Nigeria Content Online

At the age of 77,
S.B Falegan is still very much on the ball. If he had gone into a rip
van winkle type cat nap and then woken up today, Mr. Falegan would have
been hard put as to what to make of it all.

When he joined the
Central Bank of Nigeria (CBN) in 1961 with first and post-graduate
degrees in economics, it was a totally different ball game. In fact, a
million years away from the age of the information super highway.

In the CBN of 1961,
everything was manual; the typewriters being standard colonial relics.
It didn’t matter though, for a largely pioneering staff had been
brought up to be fastidious. A lot of the process was experimental, the
structures were just evolving. It was a staid sort of situation, in
which everyone played it strictly by the book.

Finding themselves

The early 1960s,
Mr. Falegan recalls, were very much like “trying to build a
non-existent system. In the process we found ourselves learning all the
time”.

In the course of
events much of today’s foundation was constructed. Mr. Falegan went on
to become Director of Research at the CBN, a director of Standard Bank
(Now First Bank Plc) and the pioneer Managing Director of the Federal
Mortgage Bank of Nigeria.

Looking back, he
cannot help noticing the enormous differences in operations. He
cautions over and over again, that it is an exercise in futility, “to
compare incomparables.”

This is a very sensible precaution. For a start, the numbers of banks in operation then, were few and therefore manageable.

The ethical base of
the value system was totally different. Indeed, incomparable. The
society was intolerant of deviance and corruption. “Irrational
exuberance” would have been totally out of place and treated with stern
disapproval.

Mr. Falegan blames
the uncontrolled explosion in the number of licensed financial
institutions for much of what subsequently went wrong. If banking
licenses are handed out like confetti at a wedding, it cannot be
entirely surprising if, in his own words, the system attracts “the
good, the bad and the ugly”.

Predictably, it was to a one way route to disaster.

A disaster foretold

Mr. Falegan
observes that the Nigeria Depository Insurance Corporation (NDIC) was
put in place precisely to checkmate a disaster foretold. The
corporation was midwifed during the tenure of Ola Vincent as governor
of the CBN.

Mr. Falegan is, not
surprisingly, highly enthusiastic about the potential of the new Asset
management Company (AMC). He believes the AMC will be quite pivotal in
complementing banking reforms. He is of the view that this will help to
facilitate and produce a whole new set of professionals.

In an old fashioned
sort of way, he places great faith in moral suasion, believing that a
reorientation in ethical values will be of value in restoring order. He
is also perturbed about the present quality of the entre and recruiting
standards into the banking industry.

He is aghast at the
often naïve recruitment of non-economic graduates wholesale into the
operational departments of the financial institutions. Much of the
entre appears not to have been based on any latent interest but rather
on the attractiveness of the pay structure of the financial services
structure, according to him, and he believes that specialisation is the
key now to bringing enhanced value into the system and should be a key
consideration in recruitment.

Home-grown

In the 1960s, the
CBN was virtually under the control of the Federal Ministry of Finance.
In that experience, there was no place for an independent central bank
like for example, The German Bundesbank. In such a relationship,
Felegan recalls that “the CBN was buried in the belly of the elephant”.
Prudence of course had to be the watchword. Fiscal policy had to be
cautiously designed to contain inflationary pressures.

Today’s CBN has a latitude which would have been unthinkable in the 1960s, he says.

Mr. Falegan is
however not enamoured with the prospect of hiving off the banking
supervision arm from the CBN as has been done in the United Kingdom.

He believes that home grown alternatives should be sought in
prescribing solutions itotackling fiscal and monetary issues. “Let us
look at our own domestic environment,” he said.