Nigeria Is Open for Business: After the Tsunami in the Financial Sector over the Last 18 Months, Which Compelled the Central Bank of Nigeria (CBN) to Take Control of Eight Commercial Banks, with the Economic and Financial Crimes Commission (EFCC) Prosecuting Several Executives for Mismanaging Bank Funds, Confidence Is Being Restored to the Sector, Even If Very Slowly. Osasu Obayiuwana Reports

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Sanusi Lamido Sanusi, the blunt-speaking governor of the Central Bank of Nigeria (CBN), has, to industry and public acclaim, bravely confronted some of the sharp practices amongst unethical bankers, which impacted negatively on the long-term stability of the sector.

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Last year Governor Sanusi said: "The Central Bank has a responsibility to act to protect all depositors and creditors and ensure that no one loses their money due to the failure of a bank. The Bank ... needs to restore confidence to the banking system." And that is exactly what he has done.

Since then, when the total loan exposure of the "distressed" banks nearly reached $20bn, with their non-performing loans ranging from 19% to nearly half of their total portfolios, the injection of funds from the CBN into the troubled banks has prevented a crisis of confidence, as mass withdrawals from panicked depositors would have certainly led to the collapse of the banking system. The setting up of the Asset Management Company of Nigeria (AMCON), which has absorbed the "toxic debt" of the sector, has also helped to calm frayed nerves.

During the forced nationalisation, in August this year, of Bank PHB, Spring Bank and Afribank, now known as Keystone Bank, Enterprise Bank and Mainstream Bank respectively, after nearly a year of the CBN's direct intervention, AMCON admitted that it lost the "stabilisation funds" of N226bn (almost $1.5bn) it had injected into the three banks.

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But Mustafa Chike Obi, AMCON's CEO, said the situation could have been a lot worse had they not intervened. And to give the "new" banks a shot of getting out of very troubled waters, AMCON has made a further injection of nearly $4bn.

It is hoped that these funds would be recovered by AMCON when the banks return, hopefully, to profitability under new local management or when, as suspected, they will be acquired by foreign owners interested in becoming players in Nigerian banking.

Fundamental changes are expected in the Nigerian stock market as well, where Ndi Okereke-Onyiuke, the previous director-general of the Nigerian Stock Exchange (NSE), who was dismissed under a cloud of controversy, is still fighting the Securities and Exchange Commission (SEC) over her sacking. …

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