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 Daily Independent Online.
* Friday,July 16, 2004.
N25b capital base ‘ll
encourage money laundering -
Wabara
By Chuks Isiwu,
Shola Ogunode
(Lagos)
and Sanya
Adejokun (Abuja)
Yet
more powerful voices rallied on Thursday against plans by the Central
Bank of Nigeria (CBN) to raise the capital base of banks by 1,150 per
cent, from N2 billion to N25 billion, by the end of 2005.
Senate President
Adolphus Wabara charged that, rather than stimulate financial sector
growth, the policy would encourage money laundering. A former consultant
of the International Monetary Fund (IMF), Jimoh Ibrahim, said it could
ground the economy if implemented.
In any case,
also on Thursday, the CBN was handed an opportunity to tinker with the
economy in a way that may draw the cheer of real sector participants and
watchers alike. Well, except banks.
President
Olusegun Obasanjo ordered it to reduce interest rates to “a single digit
figure” in order to stimulate industrial growth. A low interest rate
makes it cheaper to borrow money.
The President
spoke in Abuja through his Special Adviser on Political Matters Jerry
Gana. The occasion was the opening of INVESTNIGERIA International Fair 2004.
He said it is
impossible even for large-scale industries to take loans at the current
rate of 30 per cent and above, which only enables banks to make huge
profits.
This came as the
Director General of the Small and Medium Enterprises Development Agency
of Nigeria (SMEDAN), Modupe Adelaja, lamented that SMEs have been crowded
out of the financial market with exorbitant interest rates.
Speaking on the
proposed capital base, Wabara cried foul as he declared that such a
policy will encourage money laundering. “All these ‘419’ guys (fraudsters) will probably own
heavy shares in banks because they will find an avenue to launder their
money.
“In as much as
we tend to be copying the Americans, because I understand the CBN
governor studied in America; yet, I know that one only needs $3 million
dollars to establish a bank in America”.
Wabara barred
his mind to journalists at the Murtala Muhammed International Airport,
Ikeja, Lagos.
He urged CBN
Governor Charles Soludo to address the issue of interest rates instead.
Also faulting
the new capital base, Ibrahim, who was part of the IMF team that carried
out reforms in such countries as Croatia, Lithuania and Bangladesh, said
besides a possible closure of banks and its multiplier effects, the
policy would impact negatively on operations in the other economic
sectors, including the downstream petroleum sub sector, where fuel
importation and the building of new refineries would be near impossible.
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