Thursday, August 20, 2009

Nigeria Banking Sector And New Measure To Rescue Banks - True?

The revelations in the Nigerian banking sector at this point when the global recession is suspiciously parking up is a dire surprise. But the Nigeria government’s move to contain it seems to be swift and clever. If it be a success, then the country would have done better than most western countries in the face of recent credit crunch. If not, then more questions and doubts will be raised.

The Nigeria banking sector suffered a huge loss in the early 1990s when most of the then ‘mushroom’ banks licensed by the then military government led by General Babangida, collapsed. A lot of Nigerians lost their life’s savings and most of the bankers were imprisoned by the government. But the primary root of the cause of that problem was never dug out. The then government had a hand in most of it having ‘done’ business with their friends whom they licensed to run whatever they called a ‘bank’. After the pretentious arrest of the culprit bankers and the ensuing bribery to releasing their close allies, most of the cases closed with no outcome.

The affected banks in the present scare happen to be among the ones that have driven the banking sector to a ‘believed-excellence’. Oceanic Bank controlled by the Ibrus is a big shame to be there. But risk is the twin traveller in business.

In all, the fear lies in what actually this scope and goal of the government is and can yield via the Central Bank of Nigeria action. It is well know that corruption and dishonesty is the rule among Nigeria ruling class. One is concerned to think that this action would be the right steps. But we have to wait and see.

Ring-fencing the failing banks with public money is clever, but only if there is no hidden ulterior motives. I also think that publishing the names of debtors in a name-and-shame system is uncalled for.

In all, I will be proud if the measures taken work without the evils of self-centredness, corruption, self-enrichment, etc do not come into it.

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