To reward or not to reward Mr. Soludo is the theme of the new narrative regarding the future of the CBN. It is perhaps the biggest battle for the economic health of the nation and it has divided the tribe of bankers and economists into two fierce camps, all in frenetic manoeuvres to affirm or disavow Mr. Soludo.
“It is up to the President to make that decision and whatever decision he makes, I will respect it. But I am sure he will consider some things before he makes that decision. Let’s leave it at that” declared Ahmed Markarfi, Chairman, Senate Committee on Finance, in a veiled indication that Soludo’s term extension would run into a blizzard of opposition.
However, for Ogbuefi Ozomgbachi, Chairman of the House Committee on Banking and Currency the answer is in the affirmative “to the extent [that] we now have a number of manageable banks in Nigeria. From the profit posted by these banks and their annual accounts...” Such is the tension generated between the two poles that have now built forces around Mr. Soludo.
A New CBN
Yet even in their differences, Mr. Soludo can hardly rejoice. Both in the Senate and in the House of Representatives, plans are afoot to review the CBN Act in a way that will lead to an institutional split of the bank as we know it today. “Even now at the committee level, we are working at the amendment of the CBN Act and the amendment of the Act will be predicated on the bifurcation of the functions of the CBN into two.
CBN should be saddled with the monetary policy and inflation targeting, while another body should be saddled with operational issues, supervision of banks,” Mr. Ozomgbachi said, echoing what Mr. Makarfi himself had said earlier.
“The CBN Act needs to be reformed. They have too many responsibilities, probably just like the Uwais Committee has recommended the unbundling of INEC, maybe it is high time we unbundled the CBN” the senator said. The implication then is that even if he gets a second term, the organization that Mr. Soludo will lead would be hugely denuded.
Those who oppose Mr. Soludo are drawn from diverse backgrounds which include some strong gubernatorial voices with considerable influence in Aso Rock, according to sources within the presidential villa.
At a recent meeting of the National Economic Council in Abuja, Mr. Soludo again flogged the same catechism of “all is well with the economy” to the governors.
According to sources at the meeting that sought anonymity, governors Adams Oshiomhole of Edo State; Rotimi Amaechi of Rivers; and Jonah Jang of Plateau, angrily tore into his arguments, charging that the logic was hollow and excessively academic; that his policies offered no solution to the urgent and important problem of poverty in the land; and that in the essential responsibility of maintaining and protecting the value of the Naira, Mr. Soludo has dropped the ball and seemed to be on an ideological, if even blind, mission.
Mr. Amaechi took the same position to Lagos, when at the event of the local chapter of the Nigerian Union of Journalists, he refuted Mr. Soludo’s claim of our economy’s resilience against the global onslaught. “I do know that the statutory allocation to my state has reduced, no thanks to the economic meltdown” the governor asserted.
Bad judgment
Ebere Onwudiwe, a respected professor of political economy has harsh words for Mr. Soludo, who he characterised as needlessly boastful. He said: “Playing to the gallery and all those boastfulness that is not backed by real concrete positioning against the negative influx of the global financial crisis amounted to negatives for Soludo,” who he thought “is there to protect Nigeria through policies so that we can guide this country from the negative impact of the global financial crunch and he has not done that.”
Onwudiwe is miffed that Mr. Soludo makes bogus claims about “how Nigeria is prepared, about how we are not a credit economy, and about how we are sort of insulated from the global economic crisis; about how the rest of the world needs to learn from Nigeria, and how we have protected ourselves from this...” these amount to what he calls “bogus claims” that have proved to be “for nothing and that it is a failure that should not be rewarded.”
In the beginning
Regarded as the quintessential system man with a whetted tropism for power, Mr. Soludo was a famous and leading student leader of the then National party of Nigeria [NPN] as an undergraduate on the campuses of the University of Nigeria, Nsukka in the eighties.
The year of his graduation in 1984, Tunde Lemo, one of the deputy governors he later recruited into the CBN, also graduated in accounting.
They both made first class honours in their respective courses. He enrolled for a doctorate in the same university but because Nsukka could not offer him quality supervision, he took most of his courses at the University of Ibadan under the supervision of Samuel Olofin, a famous professor of monetary economics.
Mr. Soludo would later recruit Mr. Olofin as a member of the CBN a year after he became governor, in what critics started reading as a leadership style defined by cronyism.
Mr.Soludo burnished his credentials, via a string of high-brow sabbaticals in some of the leading academic centres of the western world, such as the Brookings Institution [Washington DC], Oxford University, and Cambridge University ,in the UK.
He arrived from a Swathmore College visiting programme in 1998, to become a professor at a relatively young age of thirty-eight. In spite of his impressive academic feats, Mr. Soludo’s leadership skills have always been a subject of concern for those who work with him and many who claim he harboured some complex, which is masked by an autocratic and bullying visage.
Abiodun Adegboye, an academic at the Obafemi Awolowo University’s department of economics, shares Mr. Ozomgbachi’s position. Since Mr. Soludo, he said, came on board in July 2004, he has brought a new face to financial system in Nigeria.
“As at 2004, there was no Nigerian bank among the first one thousand in the world, but now we have Nigerian banks that are among the first five hundred, and the economy has also witnessed a huge sustainable growth, especially the non-oil sector.
All these include the manufacturing, pharmaceutical and so on. Also since 2004 , our oil sector too has been growing, especially with the effect of economic diversification. This has ensured soundness in our financial system” Adegboye asserted. Muda Yusuf, Director General of the Lagos Chambers of Commerce, and Industry [LCCI] agrees too. Mr. Soludo, he says, has made a significant mark by introducing the march of technology in the financial system of the country, through the e-banking processes.
He also thought the consolidation represented a salient moment of institutional growth that has put the banking sector on a proud pedestal.
Jameelah Yaqub, of the finance department of the Lagos State University, who shares Mr. Yusuf’s view on Soludo is, however, uncomfortable with critics of the man who only whack him on the grounds of inaccurate references. She illustrates her position thus: “the problem we have now regarding the exchange rate comes from the fact that there is a fall in the international price of oil which is the biggest foreign exchange earner for Nigeria. It is not really a Soludo problem” she insisted.
Creative policies
In 2007, Mr. Soludo came up with the Naira re-denomination policy. He announced to the nation that by August 2008, the Naira would be re-denominated and that coins would be re-introduced. The aim, he said, was to strengthen the naira against other currencies and restore its value, close to what it was in 1985. The policy would also help manage inflation and liquidity, he said.
The governor cited Ghana, New Zealand and Germany as some countries that had re-denominated their currencies recently. This time though, Mr. Soludo ran into a brickwall.
Experts were quick to point out the glaring anomalies in the policy he was proposing. Dr. Ayo Teriba, the Chief Executive Officer of Economics Associates, is of the view that what Mr. Soludo was proposing was not re-denomination but decimalisation. “What the CBN did was to knock off two zeros.
That is, what is N1,000 will become N10, and what is N200, 000 will become N2, 000 and this will start by August 1 next year. There is no implication , it is only an arithmetic thing because it simply makes accounting easier.
That is, you have less money to calculate and less to carry about. “You measure your clothes in millimetres but you decide to measure it in centimetre, your body will still remain the same despite a change in measuring. The policy does not affect the economy either negatively or positively, because it does not affect the economic variables,” he said