Allison Ayida faults N25b capital base for banks
By Lekan Okusan
A FORMER Secretary to the Government of the Federation, Dr. Allison Ayida has criticised the new N25 billion capital base requirement for banks in the country.
According to him, the stipulation will only divide the industry and allow some unscrupulous people to benefit from the likely run on the system.
Ayida, who spoke yesterday at this year's Fellows' Day of the Nigerian Institute of Management (NIM) held in Lagos said: "I should point out that it was the Central Bank and the Federal Government that granted licences to over 140 banks in the name of the market economy. How can you wake up and say market forces cannot work, (and so) we should reduce the number of banks to about 10 through capitalisation of N25 billion".
The erstwhile SGF who spoke on "Corporate Government in Nigeria", said that the CBN and the Federal Government should be taken to the bar of the public opinion for sanction, stressing that there must be fixed rules in the industry.
He urged the government to concentrate rather, on how to remove the abuses in the system which he said are not limited to small banks, adding that obedience to rules is what constitutes corporate governance in banks.
According to Ayida, though the recapitalisation will give birth to mega banks, it will scuttle their plans to become international players, which are unable to discharge their responsibilities as national players.
"NEPA is to be privatised and divided into smaller units. Decentralisation is the order of the day. Collapsing the system into mega banks can only mean a return to queuing and a return to arm chair banking. Competition and the drive by the market forces will no longer apply", Ayida lamented
He said corporate governance in Nigeria is based on best practices in the world, but decried nepotism, which he said has taken over some corporate firms in the country.
Ayida further emphasised that corporate governance would thrive in a company when there is an effective board which must not compromise their position.
He said the problems with corporate boards is that too many of the directors fail to do their job by compromising their positions while others are inadequately informed about the nature of the business as they do not participate sufficiently in in-depth, long-term strategy planning.
On how to achieve change in corporate governance, he listed seven points, which include expertise of the board and access to information.
Referring to the appointment of Professor Charles Soludo as the Governor of CBN, Ayida said President Olusegun Obasanjo appointed Soludo as governor without cognate experience, which he described as very important in every establishment.
