The new Central Bank Governor Lamido Sanusi has warned that Nigeria may not develop, unless the power sector and infrastructure are fixed – urgently.
Sanusi, whose nomination as CBN Governor was unanimously endorsed by the Senate yesterday, also stressed the need for the Federal Government to ensure food security by putting in place the right policies.
Answering questions from the Senators in an encounter that lasted for three hours, the new CBN boss was of the view that the administration’s Seven-Point Agenda could be implemented in phases.
To him, the focus should be on power, infrastructure development and food security. When these are addressed, in his view, other ailing sectors will naturally take shape.
Sanusi said: “Until we address the problems of power and collapsed infrastructure, we cannot move forward or achieve any meaningful progress. In my view, the Seven-Point Agenda should be implemented in phases.”
“The first phase should be geared towards addressing power problem, infrastructure and food security. We produce gas but we don’t have gas; we produce oil but we import petroleum products; we export steel rods yet we import flat sheets.”
“By the time we address the power problem, put our refineries back in shape and set up our own flat sheet industry, the multiplier effects will spill over to other sectors of the economy and the small-scale industries will grow.”
Sanusi went on: “So, until we address the infrastructure problem, we cannot achieve any development. The question is, how do we go about it? Do we do it through inflationary financing or by prioritising our goals?
“In his inaugural speech in 1999, former President Obasanjo talked about power, infrastructure and the Niger Delta. Ten years after, we are still talking about the same thing. We need to work harder so that by 2019 we will not still be talking about these same problems. Let us stop having vision; let us start moving.”
Sanusi described the re-denomination of the naira as canvassed by his predecessor, Prof Chukwuma Soludo, as cosmetic, saying the policy is only applicable to countries with over 700 per cent inflationary rate. Nigeria, he said, has not got to that stage yet.
On banks’ consolidation, the CBN boss said it was necessary when the policy was introduced, but that consolidation should not be seen as an end in itself. The existing 23 banks, he insisted, need to be strengthened.
“A good bank requires a lot of capital, but I don’t believe every bank should have N25 billion capital base. There could be smaller banks on regional basis. The consolidation is a foundation for us to build on the existing ones.”
“It is not true that any bank with the biggest capital is a good bank. It depends on how the funds are used. Consolidation should be taken as a foundation for us to build on and improve on what is on the ground through effective monitoring and supervision”
“It is not a question of the biggest bank. The best bank is the bank that is consistent and transparent in the application of the rules and ethics. The best bank is the bank that observes the best practices.”
When the senators sought his views on the high interest rates being charged by the banks, Sanusi traced the problem to epileptic power supply and decaying infrastructure that have shot up the costs of doing business.
He said: “Of course, low interest rate is a recipe for economic development but it is only improved power supply that can guarantee this. Most of the banks run on generators in their head offices and virtually all their branches on a daily basis.
“This has forced most of our industries to close down. So, the high cost of running their business is partly responsible for the high interest rate that is being charged by the banks. The moment the power problem is solved, the rates will definitely come down.”
On the impact of the global economic meltdown on the Nigerian economy, Sanusi said the effects were minimal owing to the fact that the falling value of the naira is being augmented with falling prices of commodities in the international market.
Second, the risk management banker added that the economy is yet to be fully integrated into the global economic system, stressing that what we are experiencing are self-inflicted problems.
On a common currency for West African countries, Sanusi said the sub-region was not ready for it because all the variables necessary for the implementation of the policy are not in place in any of the countries.
He said henceforth, the CBN would deepen its supervisory role and extend it to the capital market and the Securities and Exchange Commission – to check some excesses.
Sanusi hinted of the possibility of the CBN beaming the searchlight on the capital market, with a view to identifying the forces behind the collapse of the market and bringing the culprits to justice.
“I can assure you that we are going to look into the crisis in the Capital Market and anyone found to have contributed to the problem will be made to face the law,” Sanusi said.
Deputy Governor Tunde Lemo was also confirmed yesterday after answering questions from the senators for about 30 minutes.
Sanusi was ushered into the Senate chamber at 11.05 am. The hail of questions began almost immediately. Dressed in a dark three-piece suit with a bow tie, he was accompanied into the chamber by the Special Adviser to the President on National Assembly Matters, Senator Mohammed Abba-Aji.
The spruced, lanky 48-year old was on his feet for over three hours and he got almost all the senators on the edge of their seats with the way he tackled the questions – clearly and confidently articulate.