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All change for Nigeria?

August 18, 2009

Nigeria’s central bank sliced through the hubris of the business elite with its $2.6 billion bailout out of five banks and the sacking of their heads in what looks as though it could be a new era for corporate governance in Africa’s most populous country.

Recently appointed Central Bank Governor Lamido Sanusi said lax governance had allowed the banks to become so weakly capitalised that they posed a threat to the entire system, and described the move as the beginning of a “restoration of confidence” in sub-Saharan Africa’s second biggest economy.

The 1.14 trillion naira ($7.6 billion) in bad loans run up by the banks is roughly equivalent to the combined annual income of the poorest 20 million people in Africa’s most populous nation, each of whom live on around $1 a day.

Yet the “Friday massacre”, as one newspaper dubbed it, set Blackberries buzzing in Lagos champagne bars not because of the breathtaking scale of the money involved, but because of the might of the corporate aristocrats felled by Sanusi’s axe.

“Ordinarily in Nigeria there is a sacred cow culture,” said Reuben Abati, a respected leader writer and chairman of the editorial board of Nigeria’s Guardian newspapers.

“Once someone is prominent in a particular industry you assume those persons are untouchable. What Sanusi has done now is to say nobody is too big to be held accountable, whether they are an Ibru or an Akingbola.”

Cecilia Ibru and Erastus Akingbola — the former chief executives of Oceanic Bank and Intercontinental Bank — were arguably the highest-profile casualties of the cull, titans in a corporate elite dominated by egos and empire builders.

Ibru is from one of Nigeria’s most powerful business families, whose interests range from shipping and hotels to oil and media. Akingbola is president of Nigeria’s Chartered Institute of Bankers and brimming with honorary doctorates.

“Some are born great, others achieve greatness, while others still have greatness thrust upon them. But rarely do we have these three attributes combined so well in an individual as is the case in our Dr. Erastus Bankole Oladipo Akingbola,” blasts the biography on his website.

In his trademark bow-tie and frameless spectacles, Sanusi’s slight physique and measured rhetoric mark him out from some of the more flamboyant personalities it is his job to regulate.

Some Nigerian commentators have argued that the cull by Sanusi, a northerner, targeted southern bank executives and that it was a retaliation for consolidation four years ago which saw some northern banks absorbed by their southern peers.

But the forensic precision of Sanusi’s public statements left the numbers to speak for themselves.

The loans they racked up — including credit to speculators on a stock market which fell 60 percent over the past year and unsecured financing to fuel importers who have seen oil prices halve — meant the five were constant borrowers of public money.

They accounted for almost 90 percent of exposure to the central bank’s discount window, a facility which allows banks to meet short-term obligations by borrowing central bank funds.

The results of Sanusi’s audit have left many wondering how the five banks managed to survive for so long.

Intercontinental and Oceanic had both won national and international banking awards. Analysts from brokerageRenaissance Capital were shown Intercontinental Bank’s balance sheet in April and published a report saying it had enough capital to absorb its asset risks and there was no threat to its solvency.

Ibru was quoted in this month’s edition of McKinsey & Company’s business journal McKinsey Quarterly as saying: “In five to 10 years, we expect to be a well-known, established bank beyond this sub-region of Africa.”

One Nigerian analyst commented “When the dust settles, one of the most shocking aspects of this crisis is going to be the magnitude of the gap between the rot in the system and what its leaders wanted us to believe.”

Will this be a new era for Nigeria’s companies? For Nigeria itself?


arrant nonesense. work of prejudiced and subjective journalist. Get real and get life

Posted by kester jacob | Report as abusive

I think Nigeria and Nigerians need a dare-devil like Sanusi Lamido to get Nigerian economy back on track. Economy with weak financial system and reckless bank CEOs is bound to crumble. I doff my hat for Lamido.Whatever it will take to clean this mess should not be spared. Africa and the world cannot afford to see Nigeria fail in taking her pridal place in the world economy.

Posted by Amos Amodu | Report as abusive

This intervention needs to be decisive and conclusive, a one off lancing of the Boil. If we are to be visited with a further drip drip of bad news, that will compound with the deteriorating FX reserves position.Aly-Khan alykhansatchu


It will only be a new era for Nigeria and her economy if there is a proper follow through on the ‘Friday Bank Massacre’. This whole investigation might just end up getting tangled in political and legal knots. Thus generating plenty of heat with no illuminating light.I sincerely hope that this won’t be the case.


The Nigerian banks just like their western cousins, are victims of their own greed. Governments around the world continue to bailout banks as a result of over lending. Thanks Charles Soludo(former governor), and thanks Sanusi Lamido(current governor).One note though, listening to Sanusi’s BBC interview, made statements such as;”those found to have abused the banking system will be arrested and thrown in jail”. We are a democracy, military words should be erased out of our vocabulary. People are investigated and if there is proof of wrong doing, they will be prosecuted in a court of law. Full stop.

Posted by 4Delta 4Nigeria | Report as abusive

One very important attribute of a central banker is to be decisive. The other is to be measured in action and act in proportion to the risks. Some of these steps are too extreme and border on tyranny by the regulator. Who is the Head of the Nigerian Central Bank accountable to? Are there any checks to what he can do?

Posted by true | Report as abusive

Nigeria is not an easy country thats for sure. about 12 months ago my brother in-law was picked up for defaulting on half a million naira loan. We had to pay up every bit before he was released to his family. Every appeal to the bank to give him time fell on deaf ears. I am waiting to see how things will play out in this dispenation.

Posted by ashimeduia | Report as abusive

Now i know truly, that “all gliters are not gold.” Cos if Dangote, Otedola, Ololo and so on could be holding on to such huge sum of money that doesnt belong to their great grand fathers,so tell me, how do u want our beloved country “Nigeria” to move forward?I think it will be better if CBN Governor, Sanusi in full support of EFCC, can put all affected names, positions and status in black and white so all eyes can see and read……big up 2u Sanusi 4 dis gud job u r doing but…NOTE: all Nigerianz r in different corners waitin 2 c where d destination of all these whole story would be.I’m out!

Posted by 2ndeY | Report as abusive

I know there is more to the present issue in the Nigeria banking industry than what a mere action against the bank executives can solve. Looking at the background problem of the five banks, it is due to investment made at different times. so if the economy of the country is stable then necessary returns should have to accrued to the affected banks.

Posted by Babatunde Barnabas | Report as abusive

There is still a global credit crunch. Bad loans with banks will still go up and I suspect more banks will be in trouble by year end. Afterall banks are still collapsing in the US. The one good thing about this whole exercise is that transperancy and coorporate governance will improve in this sector. The governemnt/CBN sacking CEOs is illegal and sets a bad precedence. It is very dangerous for govt to make this type decisions. If a CEOs performance is poor the board and shareholders can remove him or her. This is how it should be done going forward. I hope Sanusi is sincere and knows what he is doing. He has only been in office two months. Besides if this scandal affects Mr president will he be brought in for questioning? For the good of Nigeria let this be the last time CEOs of private firms are fired by govt.

Posted by anioma | Report as abusive

Nigeria is gradually becoming a failed state, i also hope Sanusi will not be another ribadu. VIVA NIGERIA.


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