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Omokhodion and the Plot Against Consolidation By Okpo oduogu
I am compelled to respond to Lawson Omokhodion’s article with the title “The Other Side of Consolidation” in on the Back Page of Thisday of January 22, 2008. In the piece, Omokhodion tried, howbeit, uninspiringly, to rewrite current history in respect of the reforms that are still on-going in our banking sector. I never really felt too strongly about the write-up until Sunday, January 27, 2008, when I read a front page cover story of the Sunday Tribune with the title “Fresh plot against bank consolidation”. In this lead news item, which is yet to be denied by anyone from Abuja, the paper says that some group coordinated by the chief economic adviser to the President, Tanimu Yakubu Kurfi, is bent on reversing the consolidation reforms which are being alleged to have been against the interest of Northerners. It further revealed that the group had “almost concluded work on a proposal to be presented to President Umaru Yar’Adua” on the issue. Part of the proposal, the Tribune reports, includes, the introduction of regionalization of banking and to allow government to own and control banks once again so as to enhance a supposed Northern ownership.
Is this a mere coincidence or design? Can this be true? Can any Nigerian with a sane mind even contemplate such a plot? It is indeed, nauseating to imagine that people like Omokhodion and the supposed cabal could be working so hard to destroy Nigeria for what are certainly sectional and personal interests. I think that the Economic Adviser should quickly deny such an ominous story because of the implications it has for the health of our economy and the integrity of the Yar’Adua administration.
Now let us look at the issue of the success or failure of banking consolidation. I believe that one may not successfully argue that the last consolidation programme was a perfect exercise. There really no policies that work as if they are conceived and implemented in heaven. It is, however, generally agree that few public policies initiatives that have been as resounding in its success. It may have ruffled some feathers, it may have denied some rent seekers a source of livelihood, thereby lining up enemies for Soludo and his team. But most Nigerians do know that our financial system has received unprecedented boost as a result of the consolidation programme.
Like in every public issue, there are those whose duty it is to attempt to hoodwink the public and thwart efforts towards attaining the public good. It is principally because of this that there is the need to thoroughly scrutinize those who pass undue judgment on the execution of the consolidation programme. This is important because while trying to do a short research for this piece, to ascertain the true identity of Mr. Omokhodion, I stumbled on a number of articles written in the last six months with different titles by the same Omokhodion chorusing practically the same refrain. For instance, there was one titled “Fallacies of Consolidation” which appeared on page 16 of Thisday of August 27, 2007.Could this Chief Lawson Omokhodion, described as a former banker, who signed this article, be the same Mr. Omokhodion that I have read about, who was formerly a fund manager with the liquidated Pan African Bank, former Executive Director of the failed All States Trust Bank, and Managing Director of the equally failed Liberty Bank. Could he be the same Lawson Omokhodion who was once charged by the EFCC along alongside former Plateau State Governor, Joshua Dariye, over money laundering and the looting of Plateau state? No matter how hard they struggle to hide, the global electronic resource, Internet, has made it easy to trace the route and root of pretenders who have caused pain to the Nigerian public. If it is still the same Lawson Omokhodion, it is then easy to see why he has an issue with the success of the consolidation in the banking sector.
In the article in question, Mr. Omokhodion strove hard to imply that the recent consolidation was a failure on several counts. His first claim was that the CBN did not categorise banks into small, medium sized and mega banks. He also claimed that the CBN did not set up a ‘Help Desks’ to guide the banks that failed. His other grouse was that up till now, the CBN has not set up an Asset Management Company that would buy up the bad loans which he and his co-wonder bankers had been carrying in their books through the years. He further alleged that interest rates have not gone down in the wake of the consolidation exercise. Employment, according to him, had gone down, and some bankers have gone abroad, while others have remained unemployable. I believe Omokhodion’s greatest grouse with both Soludo and the CBN is the failure of the Alliance Group of weak banks, of which he was a key driver, to make consolidation.
In the first place I see Omokhodion’s article as adding insult to injury because I consider myself one of the walking dead; victims of the incompetence and callousness of so-called wonder bankers like him who were preying on unsuspecting and ignorant Nigerians to fund their lavish lifestyles. They may now be enjoying the loot of their undeserved years as pseudo-bankers, but I know that one day they will certainly be held to the answer of the law.
I do not know of any well meaning Nigerian who will prefer the type of banking environment we had pre-Soludo, to what exists today. At least we can go to sleep in the full knowledge that we will not wake up to hear that our bank has gone out of clearing. Since Soludo’s consolidation of banks, I have never heard that any bank stopped honouring cheques. This used to be an everyday occurrence during the time the wonder bankers held sway in banking. Soludo’s ‘crime’ must have been to save the agony of Nigerian bank customers whose deposits kept the liquidated banks on life support, when he pulled the plug. Maybe Soludo’s refusal to accede to gradualism and business as usual has incurred the wrath of so called bankers like Omokhodion. The old business as usual was just what he needed to coast through life as a rent seeker. As the saying goes, it is when the train stops that one knows those who are lame.
It is absolute falsehood that the CBN did not categorise banks. Indeed, to the best of my knowledge, from what we have today, there are now three sizes of banks. The first tier is for the big boys, those who will help Nigeria be one of the top 20 economies in the world, as Omokhodion himself admitted in his article. There are the ones trying to grow to the top league; then we have micro-finance banks. Before now, it was an all comers affair with all sorts of banks and that was the time the Omokhodions held sway. It was the era the wonder bankers found their way into banking and created the decay that Soludo and others are now working hard to clean up. It might have sounded like a joke, but I remember the CBN advising banks that did not have N25 billion to consider transforming into microfinance banks. It was obvious they did not take the CBN advice seriously. They obviously banked on a political plot to torpedo the policy. The Senate actually passed a bill trying to categorise banks in another warped sense. This bill died a sure death in the House pf Representatives. If Omokhodion and his ilk truly desire to promote small scale enterprises, the CBN requires only N20 million for them to establish microfinance banks.
On the loss by depositors, Omokhodion was not charitable enough to acknowledge that all private sector deposits were insured and none was lost. Just last week, the papers reported that the last group of the depositors in the liquidated banks ( excepting those whose directors have gone to court) would be taken over by other healthy banks without any loss of value and account. If he is claiming that Federal Government deposits were lost in the banks, the question to ask was why any Federal Government treasurer or Finance Director will leave tax payers deposits in such banks even though the rules of the exercise were clearly spelt out 18 months earlier. It is important to find out the motivation behind such clearly poor treasury decisions on the part of some public sector treasurers. Corruption will not be a far-fetched reason.
It is funny for Omokhodion to suggest that the reason some banks failed to meet the consolidation deadline was because they did not see any ‘Help Desk’ from the CBN. With all the consultants that were retained by the CBN and some of whom I saw at some banks then, those who failed must have been twiddling their toes waiting for a specific table labelled ‘Help Desk’. The spoon feeding mentality really runs deep in some NIgerians and it is no wonder they could not make it even in an otherwise lucrative industry like banking. Here the issue of the Alliance Group of banks comes readily to mind. Some of us knew they would not make it. This was a motley group of banks regarded by the industry as the chaff, remnants in the pot of the series of mergers and acquisitions during the almost two-year period. An analysis of the group showed that the leaders were bankers whom the industry itself had closed the door on. They were said to have a collective negative shareholders value. The issue then was that they could not even clear the liabilities on them not to talk of raising an additional N25 billion. In effect, they needed to raise money to come up to ground zero before struggling again to make N25 billion. Omokhodion should tell Nigerians why he and his co-travellers were unable to get suitor during the consolidation period.
Again, he was not telling the truth on interest rates when he said they had risen since after consolidation. We know that interest rates stood at over 25% on the average before consolidation. Even at that, we must not forget all those flat charges that usually put the overall cost of borrowing even closer than 30%. It is a major concern especially for some of us in post-retirement small business. Interest rates have gone down significantly and I can tell from my little borrowing. This is an area both Government and the CBN should manipulate the macroeconomic environment to address. Besides, in his article Omokhodion admitted that infrastructure challenges in Nigeria are a key feeder into the interest rate problem.
For sure, the value of the naira has gone up also and Lawson was not charitable enough to give Soludo this credit. He could easily have been among those bankers who saw banking only from the prism of foreign exchange trading and who made their margin from the premium that existed in the margin between the official and black market foreign currency. Today this margin has largely vanished and there are no lazy traders in the foreign exchange market.
Soludo has driven the money changers out of the market and there is growing value in the naira. The corollary to all these is that inflation is now moderate at single digit, even though Nigeria had huge increase in the price of crude oil. Before now, it was recipe for uncontrolled inflation. Some people in the CBN are thinking, I must say.
What has happened in the Nigerian financial system in the past three years had been thought almost impossible when Soludo began his reforms. Mr Omokhodion should show his article to his erstwhile colleagues who made the mark and find out their own reaction to his suggestion that we go back to Babylon.
In fact, Nigerians need not be told whether consolidation worked or not. Ask those who still have their money lodged in, SGBNs and Savannah Banks of this world and they will tell you that one of their worst nightmares is to wake up with no certainty over the safety of their hard earned money lodged in fly-by-night poorly capitalised banks, run by what the Igbos call the Obioma bankers.
Some of those who caused such pain to the masses and banking Nigerians may have moved away from banking to some other sectors just like we, their victims. One thing is sure, they will continue to bear the guilt and moral burden of the numerous Nigerians and their families that have been put perpetually on the breadline. But there is one thing Soludo must do for Nigerians. All those who squandered depositors money must be punished.
My since prayer is for the Nigerian banking sector never to see likes of Lawson Omokhodion. |