The central bank is an institution that manages a nation’s currency, money supply and interest rates. It also usually oversees the commercial banking system  of this country. In contrast to a commercial bank, the central bank possesses a monopoly  on increasing the amount of money  in the nation, and usually also prints the national currency.

The primary function of the central bank is to manage the nation’s money supply (monetary policy ) through active duties such as managing interest rates , setting the reserve requirement  and acting as a lender of last resort  to the banking sector  during times of bank insolvency or financial crisis .

The central bank is the banker’s bank and also has supervisory powers intended to prevent bank runs  and to reduce the risk that commercial banks and other financial institutions engage in reckless or fraudulent behavior.

Central banks in most developed nations are institutionally designed to be independent from political interference. In most cases they are not public, in the sense that they are neither state-owned nor directly regulated by government, parliament or another elected body in such nations, limited control by the executive and legislative bodies usually exists.

The governor and  chief executive of  the Central Bank of Nigeria is Lamido Sanusi.  It has been established that the goals of a good monetary policy of a central bank will include the reduction of what is called frictional unemployment(or unintended un employment), creation of price stability through management of inflation, inducement of economic growth through maintenance of  stability in interest rates, financial market and foreign exchange. A low interest rate implies that firms can loan money to invest in their capital stock and pay less interest for it.

Lowering the interest is, therefore, considered to encourage economic growth and is often used to alleviate times of low economic growth. On the other hand, raising the interest rate is often used in times of high economic growth as a contra-cyclical device to keep the economy from overheating and avoid market bubbles.

In Nigeria, we have remained in the regime of high interest rates for well over 15 years, but the last few years of Sanusi seems to be witnessing the highest crescendo of high interest rates, dimming any hopes  of our climbing out of the doldrums. When he came to the saddle in 2009, he struck the bank Managing Directors, claiming that there was too much corruption, the banks were whited sepulchers, that if nothing was done their bubbles would burst any time.

To ensure stability, he embarked on the sanitisation of the banking sector, unleashing fear and intimidation on bankers. It is now almost four years after, the common man, the simple business person is yet to see the goodies from the sanitization. The economy appears like a tired lazy old elephant that has refused to get up and move.

Bank lending rates have
continued to hover around 20 to 27 percent per annum on most transactions since the past 10 years without appreciable change. Simply put, capital or money for long term investments in the real productive sectors, like agriculture, manufacturing, mining and processing, to name a few, is much more scarce now, than it was before 2009.

Un employment will continue to hit the high roofs if money to do business is not coming forth from the banks. Statistics from the National Youths Service Corps show that over one million young graduates pour into this economy yearly from the higher institutions, expecting employment. Governments can never cope with this type of deluge no matter what they do, and what will happen in the next 10 years at the rate we are going is what we just cannot imagine.

Every commercial bank insists on applicants for loan as capital, to show either strong equity commitment, or collateral, before funding could be considered no matter how profitable the business plan may be. How can such an applicant find the equity and collateral?

The commercial banks are all just interested in short term lending, thereby fuelling an import and consumer orientation, rather than productive orientation. The banks are all expanding their marketing departments, chasing after deposits from people, using all sorts of designs which they call products, but the governor of our central bank does not seem to care.

In view of the gargantuan responsibility of stimulating and maintaining economic growth by the central bank, the governor ought to be a man who is just doing his work, and not given to excessive press and media presence at all times. In the early seventies to the late 1990s, you rarely saw the governor of central bank reading speeches, addressing conferences and the press.

You could walk into the presence of the governor of your central bank without recognising who he was. That was in the good old days of Governors A. Ahmed and Clement Isong, to name only two. But since after 1999, our central bank governors seem to lose sleep if  not reported weekly in any of the print or electronic media.

Prof Chukwuma Soludo started it and  Lamido Sanusi after pretending to be different has taken it to another level. He has worn his traditional turban to his office, donated money to “good cause” and sees to it that his weight is thrown around whenever such takes his fancy.

Before 2009, many Nigerian bankers, including those Sanusi chased out of office, were receiving awards from all types of quarters overseas in the United Kingdom and the United States.

It was interesting to watch and read the same Sanusi receiving awards from overseas too like the ones he rebuked only in 2009. What then is the difference between those Managing Directors of banks that were hounded out of office, and those occupying those desks now when they also round trip on government deposits?

Mr. CLEMENT UDEGBE, a legal practitioner, wrote from Lagos