IT is a little over a year that Lamido Sanusi LamidoÂ swept away eight bank chief executives, and some of their directors, in a move the Central Bank of Nigeria Governor said would sanitise the banks and make them more accountable to the depositors and their shareholders.
From the beginning, the reforms were based on wrong assumptions. Some ofÂ which were that if the bank chiefs were sacked, bad loans would be recovered quickly, other bank chief executives would be frightened into observing banking regulations and the publicâ€™s confidence in the banks would increase.
Things have worsened since then. The banks have had to sack many of their staff at the instance of new managements CBN installed, lending has ceased, even businesses that legitimately obtained loans from banks have been hounded to repay them, with the Economic and Financial Crimes Commission, EFCC, called in to give bite to the loan recovery drive.
Projects banks were financing remain on hold. CBN has used billions of public funds in propping up the banks. By CBN admission, the banks have gulped N620 billion of public money. CBN said the volume of non-performing bank loans was over N900 billion.
Every sector is running to CBN for bail-out. It is understandable because the banks are not lending. Depositors are keeping their money away from the banks after the uncertainties reforms unleashed.
News that CBN has quietly returned the seized assets of sacked bank chiefs could be Sanusiâ€™s first acceptance that he acted with over-bearing haste. He can be said to haveÂ done more damage to the banks in trying to solve the problems the reforms created.
With N620 billion of public funds and EFCC claiming it recovered loans worth N400 billion, why has the CBN not fixed the N900 billion hole in accounts of banks?
Obviously, the issues were deeper than the Governor thought. Take as an example, CBN staff, who over the years, collaborated with some of these banks to doctor their accounts, are still in service. Sanusi has not reformed them, ignoring the fact that they are a major factor in the frauds in the banks.
Sanusi was selective in punishing the banks. He has discovered that the problems with the banks are more widespread. There is hardly a bank without a blot. He compounded the problems by refusing the directors of the banks recapitalising them, sustaining the impression that he has his agenda, an allegation that he keeps denying.
His utterances are not any better. He makesÂ remarks about the banks, makes policy statements and recants the next moment; and more than a year after his road shows abroad, and claims that foreign interests wanted to buy the seized banks, the banks are still gulping public funds that could have been used in propping up sectors like manufacturing.
In his second year in office, Sanusi would benefit from some sobriety.
The banks are in a flux. They have a regulator who does not appear to appreciate the implications of his utterances on the economy. His statistics about the growth of the economy have not reflected on Nigerians. Inflation remains high. Low interest rates and uncertainties about the banks have discouraged depositors.
A redeeming factor for the banks could be Sanusi allowing their shareholders to recapitalise them.Â He should not sell any bank the shareholders are able to re-finance.
He also needs a quick plan to return the banks to private ownership and stop the haemorrhage on public funds.