Sanusi: A Radical in a Conservative Job?

Sanusi Lamido Sanusi is a very brilliant man. He writes the English language with remarkable authority, and even speaks it better. This could however be both an asset and a liability. Too much love of ‘grammar’ (turenci) could lead to an undue love for the podium and limelight, with attendant risks of gaffes in moments of rhetorical flourishes.

Central Bank Governors are thought to possess so much crucial information about their country’s economy that investors and analysts closely monitor their utterances even after they have left office. For instance when Alan Greenspan, who retired as chairman of the US Federal Reserve on January 31, 2006, predicted on February 26, 2007 that the US would enter into recession before or in early 2008, the Dow Jones Industrial Average dropped by 416 points (or 3.3 percent of its value) the following day. At that time, it was the worst one-day loss since September 17, 2001, when it lost 684 points (7.1 percent) after reopening in the wake of the 9/11 terrorist attacks.

It is perhaps because of the ‘oracular’ nature of being the boss of a country’s central bank that emphasis is often placed not just on the professional qualifications of candidates for that office but even more importantly on their character and temperament. Willem “Wim” Frederik Duisenberg, first president of the European Central Bank (1998-2003) was generally considered a failure for not having the appropriate temperament for the job. In a special report on February 8, 2002, aptly captioned, “The Wrong Man for an Impossible Mission”, the Financial Times (London) summed up the angst against the late Dutch economist and financier: “The biggest criticism of Mr Duisenberg is not over the substance of his decisions, but over his presentation. His willingness to talk off the cuff and his often vivid turn of phrase have frequently raised eyebrows among other policy-makers.” About his critics, Duisenberg was quoted as saying: “I am direct – some say I am too direct… It is part of my character. Even if I wanted to change my character, I do not think I could.”

You may be forgiven if you think the FT was writing about Sanusi Lamido Sanusi. While I do not necessarily think that Sanusi is the wrong man for the job, I also feel that he has not been as discreet and meticulous as he ought to be in his utterances and actions. I do not however believe the allegations that he harbours any hidden agenda – ethnic or religious. He appears simply too polished to be clannish.

At an event earlier this year in London to talk about the reforms in the banking sector, I asked Sanusi, if, professionally speaking, he saw a tension between where he now found himself, and where in his heart he felt he ought to be. I have read a few of Sanusi’s writings on Gamji.com and never ceased to admire his brilliance. I also always felt his ‘natural’ calling would be as a radical academic.

Sanusi said he did not consider himself a radical but admitted that when he was in merchant banking, he did feel that tension.

Despite his protestations, I am inclined to see him as a ‘radical’ or ‘revolutionist’ – in the sense of someone who favours extreme or fundamental changes in the way the society is organised. As with most revolutionists, Sanusi’s approaches to complex issues tend to be simplistic, and as the contradictions in his chosen options become obvious, the proffered solutions tend to appear contradictory or hastily taken. Consider the following examples:

In what would appear to be a reckless outburst of emotions, Sanusi was quoted as saying that the sacked bank executives now standing trial at the various courts in the country deserved to die by firing squad for eroding public confidence and raping the institutions that were entrusted to their care through reckless credit and loan administration processes. Sanusi was later to recant, perhaps after he realised the enormity of the statement. He now claimed that Nigerian bankers are honest, hardworking professionals and not the crooks he had made them to appear.

In a similar display of speaking from both sides of the mouth, the CBN announced on October 2, 2009, the removal of Dr Mike Adenuga as a non-executive director of Equatorial Trust Bank. About a month later, the apex bank changed its mind and restored the business mogul to the board of the bank, claiming that it had not established any criminal activity against him. It also said it had granted the request of the shareholders of ETB to be allowed to rectify lapses identified in the bank and to subsequently take it over.

Virtually every major move since Sanusi became the helmsman of the apex bank, including the publication of the list of bank debtors, have been dogged by self-inflicted controversy, with the CBN often admitting errors. Recently Chief Aderemi Oyepeju, chairman of Ibadan Zonal Shareholders Association of Nigeria, was quoted, as saying that Mallam Sanusi had promised that shareholders that could recapitalize the troubled banks would be allowed to do so. This thus raises the question of why Sanusi did not consider that the first line of action before unduly panicking the financial system? It is instructive that of the ten advisers appointed recently by the CBN for the ‘troubled’ banks, at least two – KPMG and Akintola Williams Deloite- were the same auditors who apparently saw nothing wrong in the books of the same banks they are now asked to advise and help out of the mire.

Even more worrying is that some policies pursued by CBN verge on dictatorship and could undermine risk-taking, which is at the heart of entrepreneurship. Take this recent directive from the CBN: “Any Director of the 24 banks who fails to redeem loans by November 30 will have his appointment terminated by the CBN, and may face arrest and prosecution” (Times of Nigeria online Sunday, November 21, 2009). It was also reported that the EFCC would investigate to see if prospective borrowers have previous records of non-performing loans. Is the CBN under the guise of reform undermining the autonomy of banks?

In an article for the Financial Times‘ Economists’ Forum in March 2008, Alan Greenspan warned that while we “will never be able to anticipate all discontinuities in financial markets…it is important, indeed crucial, that any reforms in, and adjustments to the structure of markets and regulation not inhibit our most reliable and effective safeguards against cumulative economic failure: market flexibility and open competition.” While Greenspan has his own critics, Sanusi’s CBN should bear this advice in mind so that it does not continue to give its critics the ammunition to strike.