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Central banking is everything to the financial system, a key driver of national economic growth. The raging controversy over CBN’s N100 million donation to victims of the January 2012 Kano bombings and his comments on the emergence of the murderous terrorist sect, the Boko Haram, are as damaging to the neutrality of the institution he heads as was his tactlessness over non-interest banking and the sanitisation of troubled banks. Appointed in 2009, the expiration of Sanusi’s first five-year term at the CBN is still a long way ahead; too long, say some critics.
The principal objectives of the apex bank, the CBN Act 2007 says, shall be to ensure monetary and price stability; issue legal tender currency; maintain external reserves; promote a sound financial system and act as banker and provider of economic and financial advice to the Federal Government. CBN officials say the N100 million donation was within the purview of its Corporate Social Responsibility. But Section 9 of the CBN Act enjoins “Governor and Deputy Governors to be fully devoted to the service of the Bank” and warns that “charitable causes as may be determined by the Board” should “not conflict with or detract from their full time duties.” It is difficult to score Sanusi high in keeping strictly to the rules of his engagement.
Major criticism of the Kano largesse centres on why the CBN in pursuit of its CSR function, appears to favour Kano when Yobe, Borno, Bauchi, Kaduna, Gombe and Niger residents have been bearing the brunt of the Boko Haram terror since 2010. While succour for terror victims is commendable any day, the sad truth is that Sanusi lays himself and the CBN open to suspicions of bias towards his home state when others have suffered more from terrorism. It is only one example of Sanusi’s penchant to get embroiled in partisan issues rather than distance himself from divisive national issues as demanded of his exalted position as central bank chief.
This is not all. In January, he had plunged into the fuel subsidy removal controversy and attracted flak from those who believe that, as CBN Governor, he should have been more circumspect in dabbling in an emotive problem that the government had created for itself. It reminded many of his equally controversial behaviour over non-interest banking last year when he appeared more as an advocate than an impartial umpire.
Non-interest banking, as its proponents have emphasised, has operated alongside conventional banking for long to the benefit of nations and their populations around the world. But to have it introduced in Nigeria, Sanusi’s CBN deemed it apt to tag it “Islamic” and to emphasise everything about its origin. Sensitive as anything pertaining to religion could be in Nigeria, fierce criticism and opposition emerged against the plan. The chances of wide acceptability for an otherwise beneficial financial mediator in Nigeria have already been dampened by Sanusi’s partisanship.
On account of the deep resentment the Islamic banking issue attracted, it became quite worrying when the CBN again threw discretion to the wind by getting the apex bank involved in the selective donation to the Boko Haram victims in his home state of Kano.
Among operators in the financial system, there are many who believe that the recapitalisation of troubled financial institutions could have been better and less acrimoniously achieved, if Sanusi had been less truculent towards their shareholders. The CBN should be concerned enough about the trend and resolve to eschew talkativeness. Central Bank governors don’t talk too much.
Lending rates (as high as 22 per cent in some cases) and persistent depreciation of the naira are far from business-friendly, and have negatively influenced investment and expansion decisions that hurt the national economy. It is also common knowledge that a hefty fraction of money in circulation in Nigeria is outside the banking system. The banks need such resources for long-term credit. The cashless initiative, started weeks ago, has suffered hiccups, even though its success would have been immensely beneficial to the nation if it had been driven by competition rather than by fiat. These are challenges demanding creativity and expertise by the CBN.
No serious country will allow an individual to drag the reputation of its apex bank through murky waters due to unnecessary controversies and indiscretions. Mixing social responsibility initiatives with politicking is unhealthy for both the CBN and the society. Indeed, unnecessary controversies stirred up by the CBN Governor will continue to hamper efforts at national economic recovery. Sanusi should direct his energies to the core responsibilities of the apex bank — to manage inflation, control interest rates — thereby ensuring the highest ethical standards appropriate for the high office he occupies.
Whatever the CBN Governor has undertaken in the name of reforms in the nearly three years of his tenure have not yet revitalised the financial markets. Impulse appears to have been a powerful force in much of what the apex bank has done so far. He needs to pause to get his bearings, to bring to the fore, those ideals and qualities that can make for a strong and stable financial system.
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