By Mrs. Ireti Bankole
It is not for nothing that General Aliyu Mohammed Gusau (rtd) has become synonymous with Nigeriaâ€™s national security.
Gen. Gusau has been in this office more than any other person, coordinating all the security agencies in the country.
He was first appointed by General Ibrahim Babangida (rtd), later by President Olusegun Obasanjo and now by President Goodluck Jonathan.
At a security awareness seminar organised for the new members of the Jonathan administration on April 17, 2010, he spoke with dazzling brilliance and infectious candour.
Participants regard the speech as truly the tour de force of the seminar.
Gusauâ€™s speech looks like a state of the union address.
According to media reports, he spoke on such critical issues as the ongoing anti-corruption war, the countryâ€™s justice system and, of course, the banking reforms unleashed by the current governor of the Central Bank, Malam Sanusi Lamido Sanusi, appointed last June.
The National Security Adviser gave a thumb down to the state of affairs in these areas.
His action was rather unusual because Gen. Gusau, a highly experienced spook, does not crave for the limelight.
Of all the areas the news media reported the NSA as addressing at the seminar for new ministers, the one of particular interest to this short article is his observation on the banking reform.
Referring to Sanusiâ€™s dramatic removal of a number of bank executives since August 14, 2010, the consequent takeover of the management of these banks, the arrest and prosecution of the executives for their roles in the â€œin the grave dangerâ€ in which their organisations found themselves, Gusua remarked:
â€œThe fragility of the economy dictates that offenders be interdicted without damaging the sector.â€
But he noted that the CBN’s intervention â€œseems to have damaged economic activity in the banking sector to the detriment of the larger society.â€
The essence of every reform is to make society better, not to exacerbate the condition of the people.
Sanusiâ€™s reform has, unfortunately, made things far more difficult for Nigerians and is hurting the economy in a very reckless manner.
Bankers, the primary victims of the reform, have been afraid to raise even a timid finger in protest because banking is a highly regulated field.
Government officials, who should know better, turned themselves into Sanusiâ€™s cheer leaders during late President Umaru Yarâ€™Aduaâ€™s leadership.
They were supported by journalists who appeared to be carried away by Sanusiâ€™s sensational dramas, blissfully oblivious of the damage to the economy in particular and society in general.
Announcing the removal at news conferences of very rich bank executives from their plum jobs and sending the Economic and Financial Crimes Commission (EFCC) after these executives who have a larger than life image could provide excellent material for sensational headlines and exuberant commentaries and even material for home videos, but what is the likely effect on the economy?
Banks, like other businesses, do run into problems from time to time, for various reasons.
In the last two years in particular, we have seen a wave of bank crashes across the globe in the wake of the world economic meltdown.
Iceland, where the banking system collapsed, is probably the most notorious example.
In such sophisticated economies as the United Kingdom and the United States , banks have failed like a pack of cards.
In the US alone, over 200 banks have collapsed in the last two years, and they include Lehman Brothers.
Northern Rock is among the banks in the UK which ran into a troubled weather.
Still, it is unimaginable that the central bank governor of any of these countries can call a press conference to announce that banks on his watch are in deep trouble.
Politicians can afford to do so. President Obama may even do that because he is a politician. But certainly not Bernard Bernainke, chairman of the Federal Reserve.
Should such news come out from the lips of any central bank governor, it will mean sheer Armageddon.
If banking is a conservative profession, the central bank governor is super conservative.
Only last November did the Bank of England (the Central Bank of the UK) reveal, for the first time, that it furtively loaned 61.6 million pounds to the Royal Bank of Scotland and HBOS between October 1 and 8, 2008, when the two leading banks ran into troubled waters.
Bank of England governor, Mervyn King, told a committee of British parliamentarians on November 24, 2009, that the assistance was made secret so as â€œto prevent a loss of confidence spreading through the financial system as a wholeâ€.
The same day, Daily Telegraph quoted economist, Tim Congdom, as saying that the secret facility â€œis staggering, but it was the right thing to do.
If you are in a system prone to panics, the last thing you want is to advertise that an institution is in troubleâ€.
Professor Pat Utomi, Director of the Institute of Applied Economics at the Lagos Business School and a board member of Bank PHB, has been bemoaning how Sanusi would accept his advice against making unsavoury comments on Nigeriaâ€™s financial institutions only for the CBN governor to release more verbal salvos the next minute.
The result is that banks with minor problems found themselves in greater difficulties no sooner than Sanusi spoke on their health.
A countryâ€™s banking system is interdependent, comparable to a chain which is as strong as its weakest link.
Hence, it is not just the nine banks â€œin grave dangerâ€ that have been retrenching staff and closing branches and drastically reducing their credit lines, but also officially proclaimed healthy ones.
Businesses, individuals and families depending on the banks are also affected. We all are, in the words of Professor JP Clark, â€œcasualtiesâ€.
Sanusiâ€™s deviation from the trajectory of his predecessor, Professor Chukwuma Soludo, is a fundamental error.
Far from offering an alternative vision to Soludoâ€™s Financial Services Strategy 2020, which seeks to make Nigeriaâ€™s financial services the most competitive in Africa by 2020, Sanusi has been running in circles, a perfect case of motion without progress.
There is something for him to learn from Soludoâ€™s management of Nigeriaâ€™s monetary and fiscal policy.
Prior to Soludoâ€™s consolidation of the banking system from 2004 to 2005, all 89 local banks were not up to the fourth largest bank in South Africa, but, today, Nigerian banks are constantly rated the biggest in the world.
If not for the bank consolidation, our banking system would not have withstood three otherwise catastrophic shocks, namely, the worst banking crisis the world has ever experienced, the collapse of the global oil market and the collapse of the domestic stock market.
It is to Soludoâ€™s eternal credit that none of the 25 consolidated banks collapsed.
The nation sorely misses Soludo.
We give kudos to the National Security Adviser for his brilliant and forthright analysis of Sanusiâ€™s banking reform. There is still hope for Nigeria.
Dr. (Mrs.) Bankole, an economist and former investment banker, lives in Ibadan, Oyo State.