The Presidency — By Prince Emeka Obasi Business Hallmark Newspaper, November 2–8, 2009

I am deeply disturbed by the torrent of comments pouring out of the CBN Governor, Lamido Sanusi. Indeed, all well-meaning patriots, especially those who should have an understanding of economics, feel very disturbed. And it is not only economists who should worry. Everyone should, because the issues Mr. Sanusi pronounces on have far-reaching implications on the economy and so affect everyone.

Sanusi was appointed Governor of the CBN a few months ago, in a move that was broadly welcomed by this columnist. As I have said severally, both in this column and on television, I welcomed the regime change at the CBN.

I had fundamental difference of opinion with the broad policy thrust of the previous regime at the CBN. Its basic premise, to wit, that poor capitalisation is the core problem of banking in Nigeria, is not true. I still maintain that its preferred solution to the problem—consolidation—is the major cause of the crisis that plagued the industry. That regime equally erred in another significant respect. It elevated monetary policy to the prime position in economic policy formulation and implementation. Obviously, that was untenable. Fiscal policy cannot be subordinated to monetary policy, not even in well-developed market economies and certainly not in the backward economies of commodities export-oriented countries. But Mr. Soludo thought differently and not surprisingly, cheered on by the usual crowd of journalists, bankers and the general public. But the dismal consequences of those hydra-headed policies stare us in the face daily.

I had therefore expected that Mr. Sanusi’s arrival would usher in a new era of sober and realistic management of the CBN. In one television interview in Abuja, I actually went out on a limb for him, announcing to all that he was the right man for the job. Whereas I agree that a categorical statement on his ability and competence might be too early to make, I am nevertheless worried by the things he has been saying all over the world.

The work of a Central Bank Governor is not an easy one, not that any work is easy, not even the work of a reporter. But a Central Bank Governor is a particularly sensitive undertaking, because of the nature of modern economies. The pronouncements of the Governor affect the market and influence the direction of equities, exchange rates and interest rates. In his best-selling memoir, The Age of Turbulence, the man once dubbed the greatest Central Banker that ever lived, Mr. Alan Greenspan, confirmed this hypothesis. Famously taciturn, he soon realised that even his facial expressions were being intensely studied and analysed by journalists and market watchers. So he took to wearing a permanent blank look, especially at the end of meetings of the board of the Federal Reserve. Indeed, Mr. Sanusi has a thing or two to learn from Greenspan.

Since he embarked on the bank sanitization programme, his utterances have been not only outrageous, but even bewildering.

In his first interview with ThisDay Newspaper, he made two remarkable comments: one, we are not accusing the bank Chief Executives of committing any crime, rather we are saying that under their watch, certain infractions occurred which make their positions untenable. Two, any of the bank promoters who can provide the required capital will be allowed to repossess the banks. But last week, he put the sacked bank executives on trial and sentenced them.

At a symposium at the Nigerian Institute of International Affairs, he thundered, “the said Chief Executives should either rot in jail or be executed.” Then, he added the clincher: “shareholders of the affected banks should kiss their holdings goodbye.” Earlier, while on a road show in London, he had said that the CBN was in search of foreign investors to buy the “sick banks,” only to later repudiate the claim.

Indeed, there is virtually no passing day when Sanusi does not find one volatile remark or the other to make. The abiding puzzle is, why does he talk like this? Clearly, it is difficult to say. It’s only Sanusi who can truly explain. But I think I have an idea.

Mr. Sanusi is driven by intense passion for his job. As a banker, he is deeply disturbed by the problems besetting the industry and is understandably eager to root out all these malfeasances. Apparently, he has a moral aversion to corruption and as a risk manager, he is angry with the culture of recklessness that is the root cause of the banking sector problems. So he is determined to pursue his programmes with religious zealousness.