ByÂ Lawson A. Omokhodion
Lt. General Aliyu Gusau, the National Security Adviser is a fine officer and a gentleman. Friends call him the smiling General, a gentle giant with an immaculate heart. A forthnight ago he bared his fangs and accused CBN Governor Sanusi Lamido Sanusi of sabotaging the economy because of consequential effects of the corrective measures he has taken to bring the Nigerian banks back to the path of sanity; and for punishing only a few bankers for the sins committed by all bankers.
Many critics of Governor Lamido Sanusi, a man I believe is doing a great job, have joined the train and are calling for the head of the CBN Governor because they believe Aliyu Gusau has spoken the mind of the presidency. But the jubilating critics have quickly forgotten what led us all to the present economic woes.
Sanusi did not create the worldwide financial meltdown that led to the death and closure of well over 400 banks in the United States alone and the nationalization of banks in Britain and in the European Union. Critics have forgotten that Gov Sanusi did not give out the over N 1.5 trillion bank loans now classified as bad debt in the Nigerian banking industry; that Governor Sanusi did not design the bubble in the Nigerian Stock market where both the regulators and the regulated were locked in an incestuous relationship that compromised the economy; that Governor CBN was not the author of the 1989 document called the Prudential Guidelines for Licensed Banks used to monitor the level of responsibility in banksâ€™ lending decisions.
In the first year of the application of the prudential guidelines in Nigeria in 1990 First Bank of Nigeria Plc declared an operating loss. The current impasse in the banking industry is due mainly to the application of these guidelines requiring banks to make provisions for their share loans and petroleum sector loans that had lost over 90% of their values. And to his credit not one commercial bank has been allowed to fail since he became CBN Governor.
To his credit no depositorsâ€™ funds have been lost in the banking system. If contrasted with his predecessorâ€™s disastrous outing Sanusi Lamido is a great patriot. For now the only blame that Governor Sanusi can take is that he came into the CBN saddle at a time when banking rules were meant to be applied. He stopped the rape and looting in the banking sector. Even if all bankers were guilty, as noted by General Aliyu, Governor Sanusi needed to start from somewhere. Yes, he can err because he is human and he has erred in some ways. But he cannot be said to have sabotaged the economy.
When the American and European banks made provisions for their bad and doubtful debt called the â€œtoxic mortgage loansâ€ some big banks immediately crumbled and if their chief executives were found to have been fraudulent they would have been in jail by now. But they declared huge losses and in some cases their chief executives were changed.
The banks became cautious and credit dried up in the system. Then the governments came in with the various stimulus packages to re_float the economy. This is why today the American economy is said to be reawakening from its deathbed and the British economy is restarting its engines.
That is what has been lacking in the Nigerian economy. The CBN is concerned only with monetary policies and focuses its attention on interest rate and exchange as instruments of policy. The CBN has carried out its duties creditably but anyone who believes that the CBN Governor is the manager of the Nigerian economy needs a fundamental lesson in the theory and application of fiscal policy tools.
The Nigerian economy needs a Finance Minister that understands the taxation and expenditure policies of government in the revival of the economy. It is curious that despite the huge losses sustained by individuals, households and institutions in the wake of the banking crisis the Federal Government did not deem it fit to introduce a fiscal stimulus package to help revive the economy.
But curiously both the government and the people were waiting for the CBN whose only responsibility is confined to monetary policy management. As the economic crisis was biting harder Nigerian politicians and government officials perfected the act of lining their pockets with the nationâ€™s wealth while their ministries and parastatals were retrenching workers.
Indeed it is a deadly offenceÂ for the state to lay off its workers! As CBN Governor was cleansing the banking stable a knowledgeable Minister of Finance would have been putting a package of incentives together for Presidential consideration and later before the National Assembly to booster the economy instead of concerning itself solely with sharing the Niger_Delta money in the federation account.
The fiscal policy of a responsible government must target the generation of employment because a high joblessness rate not only breeds poverty but emboldens criminals. In times of economic hardship governments pay its people to dig the ground and cover it up again in the form of work.
The stimulus package required of the Nigerian federal government would have been a carefully designed document with measurable and quantifiable milestones and targeted release of funds to state, local and federal agencies for economic intervention. The excess crude account (now to be called the Sovereign Wealth Fund) belongs to the Nigerian people and the federal government ought to have drawn from it to fund specific projects all around the country.
Releasing monies from the excess crude fund into the hands of thieving ministers, thieving governors and thieving local government chairmen would never help the people of Nigeria. Only project related funds can benefit the people especially if it is properly monitored as an emergency intervention fund. The CBN has no authority to spend government money to fund different sectors of the economy and the CBN has no authority to modify taxation policies to stimulate any sector of the economy.
These tools of fiscal management belong to government and only a responsible Finance Minister working with a concerned President can deploy them for the protection and welfare of the people.
The CBN Governor cannot be hanged for not doing the job that is not assigned to him by the Constitution. The only intervention that the CBN Governor executed was the allocation of N 620 billion to prop up the failing banks, an action commended by experts in Nigeria and around the world.
The criticism of the CBN Governor by the NSA must give us a fresh opportunity to ponder the purpose of governance. Why does the Nigerian government at any level not think of the welfare and survivability of its people? Why should the people be left to simply suffer and die? What has the government done in the distribution of the N 100 billion textile intervention fund approved under the government of President Obasanjo? What is the Bank of Industry doing with the small and medium sized fund whose existence is known is known only to the privileged few?
What has government done to woe Michelin and Dunlop to return their operations back to Nigeria? What has happened to the manufacturing sector and the motor assembly plants like Volkswagen of Nigeria whose operations would but Nigerians at work for three shifts per day?
Does government not know that subsidising, on an emergency basis, foreign exchange allocation to the manufacturing sector and the airlines industry is a form of stimulus for economic revival? Does the federal government believe that abandoning our road network in its current state of disrepair will ginger the economy? Does government really believe that giving all road contracts to Julius Berger and Hitech, when it decides to award road construction contracts, will resurrect the economy?
Does the Nigerian government accept that hundred of thousands of able bodied Nigeria riding Okada across the length and breadth of the country in an effort to eke out daily living are gainfully employed? Does government not know that initiating emergency skill training programmes through the now moribund National Directorate of Employment for thousands of Nigerian youths is a stimulus package?
Has any government official been worried about the existence of idle young men and women in the age range of 18_32 years in every part of the country available for mobilisation into a potent force for evil? Does government believe that its electoral reforms initiatives will go anywhere in the face of the huge army of the unemployed waiting for the usual work to come at elections.
So, my dear General, the problem of the economy is not CBN Governor Sanusi, it is at the doorstep of the Finance Minister in the federal government who always does not know what to do.
Truly, we need a fiscal policy Czar who will not be dictated to by the IMF and the World Bank in the way and manner he responsibly deploys the excess crude account. Even if we must get a scapegoat for our economic woes, it cannot be Sanusi, we must look elsewhere. An economy is managed by both fiscal and monetary policy tools.
*Chief Omokhodion, ex_MD/CEO, Liberty Bank Plc is the Akoamen of Ekpoma.