CBN Governor: I Don’t Need Second Term

Sanusi Lamido Sanusi

By Festus Akanbi

Central Bank of Nigeria Governor Sanusi Lamido Sanusi may have foreclosed the possibility of a second term in office after the expiration of his term next year.

Sanusi was quoted in an interview with the London-based Banker Magazine as saying he had completed his assignment at the apex bank and would not be seeking a second term in office.

He said critics of his tight monetary policy had forgotten how unstable the nation’s financial system was just three years ago.

Though perceived to be controversial, Sanusi, who took over from Prof. Chukwuma Soludo as the apex bank’s governor on June 3, 2009, is believed to be in good standing for re-appointment by President Goodluck Jonathan given his impressive record in office as CBN governor in the past four years.

In spite of his achievements in office, earned from efficient management of the banking and financial sector issues since 2009, Sanusi said he was not keen about retaining the job after the expiration of his first tenure in June 2014.

Analysts point out that re-appointment for any CBN governor is subject to the prerogative of the president.
Soludo, Sanusi’s predecessor in office, was not re-appointed for a second term by late President Umaru Yar’Adua despite his much-touted impressive records.

“I will not be offering my services for a second term. The job is extremely demanding. I don’t think it’s something that I would like to do for 10 years. I also think I have certain skills and a temperament that are suitable for a certain phase. I’m a crisis central banker. I came at a time of crisis.

“I consider my job to have been to fix the crisis and restore stability, and to make sure we did that in such a way that no bank failed, no depositor or creditor lost money and fiscal costs (were minimised), which is why we tried to get the banks themselves to bear the costs,” the CBN governor told the magazine.

Several attempts made Saturday to speak with Sanusi did not materialise, as he didn’t pick up the phone when THISDAY called.

But in a response to an email enquiry, the CBN governor directed our correspondent to see the interview in the website of the Banker Magazine.

The response read: “You can check the Banker Magazine yourself. Maybe the interview is on their website. Whoever wrote the article is quoting something.”

As CBN governor, Sanusi had initiated a chain of reform processes shortly after he came on board in 2009, as signs of systemic failure in the banking industry became manifest.

A joint audit undertaken by the CBN and Nigerian Deposit Insurance Corporation (NDIC) confirmed the fears of some industry watchers who had raised the alarm that some bank chiefs were merely cooking their books at a time banks were posting incredible results.

Consequently, a number of bank chief executives including former managing director of Oceanic Bank International Cecilia Ibru,  Erastus Akingbola of the defunct Intercontinental Bank Plc, Francis Atuche of Bank PHB and Barth Ebong of Union Bank were sent packing and prosecuted for opaque financial transactions.

Other bank chiefs affected included Okey Nwosu of Finbank Plc, Ike Akinkuotu of Equitorial Trust Bank, Charles Ojo of Spring Bank Plc and Sebastian Adigwe of Afribank.

The banks were offered to new investors, a process that saw to a new wave of mergers and acquisitions in the nation’s banking industry.

In the process, Access Bank merged with Intercontinental Bank, First City Monument Bank acquired Finbank, Sterling took over Equitorial Trust Bank, while Ecobank Transnational acquired Oceanic Bank to swell the portfolio of Ecobank Nigeria Plc, its Nigerian affiliate.

Three other banks, which could not meet up with the CBN time-table –Afribank, Bank PHB and Spring Bank – lost their licences and in their ashes emerged three bridged banks namely Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited, respectively.

Sanusi’s most impressive achievement since coming to office has been salvaging Nigeria’s banks after their 2009 crisis.

Today, their capital adequacy ratios average more than 20% and non-performing loans, which had soared, are back below 5%.

The CBN governor said there had been a transformation from banks merely buying government bonds and funding blue-chip companies to now focusing on what he calls “the middle part of the economy, where growth happens and jobs are created.”

This middle part of the economy involves industries such as agriculture and manufacturing, which have long been neglected by lenders.

“The DNA of the entire sector has been changed,” he said.

“If you spoke to the bank CEOs, you would find a shared understanding that the banking industry needs to return to its raison d’être, which is to be an intermediary of savings into the real economy.

“We’re not where we want to be. But the days when banks shied away from or didn’t see this as a core function are gone.”

Sanusi, a former risk manager and head of First Bank, Nigeria’s largest lender, had long ago canvassed the need for structural reforms in the country's economy. He believes these will be far more effective in enticing banks to lend to the private sector than monetary policies.

He told the magazine: “Banks’ ability to diversify their portfolios depends on a number of things,” he said. “You can’t get them to lend to the manufacturing industry if manufacturers aren’t viable because there’s no power, security or infrastructure.”

According to him, Nigeria’s macroeconomic indicators would be the envy of most countries – real gross domestic product (GDP) is set to rise by more than 6% this year, it has a current account surplus equivalent to about 8% of GDP and its debt-to-GDP ratio is less than 20%.

But Sanusi said such figures are doing little to reduce poverty in the country. “We shouldn’t get carried away by a 6% headline [growth] figure,” he said. “If the economy is expanding at 6% and the population at 2.5%, how much are you really growing on a per capita basis? A lot of that growth is also one in which you have huge inequalities in income. It’s not growth that lays the foundation for social and political stability.”

He warned, moreover, that Nigeria can no longer take high earnings from crude exports for granted.

“You can’t have a situation in which growth is driven by a rise in commodity prices,” he said.

“We’ve had strong oil prices and good output. But given what’s happened with the shale oil finds in the US and that country’s increased energy independence, and given the new oil finds across Africa, the outlook for oil growth is very weak.”

Crucially, however, he says the government’s fiscal management has been far better since Ngozi Okonjo-Iweala became finance minister in July 2011, particularly when it comes to reining in recurrent expenditure.

“From the time Ms. Okonjo-Iweala came on board, there has been significant improvement,” he said, adding, “We (the central bank and finance ministry) have been speaking the same language. And you can see the results.

“With our monetary and fiscal policies, we have provided macroeconomic stability. But stability is not an end in itself. We need to take advantage of it and push forward with structural reforms. If we can do that, then we could easily reach double-digit growth and make it sustainable.”

Sanusi’s tenure will also be remembered for effective taming of inflation as the Monetary Policy Committee of the apex bank has continued to vote for a regime of tight monetary policy.

A cocktail of such policies has brought about a moderate inflation rate, as Nigeria recorded a 9 percent inflation rate in January while the nation’s external reserves position has been trending upward hitting an all-time high of $47 billion last week.

The CBN under Sanusi’s watch has also succeeded in maintaining stability in the naira exchange rate consecutively for two years as the naira average N160-N167 against one US dollar.

To reduce the cost to the government of its intervention, all banks are being charged an annual levy by the Asset Management Corporation of Nigeria (AMCON), the state-owned bad bank created in 2010 to buy up toxic assets.

Lawmakers are working on an amendment to the AMCON Act, which will make such payments legally binding.

But Sanusi has also courted controversy in some of his actions and positions on issues like the CBN’s N100million donation victims of Boko Haram in Kano in 2012, his spat with the National Assembly over what he referred to as their bloated allocation and the latest being his call for the sack of about 50 percent of the Nigerian workforce.

Sanusi, in his presentation at the Second Annul Capital Market Committee Retreat in Warri, Delta State said the country spends 70 percent of its earnings on salaries and entitlements of civil servants.
Commending the finance minister, who he credits with prudent fiscal management of the Nigerian economy, Sanusi said: “From the time Ms Okonjo-Iweala came on board, there has been significant improvement. We (the central bank and finance ministry) have been speaking the same language. And you can see the results.

“With our monetary and fiscal policies, we have provided macroeconomic stability. But stability is not an end in itself. We need to take advantage of it and push forward with structural reforms. If we can do that, then we could easily reach double-digit growth and make it sustainable.”