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 Daily Independent Online.
* Monday, August 09, 2004.
Removing immunity clause will
distract public officers -Igwesi
Prince U.S.A. Igwesi was the
Majority Leader in the Enugu State House of Assembly before making it to
the National Assembly to represent the people of Nkanu East/West in the
House of Representatives. He is currently the vice chairman, House
Committee on Banking and Currency. In this interview with National Assembly Correspondent,
UCHENNA AWOM, Igwesi bares his mind on a number of topical issues,
especially the N25 billion minimum recapitalization fees for commercial
banks slammed by the Central Bank of Nigeria. The lawmaker minces no
words in saying that the CBN is in order. He pointedly also tells the
banks to choose between being in business and comply with the directives
or close shop. Excerpts:
What
is your view on the N25 billion re-capitalization fee imposed on banks by
the Central Bank of Nigeria giving that the Chartered Institute of
Bankers recently voiced its opposition to the proposal?
Thank you very much. I am
completely in support but the only area I have problem is the timing. The
time given to the banks to comply is too short, but I am completely in
support. I see it as a deposit for a stronger economy, a deposit for
stronger banking sector, banking activities and business, I see it as a
deposit for confidence, I see it as a deposit for actualization and I see
it as a very good policy brought by CBN. In fact the CBN governor,
Professor Charles Soludo has shown that he is an expert, a good economist
because there is no reason why we should have over 89 banks and it is
only about 59 of them that are actually in business. So what happens to
the other 30 banks? That shows that some of the banks are not doing
anything. I am of the view that the N25billion minimum capital base will
guarantee a stronger economy for this country. It will equally instill
confidence on some depositors; people from all constituencies, from all
strata of society will begin to have confidence that their deposits no
matter how small or big in these banks, are secure. No more stories of no
funds to pay depositors in the case of distress with the N25 billion
capital base. You know in Nigeria, if you invest a large some of money in
a business you will be serious with the business because you will not
like your money to go under like that. With that also, I think our
commercial banks will compete favorably with their foreign counterparts.
They can give loans to blue-chip companies, which, because of the weak
capital base of these banks resort to solicit for financial assistance by
the way of loans outside the shores of this country. They can effectively
contribute in genuinely creating employment for the teaming unemployed
youths of this country. Investors can approach banks with confidence to
secure loans at low interest rates to float manufacturing concerns that
will obviously employ hands to run them. So with that you can see the
banks will now be seen to be performing their expected role as the base
of a growing economy.
Again,
the policy will encourage mergers and acquisition in the banking sector.
The stronger banks can now band together to acquire the weak and smaller
banks. And some of these fraudsters and money launderers who with
N1billion will come and float banks with the sole intention of defrauding
unsuspecting members of the Nigerian public will of course be discouraged
to come and ply their nefarious trade which, has weakened our economy.
They will simply fade into oblivion, as they will never be able to raise
N25 billion to deposit with the CBN. You can see that this policy will
further sanitize the banking sector. It will therefore make that sector
that is central and very strategic to the economic reforms of this
government stronger and reliable.
What
of those opposed to the policy like the CIBN?
The
few people opposed to it are doing so for vested interests. In fact they
are very few. I want to advise my colleagues in the National Assembly,
that we should see this as the only way we can sanitize our banking
sector. Let us put away our individual interests, because you know some
of them who are very rich own banks and would want to protect the banks.
So I think the few who are opposed it are doing so out of ignorance. They
should come to terms with the nitty-gritty of the situation and the
expertise of Soludo and his team in the CBN and other economic planners.
The man cannot just come up with any policy; I believe he has come with
the best policy that will restore light in the bleak financial sector. It
is indeed a wonderful policy, so I support it.
What
of the bankers suggesting N10billion instead of the N25 billion slammed
on them?
You are talking of the bankers, I
am talking of the depositors, who include people from my constituency,
the people of Nkanu East and Nkanu West Federal Constituency who I am
representing in the House, who had lost large chunks of their hard earned
money in some of the failed commercial banks. So we are not saying what
the bankers want, we are saying what we want that will sanitize the
banking sector. CBN is the apex bank that supervises the other banks. It
is for them to set exams for the banks. It is for them to give them
directives. I believe that what CBN is doing is to achieve its aim of
sanitizing the banking sector. The bankers are talking of what will be
comfortable for them to be in business, we are talking of what will be
comfortable for us to make the depositors happy, to create employment, to
enrich our economy, that is what we are talking about. In fact, let me be
honest with you, timing is the only thing I am worried about but it
doesn’t really matter. If a man is not doing his job and another man
comes in to do the job, then you know the person is doing the good thing.
So I believe that Soludo has come to the realization that it is very
important to have a very big and strong capital base for the banks. He
came as an economist and with the youthful pitch and the zeal to help
Nigeria and the economy of this country. It may surprise you that a lot
of people and institutions like the Nigerian Labour Congress (NLC) and
the Manufacturers Association of Nigeria (MAN) and very many other
institutions are supporting the policy. People who are grounded in
banking business are supporting it; people grounded in economics support
it. So I want to say we must make sacrifices in this direction. CIBN and
other professionals in the banking industry now agitating should
understand that if they are in business let the people know they are in
business and if they want to remain in banking business, let them go and
get money to meet the target. Let them deposit the money so that
depositors’ funds would not be touched. It is only when the banks are in
problem that NDIC will come in. That is the only insurance outfit that
comes when banks go under to liquidate their assets, to be able to pay
the paltry N50,000, which is very antiquated and rubbish to the amount of
money already lost by some of the big time depositors. This time around
they will be assisted by the CBN. So I feel if somebody wants to be in
business he must prepare for that business.
So,
in that case do you think the December 2005 deadline for the banks to
re-capitalize is feasible?
Thank
you so much. I want to use this opportunity to appeal to CBN to at least
give them more time so that they can do that, otherwise they have a
wonderful policy. Malaysia is a very small country but they a very strong
and one of the best economy driven by a virile and strong banking sector.
As
Vice Chairman of Banking and Currency what are your views on the decision
to introduce N1000 currency note and convert N5 and N10 to coins by the
CBN. Again do you not think this measure will lead to rise in inflation?
That is my thinking. As a layman I
can say it should not be the priority to introduce the N1000 currency
note in the monetary environment. Our priority should be how to make the
naira strong such that it will compete favourably with other currencies
in the foreign exchange market particularly currencies of developed
economy. How to bring it to a reasonable standard because as it is presently,
it is too weak and I think the higher denomination you introduce the
lower denominations will go into oblivion. Countries like America have
only $100 as their highest denomination and it is very strong. Then you
talk of Britain, which is 50 pounds. So it doesn’t really have to do with
bigger denomination. I want to say that it will create inflation, because
if they introduce bigger currency, the lower currency will not be a part
of it. Yet they are legal tender. They are still a unit of account; they
are still our national currency. Again I learnt they equally want to
change the N5 and N10 notes to coins. It will not help us, because
Nigeria is not a coin-spending nation. You cannot see any businessman or
woman who will be carrying coins about, even if you go to any social
occasion you cannot see anybody spraying coins otherwise the person will
be declared a murderer because it will be claimed that the person wants
to committee murder by throwing coins at the celebrant. So you cannot
believe that 50 kobo and one naira are still legal tender in Nigeria. You
cannot see them anywhere. Let me be honest with you, if they change N10
and N5 to coins, all these agricultural products that we usually buy at
N5 or N10 will increase to N20 and it will create high inflation. I think
they should drop the idea because it will not help the economy.
Personally and even our Committee has kicked against it. So in fact that
is why most of us are very eager to review the CBN Act. We are very eager
to revisit that Act. So that there will be systematic understanding of
what is going on in the economy.
Is
your committee considering tabling the matter before the whole House in
the case CBN ignores all entreaties to jettison the idea?
That is the thinking. You know we
at one time invited Soludo’s predecessor in office, Dr Joseph Sanusi, for
an interaction. At the parley, he gave us reasons why they want to
introduce the N1000. So if we are de-satisfied with the explanation, the
next thing is to table I before the whole House for deliberation and
eventual collective position. But I learnt there is a legislation that
states that the CBN is not obliged to recourse to the National Assembly
before it introduces any currency. I don’t know. If we look at that
legislation and if it is not favourable, I think we may have to review it.
The
NJC recently recommended to the Constitution Review Committee of the
National Assembly to look at the immunity clause in the Constitution with
a view to expunging it so that governors and others covered by it can
face trial while in office. As a lawmaker what are your views on the NJC
recommendation?
It
will lead to a complete distraction of public officers in the performance
of their functions in office. I know we are all equal before the law. Yes,
all members of the Nigerian society are equal before the law but I think
also that laws have exception. I do also know that those who fashioned
this law took certain things into consideration especially as it relates
to some categories of elected officers. They believed that some public
officers must enjoy some level of authority and autonomy to make their
work easy. So if you remove this immunity clause, most of these governors
will be distracted. You see these governors have friends just as they
also have enemies as is normal in a competitive democracy. Their enemies
may latch on the removal of this immunity to create problems for them. As
such it will impede their overall output while in office. The people who
gave them the mandate will be the ones that will suffer at the end of the
day. Remember, there is no person who won an election that does not have
opposition. So you can imagine what will happen when these leaders are
left bare. It is not feasible now to contemplate removing the immunity
clause from the Constitution at least for the interest of the electorate.
What
of the insinuations that some of the governors hide behind the immunity
clause to perpetrate what the society frowns at?
They should still be allowed to
perform their functions unhindered until the end of their tenure, then,
the law will catch up with them. As soon as they come out of power, their
conduct while in office will confront them. It is even there in the
bible, for after death judgment will follow.
As
a lawmaker from Enugu State, do you think all the documentaries on the
achievement of Governor Chimaroke Nnamani are real?
You know Governor
Chimaroke is an American trained professional. His vision of service is
total. As such, nothing deceptive in what you are seeing on the television.
They are all real; there is no question of deception. The man has
performed most creditably well and I believe that is the more reason why
the people of Enugu are happy with him. In fact we in the National
Assembly are very proud of the example he is setting on good governance.
Nothing can be more pleasant than what is happening in that state.
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