PoliticsNews & AnalysisNigeria's war of independence


Posted on Friday, 28 September 2012 08:44

Nigeria's war of independence

Sanusi's reforms have made him some powerful enemies in the banking world/Photo©Vincent Fournier for JACentral bank governor Lamido Sanusi has taken on the banking industry but now faces a more formidable foe in the form of the country's legislators. Members of the National Assembly are leading the charge to remove some of the central bank's powers, but his policies have the backing of foreign investors.


Hell hath no fury like a Nigerian legislator scorned. That would explain much about the latest efforts of the National Assembly to rein in the powers and the budget of the Central Bank of Nigeria. Legislators are debating a bill to give them power to vet the central bank's budget and appoint its board of directors.

Under the plan, political appointees on the bank's board would outnumber technocrats. Leading the charge in the Senate is deputy senate president Ike Ekweremadu, who insists there is nothing personal: "It's about checks and balances ... there is no power that is absolute to itself."

Currently, the president appoints the governor of the central bank, who serves a five-year term that can be renewed by the executive. It gave governor Lamido Sanusi enough authority to launch a long-overdue clean-up of Nigeria's banks in mid-2009.

"Some 30-40% of the banking sector was about to collapse," Sanusi told The Africa Report. "We had these huge banks that had grown at multiples of the rate of growth of the real economy ... all this liquidity had found its way into the stock market and pushed up asset prices."

Then the oil price crashed from more than $140 a barrel to $50 in November 2008. "We saw the impact on government finances and the capital markets immediately," says Sanusi. "Those banks that had exposure to both the capital markets and the oil markets nearly had their capital wiped out."

In the purge, Sanusi bailed out eight banks and sacked their management, making many enemies. Pillars of the establishment such as Cecilia Ibru, the erstwhile chief executive of Oceanic Bank, were convicted in criminal trials. Another top banker, Erastus Akingbola, fled to London after he was sacked as chief executive of Intercontinental Bank in 2009, when it employed some 20,000 people and was one of Nigeria's largest banks.

Test of strength

Access Bank, which bought Intercontinental Bank, launched a civil suit against Akingbola for illegal share purchases – in which Intercontinental borrowed money to buy its own shares and so boost its share price on the then flagging stock market. On 30 July, a London High Court found in favour of Access Bank, awarding it damages of more than £600m ($930m).

In recent televised coverage of the National Assembly, Nigerians have been treated to a test of strength between their country's financial regulators and its legislature. On 19 July, the National Assembly's ad hoc committee on the near collapse of the capital markets called for the prosecution of Sanusi, managing director of the Asset Management Corporation of Nigeria (which took over the assets of six distressed banks) Mustafa Chike-Obi and director general of the Securities and Exchange Commission Arunma Oteh for contempt of the House. Their offence was to refuse to produce documents as requested by the committee.

This round in the regulator-legislator clashes dates back to governor Sanusi's comment that out of total government overheads of N536.3bn ($3.3bn) in the 2010 national budget, the National Assembly's overheads were estimated at N136.3bn or just over 25%. Legislators fumed. Some questioned Sanusi's arithmetic, while others questioned his motives. Bankers say it was the...

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