By Dayo Benson

Failure to adhere to the rule of law and its principles have been attributed to the disconnect  between the banking system and economic development in Nigeria.

A professor of development law, Prof. Animi Awah, stated this in her inaugural lecture delivered at the University of Lagos campus of the Nigerian Institute of Advanced Legal Studies NIALS.

Prof. Awah whose lecture was titled “Harnessing Nigeria’s Banking System Potential for Sustainable Development” made history as the first female professor of the institute to deliver an inaugural lecture.

The event had in attendance NIALS Director General, Prof. Epiphany Azinge SAN who gave an opening remark and Mr. Dele Dodo SAN as well as other professors of the institute.

According to Prof. Awah “If the banking system is to affect development positively and give a clear signal to investors and other stakeholders it needs to show a clear commitment to abide by rules and regulations and not seek to circumvent rules that seem to make demands on them. Establishing the rule of law or the “rules of the game” is a vital contribution that government makes to an efficient economy. Private property rights, intellectual property rights, contract law etc. are all fundamental to a prosperous and growing economy. The World Bank has drawn a connection between rule of law and sustained economic development.”

Economic development

“For instance there are moves to amend the AMCON Act to among other things circumvent the clear provisions of section 228 of the ISA 2007. Section 118 of the 2007 Act provides:

Notwithstanding anything to the contrary contained in any other enactment, every merger, acquisition or business combination between or among companies shall be subject to the prior review and approval of the Commission.

Any transaction consummated pursuant to authority given by any Federal Government owned agency under any statutory provisions vesting such power in the Agency shall in addition be subject to the Commission’s approval” she stated.

Speaking further, she added “It needs be recalled that this provision was specifically added following the decision of the Investment and Securities Tribunal in Beta Consortium Limited V. Securities and Exchange Commission.

The Tribunal declared that pursuant to section 99(4) the transaction involving the acquisition of Ikoyi Hotel by the Applicant under the authority of the National Council on Privatisation, a Federal Government agency, is exempt from the prior review and approval of the Respondent which exemption is an exception to the Respondent’s general power as contained in section 99(2) of the Investment and Securities Act 1999.”

Continuing she said “This decision necessitated the provision now section 118 of the 2007 Act which specifically requires all government bodies carrying out dealings in shares to be bound by relevant provisions of the ISA. Despite this the scenario appears to be playing out again by the proposed amendment of the AMCON Act which seeks to exempt AMCON from the provisions of the ISA.

The CBN and the NDIC support this amendment holding that the amendments would secure the capacity of AMCON to secure ailing banks; while the SEC expectedly has reservations over the exemption proposed in the amendment bill. The SEC says the proposed amendment contravenes the Constitution. But it appears the real issue is the loss of revenue to SEC that would result from such exemption. It is estimated that it would cost AMCON about 20 million naira to comply with the demands of SEC.”

“Be that as it may it is our view that there is a need for a central depository of security transactions and dealings in the country and the SEC is thus positioned. Thus a wholesale refusal to keep records with the SEC may not be healthy for the economy. There should rather be a half way meeting where the appropriate information is made available to SEC without the corresponding payments being made given the peculiar position of AMCON” Professor Awah added.