My friend and brother, Ejike Okpa II brings a new, and I daresay irreverent perspective on the subject of Prof. Soludo’s legacy.

From this message, am I to assume that Mr. Soludo is no longer Governor of Central Bank of Nigeria? If that is the case, who is?

Mr. Soludo, was never a seasoned banker nor someone with in-depth understanding of the roles and functions, and the effective tools a Central Bank can deploy to make an economy come alive. Not that most before him did any better. But considering how his fan club members trumpeted the fact that he made ‘first class’, and as a result, he is a superstar banker, beats me. Making a ‘first class’ is not a measure of intelligence. I say ‘all that glitter is not gold’ as the educational standards in Nigeria has fallen and the content of the ‘first class’, may not really measure up.

That someone was able to regurgitate materials, pass exams, and often ‘copy and past’ ideas, does not mean when in a position such as CBN Governor, they will excel. While a ‘first class’ pass is great, it is not at all a measure of how one can do later in life. If Nigeria only pay attention to only educational diplomas not minding that such only contribute about 20% of what is needed to be successful, the country will always fall short. Take a look at Kenya. President Kibaki, made ‘first class’ at London School of Economics, but look how his politics and economic prescriptions for Kenya have always fallen short. So apart from impressing mostly ignorant countrymen, how have all these Africans that have towering and impressive academic diplomas done well for their country? The answer is a resounding dismal outcome.

Nigeria does not really have a functioning economy outside of the oil/gas and banking sectors. The CBN is mainly a bank for the government and is not an independent institution that use/deploy aggressive and effective monetary and fiscal policies to lobby the government for programs and reforms necessary to enhance the economy. Outside of the controversial equalization scheme and recapitalization of banks that Mr. Soludo engineered, the latter with some success, the naira versus dollar/pound exchange rate has continued to devalue any gains made in the economy. Throughout Mr. Soludo’s tenure, the naira never managed long periods of stability against any of the two currencies. Under Mr. Soludo’s watch, the naira went from a potential convertible currency to a worthless currency whose value is secured on the amount of foreign exchange reserve Nigeria has. The volatile nature of the naira has made trading in the currency very difficult, with the attendant result that most Nigerian business persons prefer to be paid in ‘hard’ currencies. There is no backing of the naira by any program that when critically examined is considered an effective tool to shore the currency. When the value of any currency is measured based on the amount of foreign reserves, such a currency is not worth much and fluctuates depending on the price of a single or a combination of commodities, in the case of Nigeria: Oil. The naira weakness, is an indication that local production is non-existent.

The borrowing rate in Nigeria is one of the highest and continue to be. How can a business person borrowing at 35%, with pay back period that is no more than 1 year survive? Mr. Soludo, should have fought to see that borrowing rate is no more than 8%. That would have eliminated the scrambling by Nigerian banks to be correspondent institutions for foreign lenders. Any economy will receive a boost when money is lent at single digit or at least 8%, in case of developing nations, as opposed to 35%. Such would have stabilized the naira, and local production and consumption will be increased and reasonable.

Mr. Soludo appeared to be more interested in a ‘copy and past’ policy without fully explaining why some programs should be encouraged. If he is such a bright mind, how much lobbying did CBN do with the National Assembly to promote some of the ideas he wanted to introduce? I believe that duly educating the National Assembly and seeking their political support to improve the economy and the naira, would have enhanced his tenure. Instead, Mr. Soludo spun programs that were not understood and in turn exposed himself to unfriendly reaction by his bosses.

Until the interest rate in Nigeria is brought down to a single digit, no amount of monetary policy will work. That is first order of business in reforming the economy and must take precedent and priority over any equalization/stabilization of the naira. Between Heaven and Earth is Government and between Government and the People, is Money. And until developing nations learn the tools of monetary policies with manipulations needed to shore their currency, stretching their arms for alms to developed nations will never pull them out of perennial dependency and cycle of poor programs. If sovereign rules entitle nations to reasonable monetary and fiscal policies, why must they be poor? It is more a beggar attitude than anything.

I hope Mr. Soludo continue to seek other ways to be relevant. But as usual, he maybe like Mrs. Ngozi Okonjo-Iweala, who after serving as Finance Minister is overseas working for the World Bank. Mr. Soludo should now go get a real job as a banker or go back and really become a ‘professor’ of substance teaching in some Nigeria university. But I doubt this. When I saw Mr. Chu Okongwu in 2004, a man that was once both Central Bank Governor and Finance Minister of Nigeria, I was perplexed by his appearance. And I wondered after these individuals leave office, how come their life always look miserable?

There should be life after service, assuming the so called ‘bright’ minds in Nigeria/Africa know how to make things happen.

ejike okpa ii
Next Generation Fellow
The American Assembly

OA’s Note:
Soludo was replaced by Sanusi Lamido Sanusi as Central Bank Governor. Before his appointment, Sanusi served for five months (from January 1 2009)as managing director of First Bank of Nigeria (FBN).He was the bank’s executive director in charge of Risk and Management Control. According to the ThisDay newspaper, “Before joining FBN, he was previously general manager at United Bank for Africa Plc (UBA), where he anchored the transformation of the bank’s Credit Risk Management Division into an Enterprise-Risk Management sector and spearheaded UBA’s Basel 2 focus by establishing the framework, policies, processes and systems necessary for compliance with the guidelines of the new capital accord. Sanusi is the son of the late Emir of Kano, Alhaji Muhammad Sanusi who ruled from 1954 to 1963, and holds a degree in economics from the Ahmadu Bello University (ABU), Zaria and an M.Sc in economics from the same university. He also has another degree in Sharia and Islamic Studies from the University of Khartoum, Sudan.”

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One thought on “Not So Well Done, Prof Soludo”
  1. OA,

    Whereas I am not really a great fan of Prof. Soludo, however on this subject matter, I think that Ejike has been in the diaspora for too long and has completely lost touch with the working of government in Nigeria. Perharps if he settles down to do a thorough study of the political economy of governance in Nigeria, he will understand that in spite of all of Soludo's limitations, he still worked near miracles in the five years he was in charge at the CBN. Perharps also, after he has had the benefit of analysing Sanusi's own five years (or even his first year) he will truly appreciate the golden years of Soludo's governorship.

    When he talks about period of stability of the Naira, I beg to be told of any other period in the last 25 – 30 years of Nigeria's existence that the Naira ever managed up to six months of stability. Unless Ejike wants us to believe that the recent bout of instability of the Naira or the global financial crisis were of Soludo's making. Even Soludo's attempt at intervention, which negated the non-interventionist and market oriented reform themes of government of which he was part could be justified in the circumstances unless we are saying that encouraging or sustaining the business of peddling money sourced from government coffers in the streets is a justifiable alternative.

    When Ejike also talks about a single digit lending rate, as desirable as that may be, is he prescribing that it be decreed by legislation or by executive fiat. These things take time. You start by having serious institutions (including banks) that can be reckoned with globally rather than mediocre family currency trading outfits (kalo – kalo) or prostitution rackets who operated under the facade of bank licences. Our challenge now is to ensure that the foundations which were laid by Soludo are sustained to maturity. Ejike should please pray that we do not witness policy reversals and de-reversals like we saw with the NIPP, railway standard track project, et al.

    When Ejike also says that under Soludo the Naira went from a near convertible currency to a worthless currency, then it is really obvious that he has really lost touch with Nigeria. Perharps he thinks Soludo succeeded Ola Vincent as CBN Governor. He should please remember that we had Abdulkadir Ahmed and Paul Ogwuma; unless he wants us to celebrate them too. The journey to change only started with Joseph Sanusi and the tempo was upped by Soludo.

    Again, when he talked about lobbying the National Assembly (NASS) for policy support, I really wonder whether he knows what is happening in Nigeria. Has the NASS ever discussed, talkless of supporting, any policy that is not about their welfare and benefits. Perharps the question he should be asking is whether we need the NASS. He should really ponder on the cost benefit analysis of the existence of NASS – hoiw much it cost us to sustain them relative to what value, if any, we derive from their existence.

    Finally, when he talked about the appearance of our ex office holders like Chu Okongwu, then I really got the substance of his arguement. Fisrt, Chu was never a CBN Governor; and secondly, his prescription is that we should all be like Babangida, Abubakar and Obasanjo – Steal till thy knigdom come.

    What a pity.

    Ike (Concerned Nigerian)

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