Reform as a Process
Looking critically at the financial and banking landscape of Nigeria since the second phase of the banking sector reform embarked upon by Mallam Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria, about one and half years ago, there is no doubt that there remains a lot of issues to be tackled ranging from payment of insured deposits of customers of the liquidated banks, the fledging performance of the bailed-out banks, the pending court cases instituted against some of the former banks’ managing directors to the newly approved Asset Management Company of Nigeria (Amcon) and lot more.
There are also the general economic problems which have greatly hampered the performance of the banks and other economic activities. More significant is the problem of poor infrastructures especially low electricity generation and supply.
Reform, according to Lawson, is a process that never stops. When Professor Chukwuma Soludo started the reform process, it was predicated on the performance of the entire banking sector which was adjudged then to be extremely poor but which was ultimately proven to be correct by the outcome of the reform.
He believes a lot of things were definitely wrong with the banking sector. Generally speaking, the banks were a law unto themselves, doing what they liked. There must be a systematic way of transacting business and the necessary monitoring of the activities of the banks.
Reforms, he says, have to be adapted to the local or recipient environment otherwise they will never work or achieve their objectives. “Ultimately you have to adapt the reforms to the specific environment in which you are carrying out the reform,” he says. However, recalling the reaction that greeted the announcement of the Sanusi reforms then, Lawson noted that they were seen as a shock treatment. Considered from another angle, the shock treatment became necessary in order to shake off the lackadaisical attitudes of the banks in order in turn to prevent them from eventual collapse.
Success of the Reforms
Although, the reforms were believed to have achieved a measure of success going by the performance of the banks in recent times, everything is not completely rosy yet. To Lawson, for instance, there is room for lot of improvements. The reform is a process that should lead to better results for the banks, the economy as a whole and the individual stakeholders.A further measure that has been taken in moving the banking system forward is the creatoion of AMCON (Asset Management Company of Nigeria) to buy all non-performing loans from the banks.
Gauging things from the Ecobank perspective, Lawson says that from all indices available, the bank has done very well within the Nigerian environment without blowing its trumpet too loudly. The bank emerged from the consolidation process initiated by Chukwuma Soludo, former CBN Governor successfully and stronger without having to be propped up by mergers and acquisitions. The bank was able to raise the required capital base of N25 billion on its own.
The merger and acquisition efforts later embarked upon by Ecobank were voluntary and had nothing to do with the enforced consolidation of the CBN. In the midst of all these successes, Ecobank is always open to the possibility of merger with other willing banks for the purpose of having a larger share of the market and better performance after seamless integration.
Lawson sees what is wrong with the Nigerian banking sector as being the same with what is wrong with the entire Nigerian economy and society as a whole. The banking sector mirrors what is going on within the larger Nigerian economy. And for one to understand what is wrong, one has to conduct a kind of holistic analysis of the entire problem. It must not be forgotten that Nigeria is a developing economy in which the process of reform has taken a slow form unlike in advanced countries where the reform process can be carried out within a specific time frame.
The issue of the overall performance of the national economy is without doubt significant when considering the specific performance of the individual banks and the banking sector as whole. The financial sector is the bedrock of the economy whose foundation must be protected in its integrity and high-level performance using international standards that keep evolving. What is the state of the nation’s economy as at present that affects the overall performance of the financial and banking sector as a whole in negative and positive terms?
“I cannot really say whether the economy is doing well or not. However a few obvious questions must be posed: Where is the necessary infrastructure? Where is power supply which powers and drives economic activities? Where is the educated workforce or skilled manpower that sustains productive activities? Where is our health care system when people die of common diseases? Yes there is no doubt that we are a richly endowed country in terms of natural and human resources. Yet, we are poor because we have not been able to deploy these enormous resources for appreciable economic development.”
He says Nigeria cannot measure progress by the constant availability of cash derived from product such as oil alone – cash that is not properly deployed for determined economic development at any rate. “Progress and development are determined by a combination of factors some of which are still missing in our system here,” he says. “For instance, good governance is a very powerful factor which you cannot wish away or do without. It is a subjective process and driver of development.”
But in a situation where one cannot guarantee good governance, in a situation where the politicians behave in an irresponsible and unaccountable manner and where resources are frittered away in an outrageous manner; there cannot be an effective system of public accountability.
The efforts of government in this crucial area are still minimal since it is the major culprit. The impact of the anti-corruption crusade is not yet overwhelming to serve as deterrence to would-be corrupt public officers. “As you arrest and arraign some of those caught in the corrupt practices, others are busy scheming to loot the treasuries,” he notes. “But the public is not excluded from the loop of blame since it has not put sufficient pressure on the politicians especially at the grass-root level. It is the same public that awards these politicians honorary degrees and chieftaincy titles that many of them do not deserve. The public citizens do not hold their representatives responsible and accountable for the general miseries of their lives. They rather allow them to carry on and get away with their crimes.”
The debate over the vision 2020 has lately died down or receded to the background against the backdrop of other national issues. According to Lawson, there is no doubt that the concept is wrong although it must be conceded that it was initiated with genuine intentions at seeing Nigeria rising out of the mind-boggling poverty bedeviling it at the close of a century.
“Instead of talking of such a vision, why not set definite, measurable targets, for instance talk about making Nigeria, a $1 trillion or $3 trillion economy by a certain date. Let us look critically at the statistics. Belgium, for instance, as small as it is in size and population, is the 20th largest economy in the world. Are you expecting Belgium or any other country within the top 20 bracket to wait for you to catch up with them or overtake them? Look at Brazil that was a basket case, which was on the same development level with Nigeria some 20-30 years back. She has pulled herself out of the woods and is now part of the BRIC countries (Brazil, Russia, India and China group of rapidly industrializing countries) while Nigeria is wallowing in the morass of soul-shattering poverty and backwardness. How were they able to do it?
“A closer look at the record will reveal that it was not only by sheer determination but by addressing those problems that constitute obstacles to economic development, by addressing infrastructural constraints, by holding the leaders responsible and accountable by the public. There is no other way to it. We have to be honest with ourselves.
Let us take the problem of electricity generation and supply as a problem of economic development. The poor state of that sector has really set us back many years. For how long have we been talking about this problem? Ten years? The target then was to generate 10, 000 megawatts. Today we are only able to generate about 3, 800 megawatts for an economy that is expected to be one of the top-20 world economies. We must either be joking or we don’t know what we are talking about.
Take South Africa that is not anywhere near the top-20 of the world economies. With a population of less than half of Nigeria, South Africa is producing 30, 000 megawatts of electricity currently which is already becoming inadequate and they are looking to generate more.”
Ecobank as a Case Study
Ecobank Transnational occupies a commanding position in the banking sector not only within Nigeria but also in Africa. It was conceived at the outset as a regional bank to serve the West African region. It was set up with its headquarters in Lome, Togo and today it is present in 32 African countries of which Nigeria is one. The vision can be credited to the late Chief Adeyemi Lawson and Kolapo Lawson himself was privileged to be the one that presented the strategic paper that led to the formation of the bank in the early 1982. Today, the same bank has grown to a stupendous stature in Africa and is currently looking beyond the African continent. How did an idea become a real force at a time when the West African region was in throes of underdevelopment and the jack boot of military rule and despotism?
“Ecobank was a dream come true”, echoes Lawson. Looking back into the last 20 years, the strategic technical paper that articulated the vision of Chief Adeyemi Lawson and laid the foundation of the bank was written and presented by me in 1982 – then as a young man. The bank was conceived as a West African regional bank from which its brand name was derived: Eco (from Economic Community of West African States). The beginning was rough and tough and there were those that were very pessimistic about achieving the envisioned goals then. But the bank has been able to surmount all the visible obstacles on the path of growth. From 12 countries less than five years ago-, it is now operating in 32 countries in Africa with different cultures, social systems and political climate; across the barriers of the old colonial divisions: Franco-phone, Anglo-phone and the Portuguese.”
Although, Lawson was very careful in speaking about Ecobank’s Nigerian subsidiary, since it is not in his direct control, he however admitted that the subsidiary has been doing well despite the harsh conditions of the last two years.
Ecobank Nigeria, after the consolidation exercise, tried to acquire other banks that are willing to part of the brand name. “What we discovered with these banks were not necessarily palatable to us because we are operating with truly international standards which we are not ready to compromise for the sake of merger and acquisition as well as the standards which the other banks have not been able to attain. It was on this basis that subsequent negotiations broke down and failed.”
One significant merger the industry waited patiently to see happen but which has not yet materialised was the Ecobank/First Bank merger. “Our effort at merging with First Bank was very significant. In fact, we had reached a concrete stage in negotiations with a signed agreement but suddenly politics crept in somewhere along the line,” he says.
Some people feared that a new-generation bank like Ecobank wanted to ‘come and take over First Bank of more than a century old’ The negotiation got stuck and unfortunately nothing has happened as yet. Of course, there were those in the First Bank that believed we could achieve a successful merger. For instance, when Sanusi Lamido became the managing director of First Bank, he brought a lot of enthusiasm into the negotiations but since his appointment as CBN governor, not much has happened.
Agbara Industrial Estate
Agbara Industrial Estate was conceived by the late father of Kolapo Lawson, Chief Adeyemi Olusola Lawson. It was a dream made manifest by determination and clarity of vision. Agbara Estate was conceived as an industrial estate, to serve as an industrial hub for Lagos and Ogun States and the entire country. Later, his late father decided to expand it to become a model town on its own where people can live and work in peace. For this purpose, large hectares of land were acquired – about 2, 000 hectares of land. Somewhere along the line, envious voices arose within government circles asking, how can a single man own so much land? As a result, government forcefully and compulsorily acquired all of the land. Chief Adeyemi Lawson, being a very practical person, went to Ogun State Government to negotiate: if you are taking my land away from me in this manner you must compensate me. The resultant negotiation showed that the value and claim for compensation was more than what Ogun State Government could afford to pay then. In fact, the monetary claim was more than the entire budget of Ogun State Government at that time. Subsequently OGSG bent backward and leased a fraction of the land back to Agbara Estate for a period of 99 years 454 hectares out of the original 2,000 hectares.
Today, Agbara Estate hosts 27 industries, a housing estate in which about 700 families live, schools and functioning infrastructures, including a central sewage treatment plant. The existing housing estate was tailored to cater for the upper middle class segment of the society: and retirees with hefty sum of money to buy the housing units in the value of millions of naira. This is a very narrow segment, without doubt. It is now expanding to accommodate the lower middle income earners especially for those that work in the Industrial Estate. It is now building about 1, 060 housing units of this category.
Lawson’s Private Life
“By being sensible,” he says with healthy laughter that reverberated round the conference hall! “I work and rest appropriately. Fortunately too, I have a very understanding, supportive and competent wife who takes off the pressure from the domestic front for me.”
Lawson is blessed with six children who are now grown up and operating in their different spheres of life. He believes that fundamentally speaking, there is a spiritual basis for everything that happens to human beings in life. Despite the huge responsibilities that go with his position as the chairman of Ecobank Transnational and executive vice chairman of Lawson Corporation, he sees them not as burden he cannot cope with. “In addition, if you do not put ego before whatever you are doing, you will be successful,” he says. “But the moment you put ego before your work, you want to be seen as having achieved a particular goal and be praised for it then you have landed yourself in trouble which you may find difficult to extricate yourself from in the short and long run.”
For his relaxation period, “I do swim, at least three times a week, to keep body fit and in good shape.” He doesn’t eat more than two times in a day: breakfast or lunch. The latter when he has to rush out of the house because of urgent appointments and supper which he doesn’t miss. The combination of these has given him good health at the age of 60.