Profile: Sanusi Lamido Sanusi

Banking, reforms, best practices, Mallam, Sanusi, Lamido, Central Bank of Nigeria, Islamic law

An interview with the governor for the Central Bank of Nigeria

He is diminutive, dapper, modest and utterly charming. He is Malam Sanusi Lamido Sanusi Ibn Abdullah Bayero – to give him his full honorific title – and he currently serves as the Central Bank of Nigeria’s governor.


But don’t let that demeanour fool you; he has a steely determination to do what is right and what is in the interest of Nigeria. Stephen Williams reports.

In early March 2011, the Central Bank of Nigeria’s governor Lamido Sanusi was in London to receive Best African Bank Governor and the Global Bank Governor of the Year Award from The Banker magazine, the Financial Times’s authoritative journal of the world’s financial industries. Highly respected, Sanusi achieved the remarkable feat of, according to magazine’s editor Brian Caplan for the first time in the Award’s history, receiving the unanimous vote of the The Banker’s awards jury.

At the ceremony, held in the Four Season’s Hotel in London, Sanusi devoted the award to the memory of President Umaru Musa Yar'Adua, and paid fulsome praise to the entire staff of the CBN.

Sanusi was appointed the Central Bank of Nigeria governor at the height of the financial crisis in June 2009 and since then has been frequently described as an unconventional, even maverick, governor – a fact that he readily admits. “As an non-conventional governor, I am obliged to step out and ensure a policy that builds on the comparative advantages that Nigeria enjoys,” he says.

One example of his non-conventionality, and his forthright views, was his reported refusal to heed the advice of the IMF to devalue the Naira. Speaking to African Review after the Banker’s Awards ceremony, he clarified: “Well I am not sure that the IMF actually said that we should reduce the value of the Naira, even though they did imply it. We have kept the Naira at a rate of N150 to the US$ at a range of plus or minus three per cent. We do not have a fixed exchange rate but we believe a stable exchange rate is important to our price stability mandate.

“Nor do we think that a devaluation of the Naira would improve our balance of payments,” he explained. “Oil is our principal export and that is denominated in dollars and the value of the Naira has no bearing on our export earnings. Secondly, our imports are priced in dollars so devaluation would add to inflation and unemployment and for these reasons we don’t think this would be the right at this time.”

The awards’ jury had recognised how the governor’s swift implementation of policy reforms had rescued Nigeria’s ‘distressed’ banks, stabilised the industry as a whole and addressed the fundamental issues of poor corporate governance and risk management practices, management fraud (including insider abuse in some cases), and weak regulatory enforcements.

But, as Sanusi readily points out, banking misbehavior is only a problem with a tiny minority of Nigeria’s banking community and, furthermore, Nigerian bankers, as a whole, agreed to place 0.3% of their balance sheets into a special account to fund 66% of the banking bailout – unlike in many countries where the taxpayer bore the brunt of the financial cost.

The policy reforms Sanusi introduced included the removal and eventual prosecution of several bank chief executives found to have abused their office; introducing legislation restricting the maximum tenure of any bank’s chief executive; pushing the banks to adopt international best practices and standards, embrace the Basel III Accord and enhance technical competence in the banking system. He also set up the Asset Management Corporation of Nigeria to absorb poor assets by purchasing debt from 21 of Nigeria’s 24 banks and issuing $6.8bn in ‘consideration’ bonds to buy non-performing loans from the institutions.

Earlier in the day, Sanusi had confirmed that that two of the banks bailed out in 2009 had reached takeover agreements and four others were close to signing acquisition or merger deals. The governor would not reveal the names of the banks as the deals are pending approval from the Securities and Exchange Commission. However, speculation in Nigeria’s local press suggests that Vine Capital will buy Afribank (Nigeria) plc; Access Bank plc will invest in Intercontinental plc; First Bank Nigeria will invest in Oceanic Bank and FCMB will take a stake in Finbank plc with Capital Alliance entering an j.v. agreement with Union Bank of Nigeria plc.

In the event, these reports proved accurate – other than FCMB initially being spurned by Finbank which immediately entered talks with a private equity firm, the Vine Capital-led consortium (that took-over Afribank), inviting a bid with a view to merge Finbank and Afribank. This did not materialise and, by mid-July 2011, Finbank and FCMB had confirmed they had signed a merger deal, subject only to regulatory and shareholder approval.

Sanusi has a long-standing interest in the study of Islamic law, a discipline that undoubtedly held him in good stead when grappling with the banking crisis. “[In my youth] I had a strong desire to learn Arabic and my approach to studying Islam was in the social-scientific realm,” he clarified. Responding to a question about how the CBN was sponsoring Islamic banking in Nigeria, he gently corrected me. “It’s not the role of the Central Bank of Nigeria to sponsor – what we do is provide a framework, guidelines and an enabling environment to allow the banks to thrive.

“We do have a group that has applied and been given a licence if they are compliant with certain conditions [presumably a reference to Jaiz International which had been been given the green light to set up Islamic banking operations in Lagos]. “We will ensure that, when the bank finally takes off, it is safe and sound. We will also play our role in ensuring that the industry is properly regulated – that is our role, but it is actually up to the private sector to establish these banks.”

Turning to the momentous events unfolding in North Africa back in March 2011, I asked the governor to comment the situation in Tunisia, Egypt and Libya and to expand on the warnings he had already made, according to the Nigerian press. “Basically, the problems in North Africa are the problems of the developing world where you have a lot of income disparity and you have problems with unemployment especially amongst the youth,” he said. “That is the raw material for an implosion, and the important thing is not to take our stability for granted, and not to continue to take our unemployed youth for granted.

“We live in a globalised world. What happened in Egypt was that Egyptians saw what happened in Tunisia, and what is happening in Libya is because Libyans saw what happened in Egypt. And African youth are watching and maybe they will think ‘if the Arabs can do it, why not us?’ That is the warning I am sounding.”



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