Wednesday, June 10, 2009

Soludo’s legacies

Professor Chukwuma Soludo gracefully bowed out of office recently after an eventful 5-year tenure as Governor of the Central Bank of Nigeria (CBN). His tenure, which expired on May 29, 2009, will go down in history as one of the most impactful in the annals of the institution.

Soludo, an economist and former lecturer, was appointed CBN Governor during the regime of former president, Chief Olusegun Obasanjo. He took over the management of the nation’s financial sector at a time of inherent fundamental weaknesses of the nation’s banks.

Soludo indelibly etched his name in the nation’s financial history with his programme of consolidation of Nigerian banks under which the institutions were made to raise their capital bases from N2 billion to N25 billion, each. The programme saw the number of the nation’s banks reducing from 89 financial institutions of doubtful health to the present 24 stronger ones. Although banking chiefs and the Senate initially kicked against the plan, he stuck to his guns and went ahead with it.

Today, the consolidation programme is widely acknowledged to have stood the banks in good stead to meet the challenges of the global economic meltdown, which badly affected many of the world’s foremost banking institutions. The apex bank, under Soludo, was able to stabilise the banks. The former governor kept his promise that no bank would be allowed to collapse on account of the economic meltdown, and saved Nigerians the agony of such a painful prospect.

Under Soludo, the economy was kept on an even keel, foreign reserves soared and the nation was largely protected from the impact of the crash in price of Nigeria’s main revenue earner, oil, from about $145 in June 2008 to less than $40, at a time. His painstaking watch kept the country out of the doldrums of financial insecurity.

Under Soludo’s supervision, the CBN streamlined and converged the naira exchange rate for the first time in two decades. The exchange rate, which at a time, rose from N137 to the dollar at the official rate and N152 in the parallel market, converged at less than N120, before the global economic crisis hit the country.
Soludo engineered the introduction of micro-finance banks, which are today very useful in giving unencumbered credit to small-scale enterprises.

An unrelenting visionary, he came up with the ambitious plan to shore up the value of the naira through a re-denomination which, however, was stepped down, as both the government and the people appeared to lack the courage to allow such a drastic step at that time.

The apex bank, under Soludo, introduced the N1000 note and gave the nation the much better, polymer N20 note. But Soludo’s plan to make Nigerians embrace the use of coins for their financial transactions collapsed like a pack of cards in most parts of the country. His controversial investment in the African Finance Corporation (AFC) was another low point in his career, though he has now been given a clean bill of health on the issue.

Nevertheless, Soludo deserves commendation for the confidence and savvy with which he kept the nation’s financial ship of state afloat, and his success in stabilising the economy. His forthrightness, professionalism, courage and dedication to Nigeria are sterling qualities that are worthy of emulation by all public officers.
There is no gainsaying the fact that Soludo played his part creditably. He clearly demonstrated that it is not how long one stays in an office that matters, but what one is able to achieve during the period.

Until his very last day in office, there was no sign of a decline in the quality of his work, and the missionary zeal that he brought to bear on his vision for the nation’s financial sector. Definitely, he was yet to unfurl and accomplish the full scope of his plans for the Nigerian economy, and we hope that the services of this outstanding personality can still be deployed to other critical areas of the economy, in furtherance of our quest to build a greater country.

The beautiful commendation letter given to Soludo by his principal on his exit from office is a pointer to the value that Nigeria places on his good job at the CBN. But the tardiness that attended his exit, with respect to the failure of the Federal Government to nominate a successor, until after he had left office, is unbecoming. The interregnum led to avoidable grave concerns in local and international financial circles, which are not good for the economy and the image of the country.

Among the challenges before Soludo’s successor, Mr. Sanusi Lamido Sanusi, is to conclude the re-structuring of the financial sector in a way that is beneficial to all stakeholders. Since the government has exercised its inalienable right not to grant Soludo a second term, we urge his successor to sustain, and surpass, his predecessor’s momentum.

The problem of getting a true value for the naira still needs to be addressed. Some of the sharp practices and other shortcomings in the management of the exchange rate should be tackled. Underhand practices should not be allowed to determine the value of the naira. Sharp practices should give way to normative ways of managing the exchange rate. The unpredictability of the value of the naira should be tackled.
We truly wish Soludo well in his future endeavours and hope that he moves on to higher planes.