The Unity Forum
(Peace, Unity and Progress Association)
The Unity Forum at its meeting of Wednesday March 25, 2009, deliberated extensively on the current financial crisis and the anxiety it is generating in the general public concerning developments in the banking sector in particular. The Forum is concerned with the scheming going on in the Central Bank to once again hoodwink the government into arranging a financial bailout for ailing banks. Although the Governor of the Central Bank of Nigeria has not publicly admitted the level of morbidity of the banking sector, he still proposes to solicit for the injection of public funds in the banks to arrest a meltdown. Which of the banks need this support or how much is needed is not yet known.
In the first place, we should recall all the promises advanced during the consolidation campaign in 2004/2005 and the gains that were expected to accrue to the economy and the nation post consolidation. Key among them were the emergence of well capitalized banks with global reach, professionalism, crash in interest rates to single digit, support to the real sector of the economy and the ability to support large economic activities. On the contrary this is not the case. The result of their consolidation has manifested in the negative campaign and de-marketing of each other, desperate drive for deposits from usually corrupt public officials thereby aiding and abetting corruption (moral and financial), the skyrocketing of interest rates, the perfection of sharp practices in the foreign exchange market and the resultant effect of hyperinflation.
Unlike banks around the world, these banks are heavily dependent on funds from the public sector instead of creating activity in the real sector of the economy. There is absolutely no sector of the economy that the banks have visibly supported to warrant public intervention. Banks and other financial institutions in Europe and the USA that have financed the housing/mortgage sector were qualified for a government bailout. However, the credit crisis suffered by banks and other players in the financial sector, due to the crash of the Stock market in Nigeria has been as a result of connivance (through falsification of facts and figures) between the regulatory authorities, the banks and a section of the so called Corporate Nigeria.
At a time the financial sector enjoyed unprecedented growth, there was never a corresponding growth in the economy they were meant to support. As a matter of fact the real sector went further down or even comatose. It is therefore surprising that these same institutions are today seeking for government’s intervention. The unsuspecting public that genuinely invested in the stock market and suffered heavy losses in the wake of the market crash should not have their money deployed to cushion fraud and irresponsibility.
Rather than a bailout, the government should thoroughly investigate the genesis of these developments and sanction both individuals and institutions involved. The regulatory authorities should also be reconstructed to position them to international standards in terms of capacity and orientation to enable them inspire confidence to investors. It is the only way sanity can prevail and credibility restored in the financial sector.
We in the Unity Forum therefore call on the government to exercise caution and not allow itself to be blackmailed in to committing public funds into rescuing a sector that has contributed little in its effort to develop the economy.
M. M. Abdu (Signed)
Chairman
