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Opposition to Islamic banking is uninformed – Cliff Mbagwu

BY CLIFFORD NDUJIHE,
Deputy Political Editor

Chief Cliff Mbagwu, is an economist, chieftain of the Peoples Democratic Party (PDP) and a retired banker. In a chat with Saturday Vanguard, Mbagwu, managing consultant/CEO of Simeon and Rose Associates, a Lagos based management consultancy firm, speaks on controversies surrounding the proposed introduction of Islamic banking in Nigeria. Excerpts:

As a management consultant and economist, what is your view on the economic situation of the country and raging kerosene scarcity?

The scarcity of kerosene is a sign that things are not being properly managed in the country because we are an oil producing country, the sixth in the world. We have no reason to import kerosene if that sector had been properly managed over time. I am not blaming the current administration for it but if it had been managed properly to the point where we add value to the product ,then would not have got to this sorry state where we queue up for kerosene. It is really an embarrassment for an oil producing country like ours.

Cliff Mbagwu

I think the solution is to ensure that we do not even import any petroleum product. We to have to establish enough capacity to refine domestically and derive some of the by-products of refining. The price of exporting black oil is dysfunctional to the economy. Even the little we refining, we are not refining everything. There are some components we should further breakdown to get things like petroleum jelly, parafine wax, etc. I think we should refine enough petroleum and derive all the derivable materials, which we can use in the industrial sector.

What is the implication of recurring kerosene scarcity on the economy?

The implication is unmitigated suffering we can see from filling stations across the country. Black market operators are having a field day at the expense of the ordinary people. Overtime, successive governments in Nigeria have failed the people because they have not made the ordinary person the centre of the policies they have had.

The ordinary Nigerian gets nothing from government; from craddle to the grave. This cannot continue if governance is to make meaning to the people.

Let’s take an illustration of what happens in other countries particularly Europe. If people are not employed, they are paid unemployment benefit. If they are homeless and have no food, there is an arrangement to give them food at least once a day. But in this country, the ordinary person is on his own. If he cannot afford medical bills, he dies and he dies like a man without a nation. I don’t think that is the essence of governance.

The government is almost completely useless to the ordinary man. Even security that people think the government is providing is no longer being provided adequately.

Would you link lack of governance to the rising insecurity in the country especially the Boko Haram issue?

I think, basically Boko Haram is driven by ignorance, poverty, injustice and deprivation because over time, particularly in areas where there is prevalence of Boko Haram phenomenon, successive governments have failed just as they have failed in other parts of the country. But the failure is more outstanding in these areas where the Boko Haram people are based.

So, the Boko Haram thing should be attacked from top, and that top is poverty, ignorance, joblessness and lack of opportunity. It is a product of several years of mis-governance and failure of people to whom authority has been given, who have over the years used that authority solely for their own benefit. Boko Haram is a reaction to the situation. Whatever colour people give it -religious, political, etc, what provides the raw materials for this crisis is poverty.

The Central Bank of Nigeria (CBN) has been caught in a number of policy somersaults. What do you make of Governor Sanusi Lamido Sanusi statement that rescued banks that could not recapitalise after September 30 would be nationalised?

Let me start by saying that the CBN governor has done well in trying to rescue these banks because without his intervention, by now, all those rescued banks could have collapsed and billions of Naira could have been lost.

But having rescued the banks, the CBN governor went ahead to begin to put pressure on them to recapitalise or be liquidated. I thought what should have happened, after rescuing them with tax payers money, which was a wise thing to do, is to give them time to gradually pay up the loan and pick out suitable partners, domestic investors to buy them and provide fresh capital. That is if they cannot do that through right issues to existing shareholders. I have always opposed selling the banks to foreigners because I look at then as national assets and no country moves forward by selling its assets to foreigners. I think the banks should be given time to recapitalise.

Like how long?

The CBN wanted to save depositors fund. Sanusi wanted to save jobs. So, those should be the cardinal issues in deciding how long it will take to repay the bailout money. Putting them under pressure nullifies the initial effort that was made to rescue them. I think four years from the time they were rescued would be enough to allow them look for more capital to repay the money. Forcing them to do that within a short timeline is not good for the industry because this is an industry that is driven by trust and information. Once, you destroy the confidence of the banking public in them, which is what that kind of ultimatum can lead to, then you make it more difficult for them to survive.

How do you view opposition to CBN’s moves to introduce Islamic banking in Nigeria?

The opposition to Islamic banking is uncalled for and uninformed. I think it is because the concept of Islamic Banking has been misunderstood by a number of people. The country is made up of Muslims, Christians, traditional religionists and others, we cannot therefore run away from things Islamic because we have Moslems among us. They have a right if they want a non-interest banking that is advocated by their religion.

And I don’t see how that impacts on the rights of any other person or endangers either the economy or the society. In the first place, roughly 70 per cent of Nigerians are un-banked. The reason is that the conventional banks have failed because they have an orientation that appears to prefer large ticket deals. Majority of Nigerians are not in the position to provide this type of deal. Somehow, the Islamic banks, when they come, will take care of a certain percentage of the un-banked population and then help to drive the economy. What is important is that we need to drive the economy to create jobs and opportunities. That is what we should be bothering ourselves about. There is nothing in a name. The important thing is that this is a type of banking that encourages people to be entrepreneural. The Islamic banks get involved in your business and at the end of it they could take a percentage of the profit or loss that results from it. The emphasis on collateral is not as stringent as it is with conventional banking.

What do you make of concerns by the Christian Association of Nigeria (CAN) that Islamic banking is a plot to islamise Nigeria?

I think that is naive. How can a banking service be a plot to Islamise the country?

At a time of Boko Haram?

The Boko Haram people are not being financed by any bank. In fact, they are financed by people doing business with conventional banks. What we need is something that will empower our citizens whether they are Moslems or Christians. I think a successful Islamic Banking will reduce the incidence of poverty that is driving the Boko Haram phenomenon. So, it is not going to aid it, it is going to help curtail it.

Do you see Islamic Banking working in Nigeria?

Yes, I see it working because there is so much poverty and a huge percentage of Nigerians are un-banked. It is very difficult to walk into a bank and get an overdraft, even to pay school fees even when the bank manager knows your source of income. That is why I said the banking sector has failed in Nigeria in terms of helping their customers. They collect money from a huge percentage of Nigerians and give it to about one per cent of the population. I think when it comes, Islamic bank will fill the gap that conventional and micro-finance banks have not been able to fill.

How would you assess President Goodluck Jonathan’s regime so far?

The Jonathan regime represents a paradigm shift, that is an opportunity for us to build a nation. I don’t think we have ever had a better opportunity to build a nation than this one. Coming from a past that was riddled with corruption, unnecessary waste of human lives in the pursuit of power; a past that was riddled with a mind set that was not compatible with nation building; a mind set that suggests to a section of the country that only they can rule. This is a paradigm shift from that past.

Looking at what he has done, he has just assumed power, I think there is hope for this country. But he must be courageous. He must step on toes. Where things have gone wrong for a long time, you cannot correct them without stepping on toes. Some people have benefitted so much from the decay that has existed and to correct the decay a lot of people will lose their source of income and feel aggrieved. They will fight back and you must be prepared for it.

He must build his own crop of supporters and technocrats, who can help him drive the country, not depending on people sent to him by godfathers.

This government must create jobs and opportunities for the millions of youths that cannot find anything to do. We must curtail our appetite for foreign goods and services. You cannot run a country where 75 per cent of everything you use is imported. If you do that, you must be prepared to send your citizens to those countries where are buying things from to get employment.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.