Cardoso living up to his promise – 2

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Apr 20, 2026 - 09:00
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Cardoso living up to his promise – 2

By Dele Sobowale

Cardoso lacks Soludo’s charisma and intimidating stage presence. Criticism of CBN’s is not dismissed with scorn without a thought regarding their validity. He was either blessed with the humility to learn even from those who disagree; or he has acquired the attribute. Either way, the tendency has served him well. Skeptical critics, like me, don’t feel offended when he sticks to his guns. We even forgive, when he turns out to be wrong – like when the exchange rate was tending towards N1,000/US$1 and he and some people were predicting N1000/US$1 soon. It is now back to N1,400/US$.

Cardoso has cultivated the classical image of the conservative central banker, who seldom speaks; and never for applause; but for effectiveness. But, we are jumping the gun in the narrative. 

Lamido inherits banking sector on brink of collapse

“Success breeds complacency; complacency breeds failure.” Andy Grove.

“The tragedy of our life is often not in our failure, but, in our complacency.”

 Benjamin E Mays

“Complacency is a deadly foe of all spiritual [and social] growth.” A W Tozer.

One word summarises the causes of Soludo’s failure – complacency. So totally convinced was he of the infallibility of his theories of banking and economic development, that one could not help getting the impression that he talked as if he was the only one in the room who read economics. He did not suffer objections gladly. Instead, he replied to every criticism with withering contempt. Yet, for ages, hubris, overwhelming pride, had always gone before a downfall. No textbook on Economics and Finance ever mentioned the Nigerian Factor; which entered the banking sector and ruined Soludo’s well-laid plans. He handed the Nigerian banking sector to a lot of rogues. They deceived him; flattered his ego and went about looting the consolidated banks. All the biggest bank robbers were award winners – while the biggest bank robbery in history went on from 2006 to 2009. AMCON was the result of the monumental failure. 

The Asset Management Company of Nigeria, AMCON, was established in 2009, to buy all the toxic bank loans; which Nigerian banks had accumulated, mostly on account of insider fraud and collusion, and which threatened to bring the banking sector to a halt.

However, before AMCON, Governor Lamido Sanusi had an unpleasant task to perform. He exposed all the falsehood associated with banks under Soludo. Virtually all the banks were filing deliberately falsified Annual Reports & Accounts; declaring fictitious profits and paying unearned dividends on “funny money”. 

HRH Lamido Sanusi, as CBN Governor, exhibited courage, integrity and banking professionalism in equal measures. History does not tell us the alternatives; so nobody can claim to know what would have happened if Soludo had been re-appointed. What follows is what we know certainly.

 Sanusi was plucked from the First Bank Plc to replace Soludo. He was an insider who knew intimately how the bankers had deceived Soludo with flattery; while cooking the books and issuing false reports. First Bank, with the largest deposits, was the most active in the inter-bank lending market. Sanusi was privy to a deep secret which eluded Soludo: most of the banks were wrecks by 2009. Shareholders’ capitals had been wiped out on account of corruption, poor judgment and poor supervision by the CBN. Virtually all the CBN bank examiners were complicit in release of false annual reports. Instead of “sleeping with eyes closed”, bankers, shareholders and depositors were wide awake with apprehension. Courage and strong leadership was required.

Notwithstanding the fact that First Bank was also involved in the massive cover-up by the banks, Sanusi insisted that every bank must clean up its books – immediately. Without that bold measure, Nigerian banking sector would have collapsed completely; and taken down the economy with it.

The most massive purge of the banking sector, since the Failed Bank episode of 1997-8, followed the disclosures of sector-wide pre-meditated bank robbery by insiders. Heads rolled, including those of highly-respected award winners and darlings of the gullible media. A few Chief Executives were prosecuted and handed penalties, so light as to encourage more bank looting by directors. Some Managing Directors ran away – to live on the loot deposited abroad. By the time the dust partly cleared, ten of Soludo’s “big, strong banks” had been washed away; like houses built on sand at the beach.Unfortunately, the courage exhibited by Sanusi carried a huge price tag with it for Fellow Nigerians. The global banking crisis of 2008, from which Soludo had wrongly predicted Nigeria immune, had hit with the force of a huge speed train. Central banks everywhere were forced to bail out banks which were on the edge of the precipice. Buying toxic loans from banks, on strict conditions that they would repay loans advanced by central banks was the only option left. Sanusi had no choice. Nigeria followed the global best practice to save its banking sector with N6 trillion committed. If Sanusi can be accused of committing a blunder, it would have to be with regard to the conditions attached to banks accessing the loans granted under AMCON. They were not stringent enough. Once again, the Nigerian Factor reared its ugly head in the banking sector. Nigeria remains the only country, worldwide, where the bail-out loans have not been fully repaid. In fact, nearly 60 per cent is still outstanding and it has required blood, sweat and tears to collect the 40 per cent. A former Managing Director allegedly mismanaged the funds pertaining to one of the largest debtors; it was discovered that former bank officials deliberately approved and disbursed loans without perfecting the conditions stipulated. It was classical high level Nigerian corruption perpetrated by those with close links to the corridors of power in Abuja. Almost ten years after loans have been recovered, even in Banana Republics, N6trillion is still unpaid by some regular visitors to corridors of power in Aso Rock. That is N6 trillion Nigeria did not need to borrow; and, if the funds had been available, we might not be talking about N155 trillion debt burden now. Ordinarily, Sanusi should have ended his tenure in 2014. But, a major disagreement with the Executive branch of Government resulted in his suspension by President Jonathan. Some keen observers, including me, regarded the suspension as unconstitutional and the triumph of the conspirators in the banking sector – who were sworn not to forgive Sanusi for being professional, principled and patriotic to the end. To me, the Central Bank Decree 24 of 1991, enacted by President Babangida, protected the CBN Governor from such drastic action – without the approval of the National Assembly, NASS, which was not obtained by Jonathan. Sanusi challenged his suspension in court; but, his appointment as Emir of Kao brought a premature end to a landmark banking case. Mrs Sarah Alade was appointed as Acting CBN Governor to finish Sanusi’s term. While in office, between 2010 and 2014, the CBN ensured that the banks were held to the terms of AMCON.
To be continued

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