When the late President Umaru Yar'Adua appointed Malam Lamido Sanusi as the Governor of the Central Bank of Nigeria on June 3, 2009, not many had an inkling of the drama that would play out during his tenure.
But after spending four of his five-year tenure, the economist and grandson of Muhammadu Sanusi, the 11th Emir of Kano, has shown that he is not a man to quiver in the face of verbal attacks of his policies and viewpoints.
For instance, Sanusi had during his screening at the Senate given a hint of how his tenure would look like when he told the lawmakers that the late Yar'Adua, who appointed him, did not need a seven-point agenda to transform the country.
The banking sector crisis
Not long after his confirmation by the Senate, the CBN governor, a specialist in risk management, swung into action. Barely a month after he took over the helm of affairs of the bank, a report was issued by an international organisation that only four Nigerian banks were strong
The report, which caused huge panic among Nigerians, prompted Sanusi to appoint external auditors to examine the books of all the 24 Deposit Money Banks.
The outcome of that exercise paved the way for the post-consolidation reforms of the banking sector.
In an overview of what went wrong in Nigeria's banking industry in 2009, the CBN governor said the sector witnessed dramatic growth post-consolidation. He, however, noted that neither the industry nor the regulators was sufficiently prepared to sustain and monitor the sector's explosive growth, adding that prevailing sentiment and economic tenets encouraged this rapid growth, thus creating a blind spot to the risks that built up in the system.
The reports of the special examination team carried out by CBN and the Nigerian Deposit Insurance Corporation revealed that nine out of the 24 banks were in a critical situation.
Non-performing loans in the 10 banks totalled N1.696tn, representing 44.38 per cent of total loans; and Capital Adequacy Ratio in the banks ranged between 1.01 and 7.41 per cent, which were below the minimum ratio of 10 per cent.
The development made the governor to sack on August 14, 2009, Erastus Akingbola of Intercontinental Bank Plc, Cecilia Ibru of Oceanic Bank International Plc, Barth Ebong of Union Bank Plc, Okey Nwosu of FinBank Plc and Sebastian Adigwe of Afribank Plc.
Sanusi, in explaining the decision, which shook the entire nation, said, "The bank chairmen/CEOs often had an overbearing influence on the board and some boards lacked independence; directors often failed to make meaningful contributions to safeguard the growth and development of the bank and had weak ethical standards; the board committees were also often ineffective or dormant.
"CEOs set up special purpose vehicles to lend money to themselves for stock price manipulation or the purchase of estates all over the world. One bank borrowed money and purchased private jets, which we later discovered were registered in the name of the CEO's son.
"In another bank, the management set up 100 fake companies for the purpose of perpetrating fraud. A lot of the capital supposedly raised by these so called 'mega banks' was fake capital financed from depositors' funds. Thirty per cent of the share capital of Intercontinental Bank was purchased with customer deposits."
Reform programmes
Immediately after he removed the bank chiefs, Sanusi announced the blueprint for reforming the Nigerian financial system in the next 10 years.
The reform, which is built around four pillars, is geared towards enhancing the quality of banks; establishing financial stability; enabling healthy financial sector evolution; and ensuring the financial sector contributes to the real economy.
The CBN intervened by injecting N620bn into the nine banks; replaced the chief executive officers/executive directors of eight with new managers with experience and integrity; reaffirmed guarantee of the local interbank market to ensure continued liquidity for all banks; guaranteed foreign creditors and correspondent banks' credit lines to ensure confidence and maintain important correspondent banking relationships.
The capital injection enabled the nine banks to continue normal business operations and prevented a run on them.
Other reform strategies involved the setting up of a resolution mechanism such as the Asset Management Corporation of Nigeria; restructuring of the CBN, improving disclosure and transparency; adoption of risk-based supervision for banks; insistence on full disclosure and common year-end for financial statements; developing and improving new regulation that takes on board lessons from the recent crisis.
It also reviewed the universal banking model; restructured margin lending; reviewed banks' prudential guidelines and corporate bonds; enhanced the developmental role of CBN; announced credit guarantee intervention schemes in small and medium scale sector; and power/manufacturing intervention (N500bn).
The banking reform has also earned Sanusi a number of awards, including the 2013 Africa Central Bank Governor of the Year Award; from the renowned IC Publications Group, in collaboration with Business in Africa Events.
His many controversies
Besides his policies as the CBN governor, Sanusi's views on national issues have attracted both criticisms and commendations.
The CBN governor is no stranger to such attacks. In 2011, he incurred the wrath of the National Assembly when at the 7th convocation lecture of the Igbinedion University, Okada, Edo State, he said that 25 per cent of the country's overheads were being spent on the federal legislators.
The National Assembly members were embarrassed by the scrutiny Sanusi's lecture attracted to them.
The Senate invited the CBN governor to appear before its Committee on Appropriation to defend himself.
But if the Senator Iyiola Omisore committee thought that it would cow Sanusi to deny his statement, it probably did not know him well. After being grilled by the senators for more than four hours, Sanusi stood his ground.
"By my upbringing, if I'm wrong, I don't need to be told to come and say I'm wrong and I would apologise. By my nature, if I am not convinced that I'm wrong, I do not apologise and this is really where the point is," the CBN governor told the committee members.
Few months later, the CBN governor stirred up another controversy. It was in June 2011 when he unfolded the bank's agenda on Islamic banking.
Unlike the jumbo pay controversy, where he received the support of Nigerians, Sanusi's insistence on Islamic banking divided the country along religious lines.
While the Christian Association of Nigeria opposed his plan, Muslims groups gave him their backing.
Faulting the CBN governor, the CAN President, Pastor Ayo Oritsejafor, said, "What does the original CBN Act say about non-interest banking? The original thing does not specify Islamic banking. I don't know why the CBN governor is kind of twisting things in a way to confuse Nigerians. The original provision is just non-interest banking. Islamic banking is just one among many other kinds of non-interest banking. So, why would CBN, an organisation that represents the Federal Government, an institution that represents all Nigerians, zero in on only one kind of non-interest banking? This is the problem with Sanusi and his idea."
But amid criticisms, the CBN boss was resolute in his commitment to Islamic banking, which has since begun operations
When the fuel subsidy removal debate began, Sanusi was not left out of it. Amid protests against the removal, he said on January 5, 2012, "The limited resources of government should be allocated to support production, especially if we are running a budget deficit. We cannot keep borrowing to support conspicuous consumption. We cannot even begin to do this if 30 per cent of government expenditure is on fuel subsidy, if out of the balance, 70 per cent is recurrent spending, 10 per cent is for debt service, 10 per cent goes to the Niger Delta and only 10 per cent is capital expenditure."
While Nigerians were still battling with the fuel subsidy problem, the CBN governor ignited another 'fire' when on January 27, 2012, the Kano prince linked the activities of the militant Islamic sect, Boko Haram, with the 13 per cent derivation fund being given to oil-producing states.
Another controversy is the CBN's N100m donation to victims of the January 20 2012, bomb explosions in Kano, which killed at least 185 people.
Before the Kano incident, the sect had carried out similar operations in Borno, Yobe, Niger, and Adamawa states, all of which did not receive any donation from the bank, until Sanusi went to St. Theresa Catholic Church Madala, where he donated N25m on behalf of CBN.
This sparked off outrage. CAN in the 19 northern states and Abuja described the donation as worrisome.
Sanusi also stirred up another controversy when he revealed plans to introduce the N5,000 note, following its approval by President Goodluck Jonathan
The decision was widely condemned by Nigerians, including former President Olusegun Obasanjo, who argued that it would stimulate inflation.
But Sanusi, while defending the policy, faulted the former President, adding that the criticism showed that Obasanjo was a bad economist.
Sanusi said Obasanjo's comment came to him as a surprise because most of the higher denominations, which the country had, were printed during his regime.
He said, "General Obasanjo did N20; he did N100, N200, N500 and N1,000. He had introduced more higher-denomination in Nigeria than any Head of State.
"He did N100 note in 1999, he did N200 in 2000, he did N500 two years later, and in that period, inflation was coming down because it was accompanied by prudent fiscal and monetary policy."
Experts' assessment
Analysts, who spoke to our correspondent in separate interviews, expressed divergent views about the effectiveness of Sanusi's policies as the central bank boss.
While some rated him very high, others said his performance was just average.
For instance, the Head, Research and Strategy, BGL Plc, Mr. Femi Ademola, in his assessment of the tenure of Sanusi said, "As CBN governor, Sanusi's performance assessment is not easy to determine. One issue with the performance rating is the lack of appropriate benchmark or target to measure his performance to.
"Sanusi achieved some very impressive results. He made the monetary policy very popular in Nigeria and is believed to have saved the financial system from a supposed imminent collapse by cleaning up the rot in the banking sector."
However, he noted that the effectiveness of most of the policies was debatable. For instance, he said, "The stunted economic growth now experienced, which coincides with the period of monetary tightening, may also dispute the effectiveness of the monetary policy."
But the Registrar, Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi, said the governor had performed well.
He said, "Sanusi has performed well as governor of CBN. If you look at most of the policies that he introduced since he assumed office, they have gone a long way in ensuring stability in the economy.
"For instance, the cash-less policy has today been helpful in business transactions as well as reducing the rate at which people lose money to armed robbery attacks."
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