Sanusi Lamido Sanusi And Continuum Of Pandemonic Collaborators

Sanusi Lamido Sanusi And Continuum Of Pandemonic Collaborators (Ii)

Jibo Nura,

Ahmadu Bello University, Zaria

An article by Gabriel Omoh, a group business editor with Vanguard Newspaper is one of those continuums of Matlock’s scripts that attempted to denigrate Sanusi’s sincere and objective efforts towards virile sanitization of Central Bank. Gabriel it was who hypothetically asserted in his August 29, 2009 Vanguard analysis that economic decisions are made on the basis of trade policy options and trade-offs. Hear him:

“It is not certain if the implication for the whole economy was considered before the action of the CBN governor, Malam Sanusi Lamido Sanusi. Malam Sanusi and his team are currently in London to explain to foreign investors the action of CBN in removing five bank managing directors and possibly convince them to come into the country and invest”. Gabriel further said, “On Friday, Sanusi told the world that he was prepared to sell the five banks 100 percent to foreign investors. If this policy were well thought out, would Sanusi need to explain to foreign investors his decision? When the same foreign investors were asked by CBN to establish bank of their own if they were interested in Nigeria banking, what was their response? Today, Sanusi’s clampdown has sent the wrong signal to foreign banks which have cut off Nigeria from their credit line”, complained Gabriel.

What is actually worrisomely-wayward with Gabriel’s statements are lack of profundity to convince the reader on the difference between trade policy options and trade-offs in terms of equal economic treatment and efficiency. The biggest tradeoff, however, is for Gabriel to understand that an egalitarian political and social system such as Nigeria, is going to generate gaping disparities in economic well-being, which in turn will breed injustice and perfidy. And for Sanusi to boomerang and treat those greedy and irresponsible sacked bank CEOs with kids gloves, is tantamount to smack of inconsistency and insincerity on his part. What he did actually is the institutional legal arrangements, which represent uneasy compromise rather than fundamental inconsistencies. This is one sharp contrast between our own way of doing things and American families method whereby in their own case, the living standards in effective management of economic wealth and in extravagance reflect a system of instant rewards and penalties that is intended to encourage effort and channel it into socially productive venture. To the extent that their system succeeds and generates an economic efficiency. And hence society faces a tradeoff between policy option and inefficiency.

However, the traditional rationale behind Sanusi’s open market enterprise of our financial institutions to foreign investors rests on “externalism doctrine”, which involve the interests of many parties not few capitalist individuals. It will eventually clear the pollution of the air in our banking system whereby one individual, for instance, harms innocent bystanders, because the system is too monotonous.

Of course, no one can be permitted to bargain away and/or unconditionally compromise his marketing rights of open market operation (OMO) in banking sector just because he/she wants to trade and/or involve foreigners. Hence the ban on any foreign bank to take majority shareholding in the recapitalization of banks by Soludo, is absolutely an economic shenanigan and hindsight that skewed Nigeria vast economic benefits in its bank liberalization policy.

Therefore, the allowance of foreign banks to take a share in Nigeria’s recapitalized banks is a promotion of equality and efficiency in a universalized banking system, which Sanusi intends to create. On the contrary, any economic decision that permits uncertain indigenous investors to acquire major shares, promotes economic inequality and qualms that must be justified as promoting economic efficiency. Otherwise, this archaic proposition is not original, and remains controversial. And the biggest question here is: on what terms is Nigeria willing to trade equality and efficiency for mediocrity and non-performance? The answer here is: anyone who has passed a course in elementary economics can spout the right formal rule: promote equality up to the point where the added benefits of more equality are just matched by the added costs of greater inefficiency and ineptitudes.

Therefore, the open invitation of foreign shareholders initiative to our banks by governor Sanusi Lamido Sanusi is intended to promote rapid and sustainable economic growth and development; development of a sound financial system; maintenance of a healthy balance of payments position; and achievement of domestic and foreign price exchange rate stability in Nigeria. And the instruments that the Sanusi’s CBN can use to succeed are through the universal banking system strategy, reserve requirement, discount window operation, moral situation and proper monitoring and evaluation and control of banking system credits, savings and loans as he did few weeks ago.

To be continued.

Jibo Nura, a Quantity Surveyor rersides at Ahmadu Bello University, Zaria. E-mail: jibonura@yahoo.com