You do not cut the head to cure a headache â€“ African saying.
THE Central Bank of Nigeria, CBNâ€™s, clampdown on five banks seemed like a move to stop the affected banks from throwing the economy over the cliff. We are in support of legitimate actions that can sanitise the economy, in all areas.
In its execution, however, it is evident CBN, with the quick-fix involvement of the Economic and Financial Crimes Commission, EFCC, did not spare thoughts for the consequences of its actions on the ailing economy.
A serious issue has been reduced to propaganda and a fight for the credibility of the Federal Government, CBN, and the National Insurance Deposit Scheme, NDIC. The economy is the worse for this confusion.
We had cause to warn about the haste in implementing report of the special examination CBN said it conducted on five banks, when the same exercise on the remaining 19 banks had not been concluded. It is now obvious that due process, in the estimation of CBN Governor Mallam Lamido Sanusi, who has arrogatedÂ to himself parameters for measuring non-performing loans, does not necessarily mean adherence to the law.
EFCC Chairman, Mrs. Farida Waziri is on a frenzy. Her position is that bank debtors must pay first before complaining. How are they supposed to pay? Were the loans not supposed to be committed to investments?
The CBN and the EFCC have embarked on loan recalling, rather than recovery. They have no respect for contracts that bound the banks and their clients to these loans. They are rampaging through businesses, threatening to shut them down and disrupt the commercial activities from which these businesses should raise the funds to service their loans.
A company repaying its loans is not an admission of guilt or that it was in default. Many companies know that in Nigeria, where sanctity of contract bows to the force of arm, their businesses and persons could come to swift harm if they insist on following the law instead of the dictates of CBN or EFCC.
These are dangerous for the economy. Muted attempts at attracting foreign interests to the economy in this setting are absolute wastes. Neither the CBN nor the EFCC understands the importance of the sanctity of contracts. In the same vein, none sees the implications of the current actions for an economy that is almost on its knees from corruption, poor policies, and feints of government in restoring the Niger Delta.
What would CBN do with reports of the remaining 19 banks? Do CBN and EFCC have capacity to handle all the banks in the manner it had dealt with the five banks?
The cross roads in this matter arise from the poor realisation of the CBN of the consequences of an ill-executed plan that should have made the banks healthier and the economy stronger. With what powers would Sanusi sell these banks 100 per cent to foreigners as he promised in London? Our banking laws do not permit 100 per cent foreign ownership.
After the impact foreign withdrawal from the Stock Exchange made, should he not have been more circumspective about offering the banks wholesale to foreigners? After getting away with the illegality of appropriating N400 billion to the five banks, Sanusi is evidently emboldened. The National Assembly should see this issue as important enough to cancel its recess.
When Sanusi and Farida are through with their rampage, they would discover they have saved the banks but ruined the economy.