Bank Debtors and the Plight of Textile Sector By Saka Raji Audu
LAST week, the Central Bank of Nigeria, CBN
under the headship of its vicious and progressive governor, Sanusi Lamido
Sanusi, for the first time, took a progressive step to save the looming
tragedy in the nation's banking sector. At least, the Managing Directors
of the five highly indebted banks, namely; Oceanic Bank, Finbank, Afribank,
Union Bank and Intercontinental Bank were removed, arrested and they will
be arraigned on allegations of arbitrary granting of loans, securing
foreign loans without consulting the Central Bank of Nigeria (CBN),
indirect granting of loan to themselves through fronts, insider trading,
capital market manipulation and money laundering. The CBN governor went
further to inform the world that about
The Nigeria's EFCC led by its Chairman, Mrs.
Farida Waziri also threatened to begin arrest and prosecution of the
already published names of the big debtors of the five banks should any of
them failed to repay their debts after the expiration of the one week
ultimatum effective 18th August 2009. Already, as at the
expiration of the deadline on Tuesday, the 25th of August,
2009, only
OF course, no one would like our banks to be used as a conduit pipe of corruption by some inconsiderate bankers and their accomplices, who borrow huge amounts of money but fail to repay such money back to the banks within the stipulated time. In fairness, the CBN governor deserves a pat on the back for such an unprecedented bold step he took a week ago to sanitise the banking sector of the country's economy, as it cannot be business as usual all the time. One must also in all honesty commend the support of Farida Waziri led EFCC towards her agency attempt at recovering the bank debts.
In spite of the various commendations
however, one should not be carried away by the good intention to save the
economy through the vibrant steps taken by both the CBN and EFCC so far on
the five indebted banks. It is indeed most unfortunate that the banks that
should have saved the endemic situation of our ailing textile industries,
which have been crying profusely as a result of smuggling and high cost of
infrastructure have indeed allowed a colossal amount of
IT would be recalled that at the Public
Hearing on Textile Revival organized by the Senate, which took place on 16th
July 2009, the government hinted through the Minister of Commerce and
Industry that it had for the umpteenth time proposed to give
If the government had lived up to its
bidding with the Textile Revival loan with let say 4% interest rate to
some of the textile industries, the present mess where some of the
companies found themselves would have happened. Still, if the government
could not raise
Because the Federal Government of Nigeria
could not bail out the textile industries from their precarious problems,
some of them who are still struggling to survive resulted to their
individual banks to take loans of huge amount of interest rate of about 25
to 30% to be able to meet with the required standards. It is therefore not
surprising that textile industry like the African Textile Manufacturers
Ltd, one of the extremely few surviving composite textile industries
located in Challawa Industrial Estate, Kano with about 1,850 employees is
one of the companies and individual that is indebted to one of the five
banks to the tune of about
IN the past, this writer had cause to
vividly analyse and showcase the horrendous state of textile affairs but
no one took it as a matter of urgent attention including the Federal
Government. One did say that African Textile Manufacturers Ltd requires
about
It is not long ago, the company downsized
its production capacity and now, the Central Bank of Nigeria and
Economic/Financial Crime Commission is asking it to repay its bank debt of
As I said, CBN and EFCC have done well in their action so far taken at recovering the bank debts. But, methinks that individual merit should be adopted in the present approach to avoid using a sledge harmer to kill some mosquitoes. What am I saying? I am saying that before the CBN and EFCC finally fill their darkrooms with bank debtors, the history of such debts and how they are invested should be a subject of consideration so that genuine investors will not have any form of regret in investing in a country that is only interested in jailing bank debtors, performing or non-performing. Every borrower has specific agreement with his lender. What happens to the collateral security of the individual or collective loan? If such securities still exist, the CBN or EFCC should pounce on them as a mark of last result. It is only in the absence of securities that the bank debtors could be sent to jail.
Bank Chief Executives and their Managers
should however know the limit of approving loans to individual or
corporate bodies. It is fraudulent to approve fresh loan in addition to an
existing loan that has not been paid off. Unnecessary loan rescheduling
must be checked. Funniest enough, under the recapitalization scheme, banks
are considered healthy with
Perhaps, my fear at the end of the day is that, all these development will teach foreign investors a big lesson. That they cannot just come to Nigeria for investment without coming along with their infrastructure, black oil, diesel, security and market to sell their products. They must also come with their banks in case they want to save or get any loan for improvement of their investment without repayment. I therefore urge the CBN and EFCC to go ahead with their threat of recovery of the bank loans in order to sanitise the banking sector since it is an important aspect of the economy. But due process and individual merit must not be relegated to the background or thrown to the dogs.
Saka Raji Audu writes from Kano and can be reached on his email: sakaraj@yahoo.com |