Nigeria’s “culture of corruption” contributed to the crisis which led to a $4 billion bank bailout earlier this year, with bank chiefs too cosy with powerful politicians, central bank chief Lamido Sanusi said.
Sanusi sent a shockwave through the corporate establishment in August and October when he injected funds into nine banks and sacked the top managers of eight of them, saying lax governance had left them so weakly capitalised they posed a systemic risk.
Nigeria’s anti-corruption police have filed charges ranging from recklessly granting loans to share price manipulation against many of the executives, including members of a business aristocracy which had long been seen as untouchable.
“You cannot be a good regulator if you are hob-nobbing with the operators. Bank MDs (managing directors) were always in the (presidential) villa,” Sanusi told an African stock exchange conference in the capital Abuja.
“How many regulators can discipline the CEOs of banks who were friends to the president? Bank CEOs were sponsoring politicians and political parties. So we have to address the culture of corruption,” he said.
“I’ve been very fortunate to have a president who supports what I’m doing.”
The 1.14 trillion naira in bad loans run up by the first five banks bailed out alone is roughly equivalent to the combined annual income of the poorest 20 million people in Africa’s most populous nation, who live on around $1 a day.
Yet the bailout shocked Nigeria not for the amounts of money involved but because after only two months in the job, Sanusi had taken on some of its most powerful business figures, with interests ranging from shipping and hotels to oil and media.
“He’s always been a radical and his speeches and essays show this,” said Kayode Akindele, a director at Lagos-based financial advisory firm Greengate Strategic Partners.
Winning powerful enemies?
Sanusi’s readiness to take on powerful vested interests in a country ranked among the most corrupt in the world has won him praise from international investors, but even his supporters in Nigeria fear it may win him powerful enemies at home.
Sanusi is a related to the Emir of Kano, one of the most powerful traditional rulers in Nigeria, and his royal lineage is seen as helping him to cut through the turbulence and in-fighting of Nigerian politics.
Analysts say he stands out as one of relatively few serving public office holders willing to speak their mind.
“If we say there’s no problem in Nigeria then we would be dishonest,” he told the Abuja conference.
“It’s not only in banking. In Ghana, for instance, a sitting president was defeated with 40 000 votes and he left office. This will never happen in Nigeria.
In Nigeria, a president that has left office will be dictating to a sitting president.”
Ghana won praise from foreign powers including the United States for electing President John Atta Mills in a peaceful, transparent vote a year ago that defied the stereotype of a region blighted by conflict, coups and crisis.
The Ghanaian vote was a marked contrast to Nigeria’s last national elections in 2007, which were so marred by ballot-stuffing and voter intimidation that they were deemed not to be credible by foreign observers.
Nigeria has seen vocal reformists like Sanusi before, such as former finance minister Ngozi Okonjo-Iweala and former anti-corruption chief Nuhu Ribadu, but they fell out of favour when the political wind changed.
Some analysts fear Sanusi risks the same fate.
“Although there are one or two good things going on in Nigeria at the moment the banks, the oil reform bill there is no overarching sense of a reform programme and I think Sanusi in some sense is trying to compensate for this,” one Nigeria analyst said, asking not to be named.
“It would be a real shame, but also a silly mistake, for the banking reforms to fail because he can’t stay on his own turf.”