. At a recent forum on the way forward for the Nigerian economy, suggested a range of cost-reduction measures among which are public service right-sizing, drastic pruning of executive and legislature expenditures; and scrapping of Local Councils. At another forum, he had further alarmed public treasury leeches with his panacea to check abuses in the Government [fuel] subsidy regime.
Recognition for this accomplished Fellow of the Chartered Institute of Bankers of Nigeria has flowed from across the world. Recently awarded Africa Central Bank Governor for 2013, his other honours include: Central Bank Governor for Sub-Saharan Africa, 2011; Global-African Central Bank Governor of Year 2011; African Leadership Person of Year 2011; Listed in TIME magazine 100 Most Influential People of 2011; and turbaned Dan Majen Kano by the Emir of Kano, HRH Alhaji Dr. Ado Bayero, CFR, LL.D, JP.
The current dispensation at the CBN has gone a long way to instil sanity in the nation’s financial system; and hence, help chart the path to economic sustainability. Mallam Sanusi’s courageous and pragmatic initiatives have upset the apple cart of entrenched predatory interests.
He has aimed at many targets and scored several direct hits — demonstrating sterling leadership, which is in short supply in the management of Nigeria’s public affairs. His four years in the saddle of the CBN has indeed been value-added.
Daily Sun
