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Lamido Sanusi, the CBN Governor has stated that some officials
whose responsibility it was to raise the flag when things were going wrong in
the banks cannot be absolved from blame for the crisis that eventually
overwhelmed some banks.

Speaking at a workshop in Benin City, the Edo State capital,
with the theme, ‘The Blueprint for banking reforms in Nigeria: Issues,
Challenges and Prospects,’ Mr Sanusi said the CBN would not shield any officer
that is found culpable. “If for instance, I have documentary evidence that
junior officers had escalated warning signals across board and nothing was
done, why should I sack the junior officer and if those who were supposed to
have acted had already left the Central Bank, what do I do?”

He, however, said the outcome of an upcoming House of
Representative public hearing on the failure of the banking industry may
provide the right platform for the Central Bank to deal with its officials who
refused to act at the proper time.

He said documents that would be submitted by the CBN, Nigeria
Deposit Insurance Corporation, and Securities and Exchange Commission, would
expose who did what before the crisis. “We will still look within the Central
Bank and if there are people who ought to have seen things that they did not
see, then there will be consequences,” he said.

Whistle blower

Mr Sanusi said even before he became governor, he had blown the
whistle on the malfeasance of some of his colleagues, adding that the signals
were clear even when he was chief risk officer at First Bank when many banks
were taking depositors’ money and investing in markets that they did not
understand. “I told everybody then that there was a problem in the banking
system and the Central Bank was not facing the problem and that the system will
explode in the faces of all of us,” he said.

“I told the governor then
at the bankers’ committee that he had no business asking banks to restructure
margin loans without providing for them and he was not happy.” He said his
decision to delay reprimanding CBN officials who might be culpable of conniving
with the bank was tactical. “I had to make sure the Central Bank was strong and
secured before I fight.”

Quoting from Tze Tsu’s book, The Art of War, he said “If you are in battle,
the ground on which you stand must be strong. There is no way you go into a war
and light a fire under your own shoes.” Mr. Sanusi said his focus was on
building a strong institution so that every official can take collective
responsibility for decisions.

“Decisions and pronouncements that I
make should not be seen as that of Sanusi but as the decision of the Central
Bank based on what has flowed up from below,” he said. He said all the actions
taken last year to arrest the banking crisis were based on the recommendation
of the department of banking supervision. “They recommended that we removed the
managing directors. But as the governor, I take responsibility for that
decision. That is how institutions are built,” he said.

The Central Bank of Nigeria (CBN) has said it is working with
the Securities and Exchange Commission (SEC) towards creating a single
registrar for all securities in the capital market.

Samuel Oni, CBN Director for Banking Supervision, who stated
this at a workshop in Benin, Edo State capital, said this is part of effort at
ensuring stability of the Nigerian financial system.

Registrars are
institutions that keep the register of shareholders of a company and coordinate
the payment of dividends and other fiduciary benefits that come with owning
shares in such companies.

There are currently over 10 registrars handling the register of
the over 200 listed equities on the Nigerian Stock Exchange as well as several
other public companies in the country.

Pillars of reforms

Mr. Oni said this is part of the four pillars of the banking
system reforms which the Central Bank started on 14 August last year when it
intervened in some banks that were deemed to be weak. The four pillars,
according to him, are; ensuring the quality of banks, establishing financial
stability, enabling healthy financial sector revolution, and ensuring that the
sector contributes to the real sector. “To ensure financial stability, the CBN
would champion the development of the capital market through the improvement of
its depth and accessibility as an alternative to bank funding,” he said.

The CBN director also
stated that the single registrar would allow for better coordination and
regulation of market activities. “To restore public confidence and credibility
in the banking system, the CBN carried out an exercise to review, evaluate and
determine the quality of bank portfolios especially their exposure to margin
lending,” he said.

Arumah Otteh, the Director General of SEC, recently stressed the
need for close collaboration with all other regulatory agencies in the
financial sector towards maintaining close monitoring and regulation of
operators. Ms. Otteh said the Financial System Regulatory Coordination
Committee (FSRCC), which comprises the CBN, Nigerian Stock Exchange, National
Pension Commission, National Insurance Commission, Corporate Affairs
Commission, provides the platform for the regulators to do a better job. Mr.
Oni explained the Central Bank was working at reducing the informal sector and
ensuring greater financial inclusion as the economy size not captured by
official data is too large to be ignored. “Enhanced financial inclusion would
result in more accurate measurement of economic outputs, increase the tax base
and tax revenue as well as more effective policy development and more efficient
use of financial infrastructure,” he said.

Late intervention

Biodun Adedipe, managing partner of Biodun Adedipe and Co. said
the intervention of the CBN in the banking sector last year that resulted in
the injection of N620 billion to rescue eight distressed banks was inevitable.
“As far back as 2006/2007, I expected the Central Bank to have conducted a credit
audit which should have been the major plank of the stress test that the CBN
did between July and August last year,” he said. “So clearly, the fault was on
both sides of the divide not only on the part of operators alone.”

Mr. Adedipe added that the CBN should give current shareholders the right of
first refusal before inviting other interested parties to pick up the eight
rescued banks. “The CBN should engage operators more in dialogue and ensure
that its policy initiatives are inclusive rather than creating the impression
that the ideas are lacking here or that everyone around is a rogue,” he said.

The positive trading recently recorded at the Nigerian Stock
Exchange (NSE) may be reversed following the quarrel between Ndi
Okereke-Onyiuke, director general of the Exchange, and some aggrieved AP
shareholders, some market operators have said.

The exchange has recovered over N278 billion in the last eight
trading days, following the passage of the Asset Management Corporation of
Nigeria (AMCON) bill into law. The last time the Exchange recorded such a
massive sum was early May.

However, some shareholders of African Petroleum have now taken
Ms Okereke-Onyiuke, and businessman, Aliko Dangote, president of the Exchange,
to court over alleged sharp practices in the capital market. Ms Okereke-Onyiuke
is expected to retire in December although there is some doubts whether she
will indeed go by the time as promised last year.

Alleged violation

Meanwhile, Gbenga Emmanuel, a finance analyst at WealthZone
Company, a portfolio management firm, think otherwise. Mr. Emmanuel said the
current market recovery “should not really be affected by the Exchange official
saga because the situation, I think, is presently under control.”

Mr. Emmanuel said the recovery should be sustained following the
recent action of the Exchange on some entities and individuals.

The SEC, on Tuesday, in a statement, said it will take 260
entities and individuals to the Investments and Securities Tribunal (IST) for
alleged violation of the Investments and Securities Act (ISA), 2007. “These
entities and individuals including banks and other capital market operators are
alleged to have been involved in price fixing, share price manipulation, fraud,
and insider trading. These activities are contrary to the provisions of the
Act,” the statement said.

Some market watchers have also charged SEC to make public the
names of those involved in the alleged infringement to further boost investors’
confidence in the market.

Recovery continues

However, at the close of Thursday’s trading, the Exchange’s
market capitalisation gained about N4 billion, or 0.1 per cent, to close at
N6.335 trillion. The All-Share Index was up by 0.1 per cent to close at
25,905.36 basis points, reflecting an increase of 15.38 units.

A total of 34 stocks appreciated in price on Thursday compared
with the 28 recorded on Wednesday, while 39 stocks depreciated as against
Wednesday’s 32. Also on Thursday, the Exchange recorded trading in over 533.615
million quantities of stocks worth N3.520 billion, compared with 324.65 million
stocks on Wednesday, valued at N3.114 billion.

Aiico Insurance, Transnational Corporation, and Tourist Company
were the most traded stocks yesterday, followed by United Bank for Africa and Access
Bank.

A huge investment in Aiico on Thursday made the insurance
subsector surpass banking, usually known for leading the market. The insurance
subsector led the most active subsectors’ chart with 189.213 million quantities
of shares, valued at over N230.384 million. The subsector’s volume was also
boosted by shares of Guaranty Trust Assurance and N.E.M. Insurance; with volume
of Aiico Insurance contributing 87 per cent of the subsector’s volume.

Trading activities in the banking subsector followed, with
157.659 million shares worth N1.228 billion traded. Volume in the subsector was
boosted by deals in shares of banks in the most traded stocks particularly,
Diamond Bank, and Guaranty Trust Bank.

The conglomerates’ subsector was third on Thursday, with over
74.209 million shares valued at N334.917 million exchanged by investors. The
volume in this subsector was driven by trading in shares of Transcorp, UAC, and
Unilever Nigeria.

Rising oil prices and increased production are expected to drive
the nation’s economic growth higher this year although headline inflation is
seen remaining in double digits, a Reuters poll showed on Thursday.

Sub-Saharan Africa’s second-biggest economy, which grew 6.66
percent in 2009, is expected to grow 7.0 percent this year and 7.3 percent
next, according to the median of forecasts from nine analysts who took part in
the survey.

Nigeria is expected to export an average of 2.1 million barrels
per day (bpd) of crude oil in September, up slightly from an anticipated 2.08
million bpd in August, trade sources said this week. “The latest national
accounts data from Nigeria reinforce our view that the economy will expand
strongly in 2010,” said Alan Cameron, sub-Saharan Africa analyst for Business
Monitor International (BMI). “Although seasonal factors related to agriculture
have historically seen growth dip in the first quarter of the year, a sharp
rebound in the oil sector helped lift the overall reading well above the 4.5
percent recorded in Q1 2009.”

Headline inflation was expected to reach 11.5 percent for 2010,
but dip to 9.5 percent in 2011, the survey showed. Consumer inflation eased to
10.3 percent year-on-year in June, its lowest level for more than two years.
Nigeria’s benchmark interest rate has been on hold at 6 percent for more than a
year as the central bank prioritises stimulating growth despite the
inflationary risks.

Higher spending

Nigeria’s fiscal deficit is expected to widen to 3.5 percent of
GDP this year from 3.02 percent last, the second year in a row it will breach a
3 percent target set under a 2007 fiscal responsibility act, according to the
polls. The deficit was seen narrowing to 2.4 percent in 2011.

The National Assembly, last week, approved N445 billion in extra government
spending for 2010, including pay rises for civil servants, doctors and
professors. The supplementary budget was partly offset by a separate bill
trimming the original spending plans by N200 billion to 4.4 billion, but the
net result is still a significant rise in spending over last year.

“Inflation is expected to continue to register in double digit territory; on
the one hand benefiting from a good agricultural performance, but on the other
hand bearing the brunt of expansionary fiscal policies,” said Thalma Corbett,
chief economist at NKC Independent. “The current account surplus is forecast to
remain sizable on the back of a robust trade surplus.” The median forecast for
Nigeria’s current account surplus was 10.4 percent of GDP in 2010 and 10.8
percent next year, according to the Reuters poll.