Sanusi Lamido Sanusi
SanusiLamidoSanusi became governor of the Central Bank of Nigeria [CBN] in June 2009, when the banking system was in the middle of the global financial crisis. Reversal of foreign portfolio flows had caused a collapse of asset prices in the stock market, which were largely funded by margin loans from banks. The development led to an increase in non-performing loans in banks – which Sanusi pounced on by virtue of interest and biases of his professional calling as a risk asset manager.
His accomplishments while in commercial banking centred on strengthening risk management frameworks. In First Bank of Nigeria, he championed remarkable development of risk management control mechanism. In United Bank for Africa, he anchored the transformation of the credit and risk management division into an enterprising risk management sector. He also spearheaded the bank’s Basel II focus by establishing the framework and systems for compliance.
Sanusi earned a Bachelor of Science degree in economics in 1981 from Ahmadu Bello University, Zaria. He did his course work for Masters of Science degree in economics in the same university and obtained a distinction in monetary policy in 1983.
He taught economics at Ahmadu Bello University, Zaria before moving into banking in 1985. He started his banking career at Icon Limited (Merchant Bankers) and later joined United Bank of Africa in 1997 where he rose to the position of a general manager. He later joined the board of First Bank of Nigeria as an executive director in charge of risk and management control and was later appointed group managing director in January 2009.
Sanusi’s approach was a direct treatment to the risk asset quality problem facing the banks and possibly shield them from the effects of the global financial crisis on the overall economy. He worked hard to do that and talked even louder while doing what he believed in. His actions were drama prone and his policies often created controversies that central banking governance in Nigeria had never known. Yet, he was never deterred from his central objective of dealing with systemic risks discovered and administering case by case treatment to weak banks according to their specific operating conditions.
He deviated from the usual diplomatic manner of speaking by regulatory officials and employed a blunt approach to issues. His expectation was that speaking out and taking the right steps would create more public confidence than withholding information on the real state of things. Following his hard stance, Sanusi appears to have received more criticisms than any CBN governor before him. Looking back, he said “criticism has made us stronger”. He is of the view that, “if you want to get somewhere, you need to annoy some other people so that they can help you”.
Sanusi is hailed for his bold move against mismanagement of resources in banks andany traces of corruption he came across in the system. He promptly sacked chief executives of five of 10 banks faulted in his risk asset audit and recommended their prosecution by the Economic and Financial Crimes Commission. Large sums of money were subsequently recovered from some of them.
The move restored discipline in banking operations and made bank managements to call off flamboyant lifestyles and get back to work. To Sanusi, it couldn’t have been possible to achieve stability in the banking sector if bank chief executive were left to treat depositors’ funds as their personal property. Sanusi proved to be a friend to bank depositors but showed no love lost for investors.
Fighting corruption is a task every government in recent times has claimed to be engaged in but none of them could claim victory to have won the battle. Sanusi appeared to have changed the kid’s gloves style of government and put on gloves of iron and steel in a fearless engagement with looters of corporate and government treasuries. The high point of it was the face-off he staged with NNPC over an allegedly missing $20 billion.
This is a hard stance no other CBN governor before and after him has taken so far. This is where the man has the highest score in the eyes of the public – which saw him as one on a mission to save the system from elitist corruption.
He did not spare the government of the day in pressing for good fiscal conduct he required to match the monetary policy restraint he had in place. His main intension for jerking up interest rates was to discourage government from excessive borrowing and abuse of the credit market. He openly opposed excessive recurrent spending and told government to its face to cut down its workforce.
The boldness with which Sanusi moved against fiscal misconduct is unprecedented in the history of central bank governance in Nigeria. In 2010, he raised dust with lawmakers with figures showing that the legislature accounted for a quarter of government’s recurrent budget, which was having a damaging impact on the economy. He defied the demands by lawmakers for apology and insisted his figures were correct.
Sanusi appears to be the only Central Bank governor that exercised the Central Bank’s autonomy to a point that the authorities had to table the bank’s enabling Act for reconsideration. He had a princely carriage, a high tone of assertiveness and exercised prestige and privileges of power that definitely cut more than a usual attention.
In 2012, lawmakers attempted to curtail the powers of the CBN governor by proposing an amendment to the CBN Act to the effect of striping Sanusi the position of chairman of the bank’s board. Sanusi was obviously not a friend of the government, which eventually hounded him out of office four monthsto the end of his five-year term.
He injected hundreds of billions of naira to bail out the weak banks, which enabled them to overcome their liquidity problems. His approach in rescuing the banks is however an area Sanusi has his lowest score as a CBN governor. Loss of huge investments in some of the banks did hurt the investing public badly to the extent that the capital market is still lying flat down and nursing the wounds many years after.
A major institutional development that happened during his tenure is the coming on stream of Asset Management Corporation of Nigeria, which was proposed by his predecessor. The institution was central to the recovery process of banks by buying over toxic assets and availing them of life-supporting liquidity that injected new life into bank balance sheets.
Sanusi’s policies led to a reasonable improvement in macroeconomic indices. He brought inflation under check and created positive real interest rates that spurred inflow of foreign portfolio investments. “For the first time in a long while, we have been able to keep inflation at about 7% since January 2013…”, he said. Reducing inflation was an award winning task for which he was named the winner of the 2013 Emerging Markets Central Banker of the Year Award for Sub-Saharan Africa – the third time he received the honour.
Also his cashless policy enabled him to cut down currency expenses, enlarge CBN surplus and consequently the bank’s contribution to the federation account.“We have been able to give N600 billion from surplus alone and the money is made from prudent finance, cutting down currency expenses, every over headline has gone down”, he said.