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Former Governor of the Central Bank of Nigeria, Prof. Chukwuma Soludo, on Sunday alleged that over $60bn has gone missing under the watch of Ngozi Okonjo-Iweala, Nigeria's minister of finance and coordinating minister for economy.
Soludo made the claim in a reply issued after Okonjo-Iweala's criticism of his last post bashing President Goodluck Jonathan and Muhammadu Buhari.
READ: Nigeria 2015 - Another Former CBN Governor Unimpressed With Jonathan's Government
READ: Soludo Gets A 'Slapping' From Okonjo-Iweala
In response, to Okonjo-Iweala, Soludo wrote;
I read some of the responses to my article, “Buhari vs Jonathan: Beyond the Election”, and I want to thank everyone who has contributed to the debate. I am glad that the debate has finally taken off. I have decided, for the record, to re-enter the debate if only to set some records straight and hopefully elevate the debate further. Whom do I respond to? First, let me thank Gov Kayode Fayemi for his very mature and professional response on behalf of the APC. It forms a great basis for deepening the conversation. Pat Utomi, Oby Ezekwesili, Iyabo Obasanjo, and thousands of other patriotic Nigerians have raised the content of the debate. Femi Fani-Kayode made me laugh, as usual.
The Gov. Jang faction of the Governors’ Forum played the usual politics, although I know what most of them think privately. Who else? Oh, Peter Obi. Well, since he can’t write and designated Valentine as usual to write for him (who never disputed the NBS statistics that Obi broke world record in the pauperization of Anambra people but instead focused on lies and abuses) I won’t dignify him with a response here. His third class performance in Anambra will be the subject of a comprehensive article later.
Here, I will focus on Dr. Ngozi Okonjo-Iweala’s response (as Minister of Finance and Coordinating Minister of the Economy—CME and hence on behalf of the Federal Government). Since I have known her, out of deep respect, I have never called her by her name: I call her Madam. I must state that I have great pains seeing myself on the opposite side of the table with Madam, in this way. I respect you, Madam, and will always do. If you read my article of September 2010 (before you became Minister), the tone and elucidation were as strong as the current one. It is my honest effort to ensure that our choice of leaders is based on rigorous scrutiny of what is on offer. Part of my frustration is that five years after, everything I warned about has come to happen and we are conducting our campaigns as if we are not in crisis. As a concerned Nigerian, I have a duty to speak out again. Regrettably, you have taken it very personal.
I am not bothered about the personal abuses: I actually expected worse. What name has the government not called President Obasanjo or any person who has dared to disagree with it of late? Anyone who disagrees with the government must either be ‘insane’ or have a ‘character’ deficiency or must be ‘looking for a job’ or ‘without honour’, or a ‘charlatan’. Yesterday, Sanusi alleged that $20 billion was missing and he was accused of gross financial mismanagement, recklessness and poor governance to the point of being the first governor of central bank to be suspended from office. Today, he is the good one; and for daring to award an “F” grade for our economic performance, Soludo has become the ‘worst’ and ‘without character’ or perhaps ‘looking for position’ (Lol!). Some days ago, a former president was called ‘a motor park tout’ and ‘un-statesmanly’ just for disagreeing. This “how dare you criticise us” mind-set of the government is dangerous for our democracy.
In this Part One of my planned three part series, I will restrict it to the main issues you raised. I will not bother about the malicious attacks on my person. For me, it is nothing personal. In early 2011, I had a similar heated exchange with then Finance Minister Segun Aganga. But when the Nigerian economy was at stake and he invited me to a stakeholders meeting in his office (as Minister of Trade and Investment) to discuss Nigeria’s response to the ruinous EU- Economic Partnership for Africa (EPA), I flew into Nigeria for that (at my expense)— the first and only time I have been to any government office to discuss policy since I left office. It is about Nigeria. I will, as expected, remind people like you of the salient aspects of my record of public service in response to your charge; challenge your claim to debt relief, and your reason for not saving; highlight your forgery of economic statistics and the lies in your response; but most importantly re-focus our attention to the historic mismanagement of our economy which you carefully avoided. I will show that while you are introducing austerity measures and soon to immiserate the citizens, our public finance is haemorrhaging to the point that estimated over N30 trillion is missing or stolen or unaccounted for, or simply mismanaged— under your watch! We can’t go on like this, and I am convinced that an alternative future is possible. Can we have a public debate on this alternative future? The issues at stake are too grave to be trivialized through name calling. As I write, the naira exchange rate to the dollar is at N215 (from N158 a few months ago) and unless oil price recovers, this is just the beginning. For the sake of Nigeria, I won’t keep quiet anymore!
Let me start with Madam’s rather comical, wild judgment on my tenure of office which I believe to be totally false and baseless. I apologise upfront that in the process of making a ‘personal defence’, it is difficult to avoid a rather uncomfortable emphasis on “I”. I did not want that but since Madam has dragged us this low, I have little choice but to do so in the next few paragraphs—just to keep the record straight!
In my view, there are three criteria for evaluating a public officer’s stewardship: the evaluation by his employer; the satisfaction of the public he served; and the hard facts of performance. As I will show on these three counts, I am convinced that I left a world record of public service, and a thousand Okonjo-Iwealas cannot re-write that history. I served Nigeria under two presidents (Obasanjo and Yar’Adua) and as my immediate bosses, below are their written testimonials of my record.
Said President Obasanjo (December 2004):
“Charles Soludo is a true Nigerian. He is the sort of Nigerian that we all know we can rely on. Among his numerous virtues is COURAGE. I have found in him a man who can take tough and realistic decisions, stand his ground, educate others on the salience of his decision, and work very hard to ensure that the decision is efficiently and effectively implemented. His dedication to duty is first rate. His leadership qualities are admirable and his willingness to listen and learn is simply infectious. Professor Soludo has within a short time emerged as one of the leading lights of our nation. Not because he has a godfather but by sheer hard work, loyalty, dedication to duty, commitment to the nation, creativity, and undiluted association with the reform agenda….”
President Yar’Adua (May 2009) had the following to say about the Central Bank of Nigeria under my leadership:
“… the CBN has performed creditably well in delivering on its core mandates. This is especially even more so in the last five years. Most people would agree that without the successful banking consolidation and effective management of our foreign reserves, the current global crisis would have shaken the financial system and our national economy to their foundations with calamitous consequences”.
In the President’s special letter of commendation after the completion of my tenure of office, President Yar’Adua (June 2009) had the following to say to me:
“As your tenure as Governor of the Central Bank of Nigeria comes to a glorious end, I write on behalf of the Government and people of Nigeria to place on record our debt of gratitude to you for your dedicated service and uncommon sense of duty over the past five years. I am confident that your worthy antecedents in the CBN and in prior appointments in the service of our nation remain sources of inspiration to an entire generation. As I wish you even more astounding successes in the years ahead, it is my fervent hope that you will readily avail us of your distinguished service when the need arises in the future”.
To the best of my knowledge, President Obasanjo has not changed those views even after ten years. The views of my two bosses, not the emotional outburst of an angry person desperate to get even, are what count.
How did Nigerians evaluate my public service? Unfortunately, we do not have scientific opinion polls on job approval ratings for individual public officers. But if the public opinions of individuals and organized groups (labour, employers, depositors, borrowers, stakeholders of the financial institutions, newspaper editorials, investors, etc) as expressed in thousands of newspaper/magazine clips during and after my tenure are anything to go by, then 82% of the public largely agree with the sentiments expressed by my two bosses.
Your views belong to the other 18% which is okay, after all, no one is perfect. Five Nigerian newspapers and magazines simultaneously named us “man of the year” in one year— unprecedented in Nigeria’s history. I do not talk about hundreds of awards and recognitions by various segments of our society (during and even after service) for “excellent public service”. I was particularly touched by the historic award by the staff union of the Central Bank and the tears in the eyes of many as thousands of the staff gave me a standing ovation as I walked the aisle after my brief farewell speech.
Certainly, the international community (investors, bankers, scholars, donors, media, etc) took serious notice of the revolution in Nigeria’s monetary and financial system. I am recipient of five international awards as global and African central bank governor of the year, not to mention dozens of other recognitions (even after leaving office). The London Financial Times described us as “a great reformer”. Even as the global economic and financial crisis raged in 2008, the United Nations General Assembly appointed me to serve on the Commission of Experts to reform the international monetary and financial system. You don’t appoint someone who has ‘mismanaged’ his national financial system to reform the global system. For 8 years until 2012, I served on the chief economist advisory council (CEAC) of the World Bank, and together with two Nobel Prize winners in economics and other experts we met periodically and advised two presidents and two chief economists of the World Bank, and in 2011, I served on the External Advisory Group of the IMF.
Again, these are not positions for ‘mis-managers’. Since I left office, I have been advising countries and central banks; and there is hardly any two months I don’t consult/advise on banking/financial and monetary policy. I have given these illustrations to make the point that for every one Okonjo-Iweala’s attempt to rewrite history, there are thousands who disagree.
Now, to some skeletal facts of our stewardship! I will be brief as I have a whole book to tell my story. As chief economic adviser, I had advised that our banking system could not support the private sector-led economy envisioned under NEEDS. When I assumed office at CBN, I inherited 89 rickety, mostly family banks (all of which put together were not up to the size of number four bank in South Africa). Many were insolvent, with depositors’ money trapped, and 20 more about to collapse. To get a credit of $300 million probably required all the banks to syndicate it. For me, there was a national emergency. I drafted a 13-point reform agenda, discussed and agreed all the specifics with the President, and his VP; as well as my management team at the CBN, and we swung into action. President Obasanjo promised 100% support and actually delivered 1000%— which was decisive. I apologize to you Madam because I did not brief or inform you about it. We just wanted to keep it confidential given the sensitivity of the announcement. It is on record that you never supported it.
It was both a revolution and a war and most people thought it was “impossible”, but thank God we succeeded. For the first time in Nigeria’s history a policy of that magnitude was announced and deadline kept with precision. We were courageous to revoke the licenses of 14 banks, including those of my friends, in one day. The FT-Banker concluded that the scale, precision, and cost of the transformation were unprecedented in the world. Before then, Malaysia had the least cost of banking consolidation at 5% of Malaysian GDP. It did not cost Nigerian taxpayers one penny. Twenty-five new, stronger banks emerged but the powerful idea behind consolidation ignited something even more powerful—‘the race to the top’. Banks raised more capital, and even banks like First Bank, Zenith, GTB, etc that did not merge with others went on capital raising several times. The consequence was higher levels of capitalization and within two years, 14 Nigerian banks were in the top 1000 banks in the world and two in the top 300 (no Nigerian bank was in the top 1000 before I came). Even after I left office, still 9 banks were in the top 1000. Our vision was to have a Nigerian bank in the top 100 banks within 10 years. As I see the new Access bank; Zenith, GTB, Fidelity, Diamond, UBA, FBN, FCMB, Skye, Stanbic IBTC, Union, Ecobank, etc, I cannot but feel that we have taken giant steps forward.
Deposits and credit soared (from barely N1.2 trillion to over N7 trillion); new technologies (ATM and e-banking) boomed, and banks had 57,000 new jobs; mega businesses emerged (ask any major operator in the Nigerian economy their experience with banking and credit before and after Soludo —the Dangotes, Arik, MM2, oil and gas operators; etc); capital market boomed and dominated by the banking sector. It was a new dawn for Nigerian private sector. I have heard Dangote twice say that he would not be near as big as he is today without the banking consolidation. Many other stakeholders still say it today. FDI and portfolio inflows flooded into Nigeria. The world celebrated, and one single transformative idea has changed the face of the private sector and economy forever. Banks became Nigeria’s first transnational corporations with about 37 branches outside of Nigeria.
Nigeria survived the global crisis because of this, and it is the banking sector that has largely been powering the economic growth you claim (compare banks trillions of naira credit for investments in the productive sector with your government’s miserable expenditure on critical infrastructure and investment; much of your borrowing – bonds – is from the banks). Your privatization of power sector, several PPP projects on infrastructure, etc, are now possible because of the mega banks. Today, Nigerian banks syndicate multi-billion dollar loans— unthinkable before. Madam, if the consolidation was ‘mismanaged’, there would not have been any bank to start with in the aftermath of the global crisis— as President Yar’adua correctly pointed out. Even you, during a recent presentation at the Banquet Hall in Abuja advertised consolidation as a historic achievement. How can you recognize a ‘mis-managed’ project as an outstanding achievement? As we say in Igbo, you can’t cover the moon with your palms.
Let me be clear: the quantum size of the new banks following consolidation presented challenges of risk management and supervision. We deployed all we had and overworked the CBN staff. The carry-over of bad loans from the consolidated banks was quickly cleaned up. To the best of my knowledge, we instituted stringent regulatory and supervisory regime (consistent with best practices at the time). We even had resident examiners in the banks and required bank MDs to personally sign their reports to CBN. I recall that the former MD of GTB complained of “regulatory intrusiveness”. To our credit, non-performing loans (NPL) came down from 22% in 2003 and 2004 to 6% as at 2008. Anywhere in the world, a central bank that brought NPL from 22% to 6% over a four year period does not look like one with a loose supervisory regime. Name other developing countries that performed better, Madam. So, on point of fact, Madam lied. Yours was a reckless assertion without basis by a Finance Minister.
The banks in Nigeria were supervised by the CBN and NDIC, but other institutions— international firms which audited them, international rating agencies which also examined their books, capital market operators since most were listed companies — all had oversight. I put on record that there was never any information/report of infractions by any bank which was brought to my attention and which we did not act upon decisively during my tenure. I heard the comment that some of the bank MDs were my friends. Well, my response is that perhaps as CME you should kill all your friends operating in the economy or become their enemies. For the record, my successor audited all the banks and none of my so-called friends was indicted. It speaks volumes. Indeed, it is also a fact that the alleged personal criminal infractions (including lapses in corporate governance Madam alluded to) by some bank CEOs were found out, only AFTER they had been removed from office. My successor told me that the comprehensive audit of the banks did not reveal such infractions. Of course, you must be God or have a special tip-off from inside to get to such information while the MDs are in office. Unfortunately, all over the world, no financial system has succeeded in routing out all criminal behaviours by the operators. So, Madam, I challenge you to provide one shred of evidence that ‘there was no separation between regulators and regulated’ or be honourable enough to retract your reckless statement.
What happened? The unanticipated and unprecedented crisis of 2008/09 hit the world. More than 40 US and European banks either collapsed or were shaken badly (remember the Lehman Brothers, Fannie Mae and Freddie Mac, Wachovia, HSBC, Lloyds TSB, Citibank, Goldman Sachs, even UBS, etc) and hundreds of billions of dollars were spent to bail them out. The contagion effects spread like a wild fire, destroying national stock markets and banks. The nascent (big) banks in Nigeria faced sudden multiple shocks— liquidity, exchange rate, oil price, capital market, etc. As oil prices collapsed, loans to oil and gas became non-performing overnight; loans to the capital market became non-performing overnight; etc.
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#Soludo #CBN #OkonjoIweala
Soludo made the claim in a reply issued after Okonjo-Iweala's criticism of his last post bashing President Goodluck Jonathan and Muhammadu Buhari.
READ: Nigeria 2015 - Another Former CBN Governor Unimpressed With Jonathan's Government
READ: Soludo Gets A 'Slapping' From Okonjo-Iweala
In response, to Okonjo-Iweala, Soludo wrote;
I read some of the responses to my article, “Buhari vs Jonathan: Beyond the Election”, and I want to thank everyone who has contributed to the debate. I am glad that the debate has finally taken off. I have decided, for the record, to re-enter the debate if only to set some records straight and hopefully elevate the debate further. Whom do I respond to? First, let me thank Gov Kayode Fayemi for his very mature and professional response on behalf of the APC. It forms a great basis for deepening the conversation. Pat Utomi, Oby Ezekwesili, Iyabo Obasanjo, and thousands of other patriotic Nigerians have raised the content of the debate. Femi Fani-Kayode made me laugh, as usual.
The Gov. Jang faction of the Governors’ Forum played the usual politics, although I know what most of them think privately. Who else? Oh, Peter Obi. Well, since he can’t write and designated Valentine as usual to write for him (who never disputed the NBS statistics that Obi broke world record in the pauperization of Anambra people but instead focused on lies and abuses) I won’t dignify him with a response here. His third class performance in Anambra will be the subject of a comprehensive article later.
Here, I will focus on Dr. Ngozi Okonjo-Iweala’s response (as Minister of Finance and Coordinating Minister of the Economy—CME and hence on behalf of the Federal Government). Since I have known her, out of deep respect, I have never called her by her name: I call her Madam. I must state that I have great pains seeing myself on the opposite side of the table with Madam, in this way. I respect you, Madam, and will always do. If you read my article of September 2010 (before you became Minister), the tone and elucidation were as strong as the current one. It is my honest effort to ensure that our choice of leaders is based on rigorous scrutiny of what is on offer. Part of my frustration is that five years after, everything I warned about has come to happen and we are conducting our campaigns as if we are not in crisis. As a concerned Nigerian, I have a duty to speak out again. Regrettably, you have taken it very personal.
I am not bothered about the personal abuses: I actually expected worse. What name has the government not called President Obasanjo or any person who has dared to disagree with it of late? Anyone who disagrees with the government must either be ‘insane’ or have a ‘character’ deficiency or must be ‘looking for a job’ or ‘without honour’, or a ‘charlatan’. Yesterday, Sanusi alleged that $20 billion was missing and he was accused of gross financial mismanagement, recklessness and poor governance to the point of being the first governor of central bank to be suspended from office. Today, he is the good one; and for daring to award an “F” grade for our economic performance, Soludo has become the ‘worst’ and ‘without character’ or perhaps ‘looking for position’ (Lol!). Some days ago, a former president was called ‘a motor park tout’ and ‘un-statesmanly’ just for disagreeing. This “how dare you criticise us” mind-set of the government is dangerous for our democracy.
In this Part One of my planned three part series, I will restrict it to the main issues you raised. I will not bother about the malicious attacks on my person. For me, it is nothing personal. In early 2011, I had a similar heated exchange with then Finance Minister Segun Aganga. But when the Nigerian economy was at stake and he invited me to a stakeholders meeting in his office (as Minister of Trade and Investment) to discuss Nigeria’s response to the ruinous EU- Economic Partnership for Africa (EPA), I flew into Nigeria for that (at my expense)— the first and only time I have been to any government office to discuss policy since I left office. It is about Nigeria. I will, as expected, remind people like you of the salient aspects of my record of public service in response to your charge; challenge your claim to debt relief, and your reason for not saving; highlight your forgery of economic statistics and the lies in your response; but most importantly re-focus our attention to the historic mismanagement of our economy which you carefully avoided. I will show that while you are introducing austerity measures and soon to immiserate the citizens, our public finance is haemorrhaging to the point that estimated over N30 trillion is missing or stolen or unaccounted for, or simply mismanaged— under your watch! We can’t go on like this, and I am convinced that an alternative future is possible. Can we have a public debate on this alternative future? The issues at stake are too grave to be trivialized through name calling. As I write, the naira exchange rate to the dollar is at N215 (from N158 a few months ago) and unless oil price recovers, this is just the beginning. For the sake of Nigeria, I won’t keep quiet anymore!
Let me start with Madam’s rather comical, wild judgment on my tenure of office which I believe to be totally false and baseless. I apologise upfront that in the process of making a ‘personal defence’, it is difficult to avoid a rather uncomfortable emphasis on “I”. I did not want that but since Madam has dragged us this low, I have little choice but to do so in the next few paragraphs—just to keep the record straight!
In my view, there are three criteria for evaluating a public officer’s stewardship: the evaluation by his employer; the satisfaction of the public he served; and the hard facts of performance. As I will show on these three counts, I am convinced that I left a world record of public service, and a thousand Okonjo-Iwealas cannot re-write that history. I served Nigeria under two presidents (Obasanjo and Yar’Adua) and as my immediate bosses, below are their written testimonials of my record.
Said President Obasanjo (December 2004):
“Charles Soludo is a true Nigerian. He is the sort of Nigerian that we all know we can rely on. Among his numerous virtues is COURAGE. I have found in him a man who can take tough and realistic decisions, stand his ground, educate others on the salience of his decision, and work very hard to ensure that the decision is efficiently and effectively implemented. His dedication to duty is first rate. His leadership qualities are admirable and his willingness to listen and learn is simply infectious. Professor Soludo has within a short time emerged as one of the leading lights of our nation. Not because he has a godfather but by sheer hard work, loyalty, dedication to duty, commitment to the nation, creativity, and undiluted association with the reform agenda….”
President Yar’Adua (May 2009) had the following to say about the Central Bank of Nigeria under my leadership:
“… the CBN has performed creditably well in delivering on its core mandates. This is especially even more so in the last five years. Most people would agree that without the successful banking consolidation and effective management of our foreign reserves, the current global crisis would have shaken the financial system and our national economy to their foundations with calamitous consequences”.
In the President’s special letter of commendation after the completion of my tenure of office, President Yar’Adua (June 2009) had the following to say to me:
“As your tenure as Governor of the Central Bank of Nigeria comes to a glorious end, I write on behalf of the Government and people of Nigeria to place on record our debt of gratitude to you for your dedicated service and uncommon sense of duty over the past five years. I am confident that your worthy antecedents in the CBN and in prior appointments in the service of our nation remain sources of inspiration to an entire generation. As I wish you even more astounding successes in the years ahead, it is my fervent hope that you will readily avail us of your distinguished service when the need arises in the future”.
To the best of my knowledge, President Obasanjo has not changed those views even after ten years. The views of my two bosses, not the emotional outburst of an angry person desperate to get even, are what count.
How did Nigerians evaluate my public service? Unfortunately, we do not have scientific opinion polls on job approval ratings for individual public officers. But if the public opinions of individuals and organized groups (labour, employers, depositors, borrowers, stakeholders of the financial institutions, newspaper editorials, investors, etc) as expressed in thousands of newspaper/magazine clips during and after my tenure are anything to go by, then 82% of the public largely agree with the sentiments expressed by my two bosses.
Your views belong to the other 18% which is okay, after all, no one is perfect. Five Nigerian newspapers and magazines simultaneously named us “man of the year” in one year— unprecedented in Nigeria’s history. I do not talk about hundreds of awards and recognitions by various segments of our society (during and even after service) for “excellent public service”. I was particularly touched by the historic award by the staff union of the Central Bank and the tears in the eyes of many as thousands of the staff gave me a standing ovation as I walked the aisle after my brief farewell speech.
Certainly, the international community (investors, bankers, scholars, donors, media, etc) took serious notice of the revolution in Nigeria’s monetary and financial system. I am recipient of five international awards as global and African central bank governor of the year, not to mention dozens of other recognitions (even after leaving office). The London Financial Times described us as “a great reformer”. Even as the global economic and financial crisis raged in 2008, the United Nations General Assembly appointed me to serve on the Commission of Experts to reform the international monetary and financial system. You don’t appoint someone who has ‘mismanaged’ his national financial system to reform the global system. For 8 years until 2012, I served on the chief economist advisory council (CEAC) of the World Bank, and together with two Nobel Prize winners in economics and other experts we met periodically and advised two presidents and two chief economists of the World Bank, and in 2011, I served on the External Advisory Group of the IMF.
Again, these are not positions for ‘mis-managers’. Since I left office, I have been advising countries and central banks; and there is hardly any two months I don’t consult/advise on banking/financial and monetary policy. I have given these illustrations to make the point that for every one Okonjo-Iweala’s attempt to rewrite history, there are thousands who disagree.
Now, to some skeletal facts of our stewardship! I will be brief as I have a whole book to tell my story. As chief economic adviser, I had advised that our banking system could not support the private sector-led economy envisioned under NEEDS. When I assumed office at CBN, I inherited 89 rickety, mostly family banks (all of which put together were not up to the size of number four bank in South Africa). Many were insolvent, with depositors’ money trapped, and 20 more about to collapse. To get a credit of $300 million probably required all the banks to syndicate it. For me, there was a national emergency. I drafted a 13-point reform agenda, discussed and agreed all the specifics with the President, and his VP; as well as my management team at the CBN, and we swung into action. President Obasanjo promised 100% support and actually delivered 1000%— which was decisive. I apologize to you Madam because I did not brief or inform you about it. We just wanted to keep it confidential given the sensitivity of the announcement. It is on record that you never supported it.
It was both a revolution and a war and most people thought it was “impossible”, but thank God we succeeded. For the first time in Nigeria’s history a policy of that magnitude was announced and deadline kept with precision. We were courageous to revoke the licenses of 14 banks, including those of my friends, in one day. The FT-Banker concluded that the scale, precision, and cost of the transformation were unprecedented in the world. Before then, Malaysia had the least cost of banking consolidation at 5% of Malaysian GDP. It did not cost Nigerian taxpayers one penny. Twenty-five new, stronger banks emerged but the powerful idea behind consolidation ignited something even more powerful—‘the race to the top’. Banks raised more capital, and even banks like First Bank, Zenith, GTB, etc that did not merge with others went on capital raising several times. The consequence was higher levels of capitalization and within two years, 14 Nigerian banks were in the top 1000 banks in the world and two in the top 300 (no Nigerian bank was in the top 1000 before I came). Even after I left office, still 9 banks were in the top 1000. Our vision was to have a Nigerian bank in the top 100 banks within 10 years. As I see the new Access bank; Zenith, GTB, Fidelity, Diamond, UBA, FBN, FCMB, Skye, Stanbic IBTC, Union, Ecobank, etc, I cannot but feel that we have taken giant steps forward.
Deposits and credit soared (from barely N1.2 trillion to over N7 trillion); new technologies (ATM and e-banking) boomed, and banks had 57,000 new jobs; mega businesses emerged (ask any major operator in the Nigerian economy their experience with banking and credit before and after Soludo —the Dangotes, Arik, MM2, oil and gas operators; etc); capital market boomed and dominated by the banking sector. It was a new dawn for Nigerian private sector. I have heard Dangote twice say that he would not be near as big as he is today without the banking consolidation. Many other stakeholders still say it today. FDI and portfolio inflows flooded into Nigeria. The world celebrated, and one single transformative idea has changed the face of the private sector and economy forever. Banks became Nigeria’s first transnational corporations with about 37 branches outside of Nigeria.
Nigeria survived the global crisis because of this, and it is the banking sector that has largely been powering the economic growth you claim (compare banks trillions of naira credit for investments in the productive sector with your government’s miserable expenditure on critical infrastructure and investment; much of your borrowing – bonds – is from the banks). Your privatization of power sector, several PPP projects on infrastructure, etc, are now possible because of the mega banks. Today, Nigerian banks syndicate multi-billion dollar loans— unthinkable before. Madam, if the consolidation was ‘mismanaged’, there would not have been any bank to start with in the aftermath of the global crisis— as President Yar’adua correctly pointed out. Even you, during a recent presentation at the Banquet Hall in Abuja advertised consolidation as a historic achievement. How can you recognize a ‘mis-managed’ project as an outstanding achievement? As we say in Igbo, you can’t cover the moon with your palms.
Let me be clear: the quantum size of the new banks following consolidation presented challenges of risk management and supervision. We deployed all we had and overworked the CBN staff. The carry-over of bad loans from the consolidated banks was quickly cleaned up. To the best of my knowledge, we instituted stringent regulatory and supervisory regime (consistent with best practices at the time). We even had resident examiners in the banks and required bank MDs to personally sign their reports to CBN. I recall that the former MD of GTB complained of “regulatory intrusiveness”. To our credit, non-performing loans (NPL) came down from 22% in 2003 and 2004 to 6% as at 2008. Anywhere in the world, a central bank that brought NPL from 22% to 6% over a four year period does not look like one with a loose supervisory regime. Name other developing countries that performed better, Madam. So, on point of fact, Madam lied. Yours was a reckless assertion without basis by a Finance Minister.
The banks in Nigeria were supervised by the CBN and NDIC, but other institutions— international firms which audited them, international rating agencies which also examined their books, capital market operators since most were listed companies — all had oversight. I put on record that there was never any information/report of infractions by any bank which was brought to my attention and which we did not act upon decisively during my tenure. I heard the comment that some of the bank MDs were my friends. Well, my response is that perhaps as CME you should kill all your friends operating in the economy or become their enemies. For the record, my successor audited all the banks and none of my so-called friends was indicted. It speaks volumes. Indeed, it is also a fact that the alleged personal criminal infractions (including lapses in corporate governance Madam alluded to) by some bank CEOs were found out, only AFTER they had been removed from office. My successor told me that the comprehensive audit of the banks did not reveal such infractions. Of course, you must be God or have a special tip-off from inside to get to such information while the MDs are in office. Unfortunately, all over the world, no financial system has succeeded in routing out all criminal behaviours by the operators. So, Madam, I challenge you to provide one shred of evidence that ‘there was no separation between regulators and regulated’ or be honourable enough to retract your reckless statement.
What happened? The unanticipated and unprecedented crisis of 2008/09 hit the world. More than 40 US and European banks either collapsed or were shaken badly (remember the Lehman Brothers, Fannie Mae and Freddie Mac, Wachovia, HSBC, Lloyds TSB, Citibank, Goldman Sachs, even UBS, etc) and hundreds of billions of dollars were spent to bail them out. The contagion effects spread like a wild fire, destroying national stock markets and banks. The nascent (big) banks in Nigeria faced sudden multiple shocks— liquidity, exchange rate, oil price, capital market, etc. As oil prices collapsed, loans to oil and gas became non-performing overnight; loans to the capital market became non-performing overnight; etc.
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