Mazi Okechukwu Unegbu was appointed by the Central Bank of Nigeria (CBN) to restructure Citizens Bank when the bank was having issues and he was able to turn the bank around before the consolidation in the banking sector.

Having brought back an ailing bank back to life, he believes that the managers appointed by the CBN to revive the eight bailed out banks are not intelligent enough. He also noted that the CBN can not just arbitrarily nationalise the banks as such action will be illegal. Excepts:

 By Moses Nosike &Rosemary Onuoha

We are seeing a huge outcry against Islamic banking, is Islamic banking a bad initiative?

Unegbu...

I did Islamic banking in UK in 2004. I don’t see anything wrong with Islamic banking. People are just sentimental about it. If you are a Christian and don’t want to go in there, then don’t go in there.

Even some Muslims don’t like it because I have spoken to a very good number of people about what Islamic banking is all about. People will need to understand it.

In order words, Islamic banking is for everything. The Sharia Law is not a coded law, so anything you do about Islam based on the Sharia Law is on certain injunctions.

Even in Christendom, if you can remember Thomas Aquinas, he was against collecting interest. I think the problem here is that the CBN mentioned the word ‘Islamic.’ I wish the CBN Governor did not talk about Islamic, he could have said non- interest banking, because once you say ‘non-interest’ banking, people will want to know what it is.

If you go into the operations you will discover that it is based on the Sharia principles. In the Shariah, you don’t charge interest when you are giving out loan. The beauty of it is that you share profit when you make profit. And when there is no profit the loss remains with the banks.

So there is nothing wrong about Islamic banking. It is even best for financing mortgages. We are talking of building houses for people and it is the best method of financing because if you go to most of the regions where non-interest banking is practiced, Saudi Arabia for instance, you find that people are all housed and accommodated.

You don’t talk of housing problems. Only that the houses may not be like the mansions you see in some places but at least everybody has a house. The problem here in Nigeria is that the Central Bank has a very good policy but implementation becomes a problem.

For instance what the Micro Finance banks are doing is not what they are supposed to do. So there is nothing basically wrong with Islamic banking. It is a sentimental thing and people misunderstand it.

I wish Sanusi hadn’t mentioned Islamic but non- interest banking and it could have been very good. But let’s not condemn it, let’s try it out.

You said that Micro Finance banks are not doing what they ought to be doing, where are they derailing?

The Micro Finance banks are operating like conventional banks, which is wrong. The CBN tells them to have various departments just like you have in a conventional bank and their format for reporting is just like that of a conventional bank, which is all wrong.

Micro finance banking should be operated just for the very active poor and for the very poor, not the lazy poor. I give you an example. While I went to my village, I went to see some people I consider poor, some very poor women in the village.

I saw one of them who was selling vegetable and snuff, the highest level of capital she has was N200. And I asked her, ‘mama, how much do you think if you get you can do your business very well? She said N1000.

I am telling you that there are people like that and that is where we are all derailing, we don’t know that there are people like that. I gave her N5000; she started dancing round the village thanking God. I told her not to call my name.

I did it for about ten people. Each time I go home, these women will come they will buy something for me to come and thank me. That is what the Micro Finance banks are supposed to be doing. In doing that, the Micro Finance banks can make some depositors become shareholders in their various banks.

The micro finance banking we are doing is not addressing the issue of poverty of the active poor which they are supposed to be doing. Look at some of Micro Finance banks that were set up, they died because what they are doing is not their function.

I think the central bank will need to redesign and restructure the micro finance banks rather than closing them down. The meltdown affected a lot of them. I think the solution is not by closing them down; the solution is about finding out why some of them are dying.

It is not because their capital is down or they don’t know what to do, it is because they have left the main objective for which they were created and started doing what is not theirs.

The CBN said that it has rescinded on its initial plan of liquidating the bailed out banks, instead it will nationalise them. How realistic is this new decision?

The issue is that the people in CBN have not sat down to think out thoroughly what they want to do. However, nothing is carved in concrete. There are supposed to be changes.

There is this thing called decision tree approach, which means that you have various roots to achieve an objective. There is the root of the tree, within the process you have the roots all scattered, so if you are following a root and you get to the top and it doesn’t workout, you go to the next root and you do an analysis of the effects of whatever change you are going to make within that decision tree method.

What the people in CBN have done is that they are not properly thinking out what they are supposed to do. They just do it on the spur of the moment without thorough thinking. That is why they are running into problems. They are saying that they are going to nationalise the banks, which means, they are going to go back and change the law first.

They must change the law first because they cannot say they are nationalising without changing the law. The problem is that they just talk without knowing the foundation. It is a bit disturbing and I see all of them as people that have had experience. I keep telling them, if they will hear, talk less.

You can come out to talk only when you have concretised your policy and once you talk about it, the implementation starts and even when people criticize it, you have done your best by letting the public know. The CBN must agree in-house about what they want to do.

So it is a pity of what we are seeing and that is what is imparting negatively on the capital market.

Because almost all the banks are quoted, any statement coming from the regulator will impact on the fortunes of the banks in the capital market. So it is a joke for the CBN to come out and say they are going to nationalise the banks. I am sorry but they don’t know what they are talking about. Maybe it is the euphoria of occupying a position.

Is it justifiable to say that Sanusi is covertly carrying out a northern agenda by nationalising the bailed out banks?

If you look at all the factors surrounding the banks, the northern agenda thing is not possible, Sanusi can’t do that.

Rather if the CBN decides to sell the bailed out banks, it will be open to everybody. Shareholders of these banks have been advocating for one thing or the other, however, these shareholders should get together and decide on what they want to do.

Although the central bank is still in the bailed out banks with their managers, my anger is that the managers they appointed are not intelligent.