It is no longer news that the market and its economic system, capitalism, has triumphed over other forms. For evidence, one has no further to look than the collapse of the Eastern block. George Hubert Walter Bush senior, a former president of the United States, once gave a scintillating senti of the market system as a thousand points of light. However, consequent on the economic meltdown and its ripple effects around the world, a thousand points of crisis and darkness would  be more appropriate. This unfolding crisis is symbolised by Banks in Nigeria. Time it was when banks and the people who work in them symbolised certainty, much as daylight follows the night, and hence the expression, “sure banker.” But not anymore.

The crisis in Nigerian banks actually predated the economic meltdown. The crisis received huge publicity in 2006 when, Charles Chukwuma Soludo, the then Central Bank Governor, imposed a programme of consolidation. All banks operating in Nigeria, he decreed, had  to transform from regional to national players and raise the capital base of N25 billion. The policy forced strange fellows into one bed, through mergers and acquisitions and before anyone could say Chukwuma, 25 “consolidated’’ banks had emerged. Banks which did not meet the capital base fell through the cracks created by the Central Bank. Those who kept the tally can testify that the CBN governor garnered over 25 awards for wizardry, besides being fed by the banks at a banquet of over N1million a serving. The entire exercise was self serving: questions about loss of jobs, national spread and whether it was better to have regional than national banks were brushed aside. Nigeria must be one of the few countries where banks cannot choose to be only city, local councils or state based.  But in the end, what is the payoff or was it all a bad cheque ab initio?

Up till bowing out, there was the seeming impression that it was all honky dory in the banks. It took his replacement by Sansui Lamido Sanusi as the new Central Bank governor to blow the whistle about the murk in the banks. Over 10 have their chief executives fired before a massive infusion of public money. Some of the bank chiefs are being prosecuted, others have fled the country. Here again the concept of the “sure banker” is severely put to the test.

Press reports indicate that protocols of borrowing and lending money were observed mostly in the breach. Billions of Naira, including funds from akara sellers, beggars and others in the bottom rungs of society, were doled out through mere phone conversations. The triumph of the greedy over the needy never looked more stark.  Collaterals, or the idea of syndicated loans were unheard of. These might only be snippets of the reality in the banks.

CBN’s injection of billions to keep the troubled banks afloat is most instructive. Here, the new governor only had to act out the scripts of US President Barak Obama and others in the West:  the so-called self regulating nature of capitalism is only a hoax. When the chips came down, the recourse was to the public till rather than to the market. In effect, the invisible hand ceded primacy to the visible hand of the state.  Government has business in business after all.  Governor Sanusi may have weathered the storm and given the floundering banks a new berth. But when did the crisis start?

Sanusi is not quite six months in office in the CBN. Was this a crisis specially staged to welcome him or was it one hidden from public view and papered over by the Soludo regime? All the indications are that the latter is the case. In this sense, one of the greatest favours was the nonrenewal of Soludo’s tenure: it saved him from himself! It was a matter of time before he would have to tell the Nigerian people the truth about the banks. Issues will continue to arise about the role of the Central Bank in exacerbating the crisis as well as the effectiveness of its oversight function. How come there were no warnings, no reprimands about untoward acts that went on apparently for months before Soludo’s exit?

 Nor is this the first perplexing case about which Soludo looked the other way? When the economic meltdown commenced, he was expected to analyse the possible knock-on effects.  He came up with a conclusion which stood reality on its head. He said the Nigerian economy was insulated from the global meltdown. This statement rubbed hard in the ears because this is a world of globalisation, Nigeria’s oil is sold in dollars, not to mention the intricate web of commerce in our buying and selling economy.  Was this a mistake of the head or of the heart? Probably, it was a matter of telling Nigerians what he taught they wanted to hear. But this supposed insulation notwithstanding, the impact is everywhere: allocations to states have dwindled and many projects are grounded.

The new Central Bank governor seems determined to restore the lost image of the “sure banker.” He reinvested funds to ensure banks remain solvent and has brought in new management. Some have dismissed his intervention as a “northern agenda.”   This is actually a moot point if only because no one would describe the concealment of the crisis as “Southern’’ agenda either.  Whether northern or southern, the lot of Nigeria is better served when CBN is open about the status of the banks and takes urgent steps to address challenges that exist.

But the remedial steps should not stop at the commercial banks. The new CBN must look inwards and clean the Augean stable. How come the apex bank continued to give clean bill of health to the banks? Who was covering up and why? The clean up must include the clarion call to stop the cover up. This is part of the measures to restore the once glorious days of the “sure banker.”