Mixed reactions have followed Tuesday’s decision by the Central Bank of Nigeria to fix a 10-year tenure limit for chief executives of banks.
Most people who spoke in Abuja and Lagos criticized the decision as “illegal”, saying it amounts to undue interference in the private investment of individuals. Others said it should be encouraged, as it would help promote corporate governance in the industry.
Calls and emails to the spokespersons for Zenith Bank Plc, UBA Plc, and Skye bank Plc, whose chief executives, Jim Ovia, Tony Elumelu and Akinsola Akinfemiwa, respectively, will be affected by the new directive were not responded to as the time of this report.
Sunny Nwosu the President, Independent Stockbrokers Association of Nigeria, said the decision was unnecessary, arguing that the CBN should concentrate its efforts on reforming the economy, which he said has failed.
“This is not a right decision at all,” Mr. Nwosu said.
“It is not necessary. These people (bank chieftains) are private entrepreneurs, who set up their investments, and as at the time they did, there was no law that they would vacate their offices after a certain period of time.
“If we are talking about free-enterprise, the question of limiting the tenure for chief executives should not be there at all.
“The decision to limit the tenure is actually going to empower anybody that wants to steal to concentrate on stealing, knowing that he has a terminal period to go.
“Besides, the decision will kill the zeal of people to invest in the establishment of banks and such institutions. Like in the civil service, government’s policy is on retirement either on attainment of 35 years in service or 60 years of age.
“Sanusi should concentrate on the reform of the banking sector that is failing. The economy has continued to go bad every day. Is it this tenure limit that would restore the failed economy?
“He should avoid making laws that would continue to be obnoxious. To my mind, it appears he is pursuing shadows and leaving the real substance of the problem,” he said.
However, none of the spokespersons for the banks whose chief executives will be affected by the July 31 deadline has said anything about the new directive.
Enforce past policies
Samuel Kolawole, the Managing Director of University Press and president of Nigerian Publishers Association said that the Central Bank would achieve more by enforcing past policies on corporate governance and best practices instead of taking it out on the long serving CEOs.
“For every CEO that takes advantage of his position, there are many that are doing a good job,” Mr. Kolawole said.
“To now lump everybody together, I do not think it is fair”.
He added that the Central Bank has not been enforcing past policies on discouraging family-owned banks or allowing a single individual to own huge shares in a bank, adding that where an individual becomes too powerful for other shareholders to control, there is bound to be abuse of power.
“The shareholders should determine the tenure. They can decide to remove him after two years if he is not performing,” he said.
On whether the exit of some CEOs will negatively affect the fortunes of the banks, he said it is not likely. “If there is any bank whose success is tied to the CEO, then that bank is in trouble.
Bismarck Rewane, the Managing Director, Financial Derivatives Company and member of the Presidential Economic Steering Committee said the problems of the Nigerian banking sector runs deeper than the tenure of CEOs.
“If that is the problem, maybe with this move, things will begin to improve.” Mr. Rewane said.
“Maybe credit will start to flow, power will stabilise and the economy will start to flow, power will stabilise and the economy will start to boom.” He said a better understanding of the situation will unfold in the days ahead.
“Let us wait until we see the official Central Bank statement and see if it is consistent with the laws that have been passed before. Right now, it will be pre-emptive to make comments,” he said.
Global practice
The Chief Executive of Pro Data Limited, Iboro Otongaran, said the decision is a departure from what obtains in other advanced economies of the world, saying: “It is downright illegality for Sanusi to say the CBN would fix a tenure for somebody who used his private resources to establish his company.” But Nona Awo, a shareholder and financial analyst said the development is a good one because some banks already have tenure limit for their managing directors.
“Contrast to what others believe, I don’t see the development as a target to remove some people in office because the directive exists in some companies. The articles of some banks like Union bank allow directors to stay three terms of three years each, some two terms of two or four years each,” Mr. Awo said.
Additional reporting by Oluwaseyi Bangudu and Daniel Osunkoya
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