By Chinedu Bosah
THEREÂ has been so much noise on the â€œcleaning upâ€ of the banking sector with the replacement of some bank chiefs. One area which most people have ignored is the huge sums (tax payersâ€™ money) put in the ailing banks and the impact on society.
About N620 billion public resources have been used to bail out these banks on the excuse that it will save depositors funds. The fact that this bailout package is more than sufficient to capitalize at least 24 new banks reveals the depth of the crisis. Recall that the minimum capital base for a bank in the country is N25 billion.
This is not the first time such measures to â€œclean upâ€ the banking sector have been carried out. There was so much grandstanding with the Abachaâ€™s Failed Banks and Financial Malpractices Tribunal between 1994 and 1995, which recorded several arrests and detentions of bank chiefs, such that one would think that the problem in the banking industry had been resolved once and for all.
Then came Prof. Charles Soludo with his much-flaunted consolidation policy in 2005 that created the illusion that by just increasing capital base of banks, the crisis in the banking sector would become a thing of the past and the economy would grow because the banks would have more money to lend for industrial purposes. Prof. Soludo went ahead to dash some commercial banks N82 billion in 2005, enough for three new banks to capitalise and until this very moment Nigerians are yet to know the beneficiary banks.
Despite Soludoâ€™s consolidation as well as the bailout package, the crisis confronting the banks have grown bigger.Â Under the superficial belief that banks by all means should not be allowed to fail, about N702 billion tax payers money have been used to bail out the banks in four years without any meaningful economic progress recorded.
I donâ€™t see how the banks can make any sustainable progress when there are no infrastructures to support businesses; when bank chiefs and directors are wasting huge money to consolidate their already over blotted privileges by buying private jets, bullet proof cars, expensive houses, etc.
Banks prefer investing in speculation to production and services. Even loans were granted to rich men to buy the same bank shares to give the impression that their stocks were doing well, and by so doing ambushed the public into buying. The government has failed to use public resources to advance public interest, in the same way the banks have used depositorsâ€™ funds to advance private interest in line with the profit first capitalist system. So, one would not be surprised when we keep recording crisis after crisis.
To me, the latest Sanusiâ€™s â€œclean-upâ€ while in a way is commendable, is equally in another way a diversion that creates the impression that the problems are being attended to. It is more a systemic problem than this patching-up. Beyond the arrest and trial of bank chiefs, which will soon fizzle out as the cases progress in court, like most high profile cases, there is yet a holistic policy to rescue the real economy.
If we want to hold all those who were directly and indirectly responsible for the crisis accountable, then Prof. Soludo and the other CBN directors should be answering questions as to why there was no proper oversight from the CBN; the Minister and directors in the Ministry of Finance should have a lot of explanation to do as to why they could not forestall the crisis; President Yarâ€™ Adua on whose table the buck stops should have resigned and be answering to Nigerians as to why he and his lieutenants should allow personal/private interest to flourish at the expense of overriding public interest; the whole parliamentarians (Senators and House of Representative members) who claim to be representing the people should quit the parliament for their failure to represent the people other than themselves and return all the jumbo allowances collected. The Police high chiefs and the EFCC head should immediately resign and face prosecution for not forestalling the crimes committed in the banks; directors and CEOs of the affected banks alongside their private collaborators should be made to pay every kobo associated with all non-performing loans.
By the time all those who are overtly or covertly involved are brought to book, beyond holding a few responsible, it will become clear that it is a systemic problem. That explains why the second phase of audit was tamed in order not to further expose more people.
I am yet to be convinced that the bailout was meant to secure the depositors and by extension the public. Out of the N2.9 trillion total bank loans of the five banks (International Bank, Afribank, Oceanic Bank, Union Bank and Finbank), non-performing loans stood at N1.2 trillion (40%). Though, about N110 billion had been recovered, virtually all the money can be recovered if we must go after all those involved including powerful individuals in position of authorities. I mean, this money didnâ€™t melt like ice; it can be traced and recovered from these persons. On the surface, it looked as if the bailout is meant to save the depositors and public, but in reality it is meant to bailout the bank chiefs and their private collaborators.
In the real sense of it, the depositors/public/tax payers are the ones paying and not the bank chiefs and directors. A simple analogy is when thieves steal from the people, rather than get the money back from the thieves, the authorities take another money that belong to the victims to replace it, and yet claiming to be protecting the victims.
Mr. Bosah, a social critic, writes from Lagos.