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 brokerage Renaissance 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?

Several factional leaders – including Ateke Tom, Farah Dagogo, Soboma George and Boyloaf – have said they accept the idea of amnesty in principle but want talks with President Yar’Adua to hammer out the details.

Advocates say such an amnesty would meet one of the key demands of militant groups and is the only way to bring an end to instability which costs Nigeria billions of dollars in lost oil revenues each year, prevents the development of the very communities the militants claim to represent and causes world energy prices to rise further, which ultimately falls back on the Nigerian consumer.

Critics say amnesty simply provides a get-out-of-jail free card to those responsible for kidnappings, acts of sabotage and banditry and that the promises to re-educate and reintegrate them into civilian society would require years of investment. The government has said it will not offer a “buy back” programme – money for surrendered weapons – but does the scheme reward those who have taken up the armed struggle while leaving peaceful protesters with nothing?

It is not the first time amnesty has been offered to armed gangs in the Niger Delta. Yar’Adua’s predecessor Olusegun Obasanjo struck such an agreement in 2004 with militants including Mujahid Dokubo-Asari, whose Niger Delta People's Volunteer Force turned over thousands of weapons in return for amnesty. But the deal later broke down when some factions accused others of profiting from disarmament at their expense, and Asari was later arrested and charged with treason.

Is Yar’Adua’s amnesty offer a serious attempt at resolving the crisis in the Niger Delta or will it suffer the same fate as the previous amnesty deal? Is it simply an attempt to win political currency for the ruling party in the Niger Delta ahead of elections in 2011? What happens after the amnesty? What hope is there that the resources and political will are there to ensure the longer-term development of the Niger Delta and prevent a resurgence of the cycle of the frustration, unemployment and violence that has characterised the region for so long?

“Watch out for watermelons” was the ominous warning long given to visitors arriving by night in Lagos. The Third Mainland Bridge, Africa’s longest, snaking over the lagoon and into town from the airport, was notorious for armed robbery. A watermelon embedded with nails and rolled in front of your car was enough to stop you, allowing gunmen to relieve you of your possessions.

Times seem to have changed. Foreign executives are still swept into town under armed escort, sirens blaring, but the state governor has made fighting crime a priority, with some success. The biggest hassle is now police checkpoints and the notorious “Lagos shake-down” – the long arm of the law (usually waving an AK-47) begging “something for the boys”, a bribe to see you on your way and top up low wages. Security may have improved, but corruption remains endemic.

Glancing down from the bridge as it sweeps towards the skyscrapers of the banking district, the neighbourhoods of Iwaya and Ebute Metta swing in to view. Wooden shacks on stilts stand over the murky water, a reminder that this city of 14 million, one of the fastest growing in the world, is bursting at the seams – and that the gap between rich and poor in Africa’s most populous nation is cavernous.

Imported inflation is the biggest impact of the global crisis here. Despite being the world’s eight biggest crude oil exporter, Nigeria is almost entirely dependent on imports of refined fuel. Cargo ships light up the horizon like a floating city at night, waiting to berth with everything from diesel to rice. A weakening currency means fuel and food prices are rising, but there’s little sign of popular unrest – a decade out of military rule, this is a population used to graft and mismanagement. It expects little from government.

The banks have been suffering, although you wouldn’t know it from the champagne flowing in the upscale bars of Ikoyi and Victoria Island – Nigeria’s elite have a proud reputation for conspicuous consumption to maintain. But newspapers brim with speculation about bank collapses and stock market bailouts. Jobs have been lost and supermarket owners complain imported luxury foods are flying off shelves less quickly than before.

But on the street, the hustle continues unabated. Boys selling phone recharge cards in the notorious traffic jams are cashing in on the huge and rising number of mobile users, while the army of motorcycle taxi riders seems to grow by the day. And foreign exchange controls meant to defend the naira currency thriving business for some in the informal economy: the black market money changers have never been so busy.  

(An aerial view shows the central business district in Nigeria's commercial capital of Lagos, April 7, 2009. Nigeria's First Bank and Access Bank on Wednesday became two of a handful of Nigerian financial institutions to adopt international reporting standards, seen as key to restoring confidence in the battered sector. REUTERS/Akintunde Akinleye (NIGERIA CITYSCAPE BUSINESS POLITICS))

On Tuesday, gunmen loyal to militant leader “Kitikata” opened fire on Shell facilities in Bayelsa state. They delivered a letter to the security guards at the site demanding they be given a contract to guard facilities at Nembe Creek, a hotspot for criminal raids, or else they would carry out further attacks.

Given that the militants, based in camps deep in the delta’s swamps, appear to be split into factions often working in an un-coordinated way, and given that many of the attacks are opportunistic acts of pure criminality – kidnappings for ransom or the theft of vessels – what should the security forces do to restore order? Is this violence really still motivated by a struggle for the development of the Niger Delta, or has it become a lucrative criminal racket? Do the oil companies have a responsibility to help police the region, and if so how? If a diplomatic solution is the preferable approach, which militant groups or faction leaders should be brought to the negotiating table? And if they do sit down to talk, what should be done to deal with the criminal gangs who act with no political ideology?

Much of the news that comes out of the Niger Delta, the vast network of creeks home to Africa's biggest oil and gas industry, is generated either by militant leaders claiming spectacular attacks on oil industry installations or by the military, keen to publicise its victories flushing out crude oil thieves from camps nestled deep in the mangroves.

Rarely heard are the voices of the "boys" who have taken up arms and make up the rank and file of the militant gangs. Oil theft on an industrial scale or kidnappings for ransom make some of their bosses rich. Peace negotiations see others rewarded with the veneer of political legitimacy and a comfortable new government-funded lifestyle. But the grunts tend to share little of the spoils.

So an initiative to take them out of the militant camps and send them abroad to be immersed in the teachings of non-violent activists from Gandhi to Martin Luther King Jr and Nelson Mandela raised - after the initial scepticism - a strong dose of curiosity. After the attempt to "reorientate their psyches", the candidates would be schooled in skills meant to make them employable once they returned back home.

Would they be convinced that they could renounce violence and still fight for their rights? Did they really believe that theirs was a political struggle or were they simply interested in emulating some of their leaders and growing rich from stolen crude, ransom money and government pay-offs?

There are precedents in West Africa. Former child soldiers in Liberia and Sierra Leone who spent their formative years living by the gun have been reschooled and retrained, some integrated into the national army, others starting lives with newly-learned skills as carpenters or welders.

Negotiators trying to build peace in divided countries such as Ivory Coast or Democratic Republic of Congo have brought former rebels into the fold by making them stakeholders in the future of their countries, with varying degrees of success.

Could the same philosophy of constructive engagement work with the armed youths of the Niger Delta?

Some of the young men waiting in Lagos airport to begin the overseas part of their "reorientation training" reminded me of former child soldiers I had met in Liberia and Sierra Leone, or young Tuareg rebels in northern Mali and Niger. They had similar aspirations as young adults anywhere -- to earn a decent living, be able to look after themselves and win respect from their peers.

"Anybody in violence wants out of violence, it's just a question of finding a way," one of them, Patrick, commented.

So could the programme work? If, with new skills, these former militants can return home and earn a living, could they persuade others in the community to lay down their weapons? Or is it an expensive waste of money, rewarding former criminals with the sort of opportunities that many in Nigeria can only dream of?

Government and presidency officials have been tight-lipped about the president's condition and have not said exactly when he will be back. The opposition has demanded clarity on the president's health, adding that his absence is having an adverse effect on the workings of government and that the official silence is fuelling speculation and uncertainty.

Should the head of state's health be a private issue or is it a matter of public interest? Is his prolonged absence from Nigeria a cause for concern? As governor of Katsina state, Yar'Adua spent several months abroad for medical treatment without attracting much public attention, only to return, complete his term and win another one. Can he expect to do the same as leader of the nation?

What if the president leaves office early?

Nigerian officials say past deals with international investors have not always been in the best interests of the country and that Yar'Adua wants to ensure Nigeria is no longer "short-changed". Virgin has said it is in talks to sell its stake in Virgin Nigeria.

Is Yar'Adua's administration right to review deals struck by his predecessor, or does this suggest that contracts with government can be subject to change and make the investment climate unpredictable? Are such rows really about the national interest, or are they triggered by a clash of egos? Would Virgin's departure from Nigeria have any impact on the country's image as an investment destination?

But infighting among the three tiers of government -- federal, state and local -- on how the revenues should be shared out has seen them squandered.

The country is starved of electricity, the roads in even its plushest suburbs are pitted with potholes, and nine out of 10 people live on less than $2 a day, according to U.N.statistics.

How should Nigeria's oil revenues be managed? Why is the country's infrastructure so dilapidated when its state budgets are so high? Should the country set up a sovereign wealth fund? Would it be any better managed than the existing arrangement?

Yar'Adua announced plans for formal talks and freed two jailed militant leaders when he took office, but the peace process has made little real progress since then, with the rebel Movement for the Emancipation of the Niger Delta (MEND) continuing to blow up oil pipelines and kidnap foreign workers.
The government has called a summit for July meant to involve all stakeholders, but MEND and another group -- the Ijaw Youth Council -- have said they will not take part. Yar'Adua has said the summit aims to address the frustrations of the Niger Delta communities, who have seen their land and water polluted by oil production, but he has also said his government will not tolerate the presence of armed militants in the region.

What are the options for the government -- at federal and state level -- in tackling the problems of the Niger Delta? Should the government negotiate with armed militants? Are the militants anything more than common criminals, profiting from an illicit trade in stolen crude? What role should the foreign oil companies play in bringing peace to the region?

A year on, his critics say economic reforms are grinding to a halt, his anti-corruption efforts are just window-dressing and his cabinet is largely a collection of ineffective bureaucrats who are but a shadow of an all-star cast in the former administration.

His supporters say his efforts to entrench the rule of law are a vital opportunity for Nigeria to make a break after decades of corruption and cronyism, and that while progress may be slow, he is laying the underpinnings for much stronger institutions in the country.

Does Yar'Adua have the political muscle he needs to lead Africa's most populous nation? Is his oft-repeated mantra of the rule of law a step change in Nigeria? Or has the country lost the momentum it built up under Obasanjo? What do you think?