CBN must rethink its reform strategies

IN line with his responsibility, the national security adviser admonished not only the president this time but the entire Nigerian people who cared to hear about how the actions of the CBN is constituting real threats to national – economic, social, political –  security. As the man with the ultimate responsibility for coordinating strategic intelligence for the survival of the Nigerian nation-state his official utterances mean a lot.

At the risk of allowing the continued plundering of this economy with attendant socio-political consequences, he called the CBN to order on its on-going banking industry interventions that are strangulating the ‘larger society’. Many concerns and questions follow from this national security adviser’s assessment and verdict on CBN’s reforms. Has the presidency lost faith in CBN’s reform programmes?

An important start in answering this question is to scope the key elements of the power and relevance of the national security adviser. The first is that he has responsibility for the strategic coordination of the entire national intelligence apparatus for the benefit of the president. The significance of this is that he can spy out dangers very clearly when he sees one.  The second and most important characteristic of the NSA’s position is that he is not a career bureaucrat but a key ally of the president who is appointed to that position primarily out of perceived loyalty. Ideally, he should be the most proximate government official to the president.
By fusing this position and the condemnation together, it is evident that the government may not be enthusiastic about the restructuring efforts of the CBN. This may contradict the earlier boastful stance of the CBN governor that opposing views mattered little as their programmes were comprehensively accredited by the presidency. This seeming presidential accreditation however seems to be getting stale.
Prior to the current CBN regime, many of our banks were clearly on life support occasioned by widespread violations of corporate governance standards. The then high governance criminality threshold that prevailed in the industry was significantly boosted by the incestuous affinity of the CBN and the leadership of industry operators as well as the outright system manipulation through constructively enacted scams garnished as policies. Consequently, a conspiratorial network of the financial system regulators and the regulated with pockets of savvy speculators, ensured that those involved increasingly accumulated more resources by transferring real wealth from the rest of the Nigerians who are the true wealth owners to only themselves.
The Nigerian stock market and the credit markets were the most used battle fields where the Nigerian economy and its people were humiliated and consigned to loss of investments, heavy debts, increased unemployment, strangulated enterprise etc. Upon appointment, the new CBN regime dealt a heavy blow on that system and magnanimously prevented the collapse of many of the banks that were clearly in the twilight of their existence. Majority of Nigerians hailed them and equally condemned the details of the approach as it kind-of signaled a possible hidden agenda.
But that glory did not last and is seriously on the line unless the CBN’s management takes decisive steps to correct what is fast becoming an embarrassment. The underlying cause of this travail cannot just be put at the foot of high wire politics or plot to remove the governor by those bank looters that were earlier exposed. But even if that is the case, the way and manner the current management of the CBN has carried on with their reform efforts have provided them with sufficient justification to win some public sympathy. Without any doubt, the CBN management obviously lowered the standards in many areas. Firstly, the process adopted in the handling of bank audit at inception which consequently resulted in the sack of five managing directors and the consequent naming and shaming of debtors of some – and not all – banks were the earliest un-auspicious signs. Not much lesson appeared to be learnt from that as the CBN continued to make reform strategy design/implementation as ‘my mama property’.
The governor’s penchant for the media and the dishing out of reform measures in disjointed piecemeal fashion through public lectures and television interviews is yet another sin. One would have expected that given the macroeconomic background and prevailing events that heightened public expectations from him at the time of ascension that he would have given adequate attention first to the task of robust policy development (design and effective implementation strategies). Aside this, there were yet more criticisms such as the money-pumping approach that was almost akin to that of his predecessor without a deliberate strategy to make such injections less harmful while yielding salutary benefits to the economy.
The CBN equally failed in its circuitous and seemingly disjointed approach to financial and monetary policy design. Reforms and critical policies that direct the course of the economy are not first debuted at school paper presentation fora. Similarly, many people including myself are still not convinced of imperative for such other seemingly strategic decisions such as the CBN-ordained tenure limits of bank CEO’s and the abandonment/replacement of the universal banking regime, which appears merely as a blueprint for paving way for the actualization of some politico-religious ideological agenda. In sum, there are many more measures enunciated by the CBN that triggered concerns, including some of the official pronouncements of the CBN that they denied and amended after outcries from critical quarters. Aside these though no one can fault the current regime’s clear intentions for the safety of deposits and the making of credits available for small businesses.
But even these good intentions will be destroyed if the CBN at this point in time does not quickly retrace its steps, withdraw to the innermost recesses of their offices, gather their best brains to think through its proposed financial system reforms (if indeed necessary) and then debut with a comprehensive strategy that is clear, impartial, theoretically founded and logically consistent, not politico-religious ideologically underpinned or driven, not self/theoretically contradicting, not economy destroying and so forth. This blue print must also specify clear implementation time horizons – short, medium and long term – with attendant expected deliverables. This is extremely important at this point in order to save this economy from the crisis of CBN-orchestrated uncertainty and economic inactivity.
Dr. Oluba is a company executive in Lagos