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<\/figure>\n\n\n\nI THINK it was remarkable for several reasons, one of which was a\ncombination of competence of the people in charge, the personalities of the\npeople at the helm, and the courage to meet the needs of the time. All these made\nthe era remarkable. Sanusi Lamido Sanusi had a clear vision of where he wanted\nthe Central Bank to go and to be. So, he decided that wherever there was an\nopening, he would go for people who shared the vision and are competent to\noccupy the position. It was on this basis that, when there was an opening for\nthe deputy governor, he approached on behalf of the late President Umaru\nYar\u2019Adua and recommended me. He had reforms he wanted to execute, so he needed\nsomebody that was independent and detached from the banking sector.<\/p>\n\n\n\n
I was managing my risk and investment-consulting firm in Geneva,\nSwitzerland, after a 17-year career at the United Nations. The global financial\ncrisis had just happened, with the world going through the great recession. One\nof the things that prevented the great recession from metamorphosing into great\ndepression was the resolute action taken by central bankers globally.<\/p>\n\n\n\n
Some of them started quantitative easing, flooding the system with\nliquidity. We also did this, but through development financing. We did not\nadopt such conventional process as a bond purchase. We decided to do it in such\na way that the real economy would be empowered. Also, about one-third of the 24\nbanks we had then were on the verge of collapsing. We decided to take drastic\ndecisions to stabilise the system.<\/p>\n\n\n\n
One of the decisions we took was the establishment of the Asset Management\nCorporation of Nigeria (AMCON) to buy off the toxic assets on the books of the\nbanks, so that they could start lending again. We decided that some actions had\nto be taken to stop the culture of recklessness; hence some bank chief\nexecutives were fired. I was brought back to lead some of the reforms, such as\ncorporate governance, management and structural reforms. For the first time, we\nmoved away from the one-size-fits-all bank to international, national and\nregional banks. We even created non-interest banks.<\/p>\n\n\n\n
Unlike in the 1990s, no depositor lost a kobo to the crisis. We decided\nfrom the onset that that would not be allowed to happen. What we did was not\nnecessarily a permanent decision for all time. I had an issue recently with the\ntendency to support every failing bank. It is not a decision to make a\npermanent feature of bank supervision. It was necessary at that time because we\nwanted to restore confidence in the banking sector.<\/p>\n\n\n\n
The Central Bank\u2019s independence was also critical to our success. The\nCentral Bank was independent of external influence. Sanusi and his team\nrespected and protected that independence, not because politicians and external\nforces were not trying to interfere, but because we did not allow them. We had\na worldview of making the CBN best in class around the world. Some of the\nreforms we embarked upon had not even been experimented by the western world.<\/p>\n\n\n\n
I recall the governor of the Central Bank of Ireland asking me at a\nconference of the Official Monitoring and Financial Institution Forum held in\nGermany, \u2018how should we protect our banking system?\u2019 I take great pride in my\nrole in that era as the deputy governor in charge of financial Services\nStability. At the end of my tenure, I was exhausted, because I was working 14\nhours daily for five years.<\/p>\n\n\n\n
You said the decision to bail out banks should not be a sustained action.\nDo you think confidence building is not necessary today as it was during your\ntenure? <\/strong><\/p>\n\n\n\n Confidence building is necessary, but people need to be educated. We also\nneed to take certain approach to prevent moral hazard. We don\u2019t want a\nsituation where banks continue to mess up, knowing that Central Bank will\nalways come to their rescue. Banks are businesses, so they cannot behave\nirresponsibly, believing that the CBN will come to their rescue when they fail.\nThis induces bad behaviour.<\/p>\n\n\n\n We can have a situation where the banks could be allowed to fail, if the\nCEOs want them to fail, but ensure that depositors\u2019 funds are protected. In our\ncase, we chose that the banks would survive, but that the investors lost their\nshareholding. Irresponsible CEOs should not create a situation where poor\npeople lose their life-savings because they trust them to keep the money for\nthem. In some jurisdictions, the creditors are protected first, but we decided\nthat depositors should be the first set of people to be protected. There is\nwhat we call a living Will, which was a phase the reform never got to. I wish\nwe got to that phase. <\/p>\n\n\n\n How does the living Will work?<\/strong><\/p>\n\n\n\n What this implies is, if you die, how will you be buried? It means banks\nshould draw up their liquidation plan and specify in the plan what should\nhappen to depositors, who put money in their care, what should happen to their\ncreditors and what should happen to their shareholders. The Central Bank will\nreview the plan and make some changes or ask the banks to do so, if it is not\nsatisfied.<\/p>\n\n\n\n If I were to ask banks to make a living Will, I would insist that\ndepositors must not lose their money, as it is not their fault that the banks\nare not well managed. Businesses will always fail, but banks\u2019 failure can\ntrigger a major problem in the economy. The living Will will be communicated to\nthe public. Since all banks are not the same, it would be better each bank\ndevelops its unique living Will. <\/p>\n\n\n\n If your team had stayed beyond a single tenure, what would have\nhappened? <\/strong><\/p>\n\n\n\n Assuming Sanusi got a second tenure and I was part of the management, we\nwould have continued the reform. There were a lot of things we were doing. We\nwould have made them an irreversible part of the culture.<\/p>\n\n\n\n Would you say the monetary policy was better managed in your days than now?<\/strong><\/p>\n\n\n\n I don\u2019t want to compare Central Bank managements. There were central\nbankers before Sanusi and I. There have been central bankers after us, and\nthere will always be central bankers. What I can say is that we managed the\nmonetary policy very well and reduced inflation to eight percent before we left\noffice. That has never been achieved thereafter till date. We brought\ndiscipline into the system. People knew that real new sheriffs were in town.<\/p>\n\n\n\n You mentioned during your keynote address at the Nnewi Investment Summit\nthat this is the best time to float the naira. If this is done, will the\ncurrency be worth anything? <\/strong><\/p>\n\n\n\n Every reform carries some pains in the short term. But in the long term, if\nthe reform is successful, the people emerge better and stronger, whether it is\ntargeted at the entire economy, the private sector or the public sector. The\nidea of painless progress does not exist. If you desire to meet your Maker, you\nare required to make certain sacrifices. This applies to all religions. If we\nfloat the naira, there will be short-term pains. However, we can plan responses\nto the shock. In the long term, the economy will stabilise.<\/p>\n\n\n\n This is a matter of detail the Central Bank can sit down with other\nstakeholders to plan. Over time, it will encourage people to create value-added\nproducts and export them to earn foreign exchange. It is more profitable to\nexport than to import. In our circumstances, this is what we need to do. There\nis no free lunch. Populist economic thinking will lead nowhere. The economy is\nnot going anywhere. It is not about a statement of good intention or political\ntalk.<\/p>\n\n\n\n Those of us who have gone around the world have seen the discipline with\nwhich economies are managed to achieve prosperity. There is no such discipline\nhere. It is just politicians trying to make the decisions that should have been\nmade by the Central Bank. The CBN needs to have the courage to assert its\nindependence. The President cannot continue to direct the Central Bank. It is\nwrong: that is what the Act says. The Central Bank Governor should brief the\nPresident periodically, but the bank shouldn\u2019t be taking political instruction\nfrom anybody, because those giving those instructions do not have the technical\ncompetence. That is the reason central banks all over the world are protected.<\/p>\n\n\n\n However, I know there is tension between central banks and sovereign\nlegitimacy all over the world. Even in the United States, President Donald\nTrump wants the Federal Reserve to do certain things, but the Fed maintains its\nstand. He wanted the interest rates to be lowered recently, but it was kept\nsteady. They knew what he wanted, but did what was good for the economy. The\ntension is always there, how it is managed is what makes the difference.<\/p>\n\n\n\n Are Nigerians ready for the kind of economic discipline you are advocating?<\/strong><\/p>\n\n\n\n We are not for certain reasons. First, we are not educated enough. Many\npeople in the public sector, much less the average people, do not understand\nthe monetary policy or fiscal policy. They don\u2019t understand why the Central\nBank takes certain decisions, which is the reason education of the public and\ngovernment was something I pushed aggressively, when I was at Central Bank.<\/p>\n\n\n\n We would put more energy into educating the different aspects of the public\nsector and the public on central banking. They have to be economically\nliterate. Since they are not, they assume that a strong naira is better than a\nweak one, because the former makes it easier for them to pay school fees abroad.\n<\/p>\n\n\n\n The reason we do not want to devalue the naira is that historically,\ndevaluation has always stood alone. Other necessary policy actions are not\nalways taken each time we devalue to ameliorate short-term pains. So,\npoliticians assume that devaluing the naira is a terrible decision. Countries\nin Asia, Europe and America sometimes competitively devalue their currencies.\nThis is because it is better for their economies. These are economically\nliterate people.<\/p>\n\n\n\n School tuition fee payment is not the priority of other countries. Nobody\nwants to address the rot in the domestic education system, so that we do not\nrush to send our kids abroad. Fix the education system and very few people will\nworry about the cost of foreign schools. <\/p>\n\n\n\n Can we advocate a stronger tie between the fiscal and monetary authorities?<\/strong><\/p>\n\n\n\n Yes, we can have them collaborate. But in doing so, we must remember that\nthe monetary authority is independent. So, nobody should tell the Monetary\nPolicy Committee (MPC) to raise or lower the interest Monetary Policy Rate\n(MPR). There should be an understanding of the overall national economic goal.\nThere is no such thing today. It is possible to have a collaborative\ndecision-making process, where monetary, fiscal, industrial, trade and\ninvestment policies flow into one another. What we have are silos all over the\nplace.<\/p>\n\n\n\n Were you motivated by the desire to address these structural defects, when\nyou joined the presidential race in 2019?<\/strong><\/p>\n\n\n\n Yes, these were some of the changes I wanted to make. I would have made\nthese changes because I am educated and informed. I know what I would like to\nsee as the President. I would have set up my cabinet with these in mind. I know\nthe person who would have been the most suitable for the Finance Ministry. I\nknow those who would have been in charge of planning, investment, trade and\nothers. I would be able to debate my agenda with the team members, such that\nthe superior collective wisdom can prevail. This is the kind of leadership I\nwould have championed.<\/p>\n\n\n\n It doesn\u2019t mean the rich would become poor. The economy should be functional.\nBusiness people should be able to make profits. But we must also give\nopportunities to the poor to enable them come out of poverty. My primary\nconcern is the poor.<\/p>\n\n\n\n Some people think your likes should have sought opportunity to serve in the\nSenate, where they can push for the reforms you canvass and make impact\u2026<\/strong><\/p>\n\n\n\n I understand the concern and the argument. But President Trump was never a\nsenator, a mayor or governor. No law in the universe says if you have the\nrequisite experience (and the experience does not have to be political), you\ncannot aspire for the highest office. In the Nigeria context, what\ntransformational change has a senator brought? I am not sure you can remember\nany.<\/p>\n\n\n\n With the current Constitution, only the President has the power to execute\nthe vision I have for the country. I went for the President because it is that\noffice that is uniquely equipped to bring into existence the vision I have for\nthe country. I am being very realistic.<\/p>\n\n\n\n There is a race for governor in Anambra State, but I am not running. It is\nnot because being a governor or senator is not important. It is because the rot\nin the country, especially in the management of the economy and national\ndiversity, is so deep that only the President can fix it. The current President\nhas not shown any commitment or political will towards constitutional\nrestructuring, even though it was in the manifestos of his political party.\nThose who said I should have aspired for the Senate did so based on\nconventional wisdom, which is not always applicable in all situations.<\/p>\n\n\n\n Do you have faith we will soon experience the kind of political change that\ncan bring people with your philosophy to power? \n<\/strong><\/p>\n\n\n\n It depends on the people. It makes no difference if I have faith or not.\nThe people will need to desire it. What I discovered when I contested was that\nthe people are not ready yet. They complain about the system, but still vote\nfor the system they complain about. Poverty is very high, so people think based\non the emptiness of their stomachs and focus on immediate gratifications.<\/p>\n\n\n\n It is up to Nigerians to wake up and build the country they desire, using\nthe democratic process. I have done my part by offering myself for service.\nEverybody should go and do their part. I have taken the risk \u2013 the risk of\nlife, the financial drain of my resources. It is a huge sacrifice to run for\nthe presidency, if you are not in the existing two big parties. There is\nnothing that says the structure will remain.<\/p>\n\n\n\n We were a one-party state with the Peoples Democratic Party (PDP) until the\nAll Progressives Congress (APC) came. There is nothing that says only the two\nparties will remain with national structures tomorrow. People should not assume\nthat everything is cast in stone. I don\u2019t have a problem with PDP and APC\nremaining the dominant parities, but they have to reform to bring the real\nchanges Nigerians want to see.<\/p>\n\n\n\n Are you running in 2023? <\/strong><\/p>\n\n\n\n I am doing so. For instance, I convene a non-partisan citizen movement\nknown as To Build A Nation (TBAN). We are on the quest to collect one million\nsignatures petitioning for electoral reform. This is a task that cuts across\nall political parties. It is an important task that cuts across all political\naffiliations. I don\u2019t have to be a partisan politician to do this. I don\u2019t need\nto hold any office either to contribute. <\/p>\n\n\n\n Is the electoral reform everybody is calling for a magic wand?<\/strong><\/p>\n\n\n\n No, it is not. Constitutional reform, which is not also a magic pin, is\nvery good for Nigeria. There are things that will happen, and electoral reform\nis the beginning. If we have an election, where people vote without fear of\nintimidation or being maimed, knowing their votes will count, there are chances\nthat there will be a leader who will do what he promised during the campaign\nbecause he knows that he could be voted out.<\/p>\n\n\n\n Electoral reform is fundamental to the societal changes we are clamouring\nfor. The citizens are empowered, when the electoral system is transparent. Each\nman or woman matters at the ballot booth. Unfortunately, we have an electoral\nsystem that is rigged to produce outcomes that are not the people\u2019s will. What\nwe have is \u2018sellectocracy\u2019 and not democracy. It is like what the holy book\nsays: having a form of godliness but denying the power thereof. We are\nfollowing a certain ritual, while the essence of the ritual is missing.\nElectoral reform is job number one. <\/p>\n\n\n\n Can this happen before 2023?<\/strong><\/p>\n\n\n\n It can, if the National Assembly members are serious about it. They have\npromised, but seeing is believing. As a citizen, I wrote the Senate President\nand Speaker of the House of Reps demanding reforms in certain areas. My\ncolleagues at TBAN are doing the same thing. If you are practising democracy,\nyou must do it properly, otherwise you are pretending. Electoral reform is\nfundamental, and the only way to do this is to ensure that the voting,\ncounting, collating and transmitting of the result are done digitally. <\/p>\n\n\n\n There are arguments that if the U.S. system could have been tampered with\u2026<\/strong><\/p>\n\n\n\n Let me interrupt you. Technology makes steady progress. We are not talking\nabout an electronic, but digital process. When we were doing banking reforms,\nmany people said what we wanted to do was not possible. Today, PoS and mobile\nbanking have become the norm. We introduced the BVN and it has come to stay. We\ncannot have a defeatist mindset.<\/p>\n\n\n\n If the U.S. was tampered with, is it the one we are doing today that is\nbetter? We are 100 years behind the U.S. democracy we are talking about. It is\na primitive system we are running today. There is no perfect democracy. The\nadvanced democracies have challenges, but that must not stop us from moving\nforward.<\/p>\n\n\n\n No doubt our institutions are weak. What are your thoughts on balancing\nstrong institutions with the strong man philosophy, which some say is suitable\nfor people without discipline like Africans?<\/strong><\/p>\n\n\n\n It is very important to build strong institutions. If you build only strong\nmen, there will be no institutions because a strong man will not live forever.\nInstitutions outlive their founders. That is the reason it is good to build\nstrong institutions, whether it is in politics, economy or any other field. The\ninstitutions should have their laws, processes and procedures that can guide\neverybody. Is it good to have strong leaders? But the real test of a man is not\nhow many people he slaps because they insult him. It is how many times he\nrestrains himself from slapping the weak on the road when insulted. The\ndefinition of strength is the issue.<\/p>\n\n\n\n We can have strong leaders \u2013 strong in vision, strong in will to drive\npeople towards achieving the vision. We have these in Singapore, Malaysia and\nseveral other countries. Strong institutions were developed in those countries\nat the same time. Sometimes, it takes a strong leader to build strong\ninstitutions. When strongmen imply empty dictators, who are focused only on\nthemselves and cronies, it is not strength.<\/p>\n\n\n\n I am calling for strong leaders who have great visions for Nigeria and the\nstrength of character to drive the vision and the capacity to build strong\ninstitutions. If I am the President today, my first job will be to make myself\nless powerful by supporting strong judiciary, independent Central Bank and a\nstrong military. These will make my job easier. Nigeria is not working today\nbecause we want the President very powerful and everyone else very weak.<\/p>\n\n\n\n How do we practically address poverty in the land?<\/strong><\/p>\n\n\n\n There is a saying \u2013 don\u2019t show me the practice but the theory. We like\nshort-gun approaches. That is what has kept us where we are. We cannot address\npoverty without identifying the forces that cause poverty. The issues: the\nabsence of quality education and absence of skills among the youths to make\nthem competitive in the job market. If you are jobless, you will be poor and\nhungry. The education system is critical for addressing poverty. Distribution\nof money is a shortsighted approach to tackling poverty. They will spend the\nmoney and remain poor. We must seek to know the structural foundation of\npoverty before we can fight poverty.<\/p>\n\n\n\n China took 700 million out of poverty in the past 40 years. It was not done\nbeing \u2018practical\u2019. You must have a philosophical and theoretical understanding\nof the problem first before working towards the solution. It is at the point of\nexecution that you can talk about being practical. Nigerians need educated\nleaders, who understand what moves people from poverty to progress.<\/p>\n\n\n\n Education was what moved the West and China from poverty to prosperity. The\nlaws of nature are the same in China, Japan, the U.S. and Nigeria. If we think\nwe can continue to elect leaders who are not knowledgeable and competent\nintellectually and achieve progress, we are deceiving ourselves. We must look\nat the root cause of our problems. We have a problem with intellect.<\/p>\n\n\n\n Political education is very necessary. My campaign for the Presidency was\npolitical education. I won the presidential election not at the ballot booth,\nbut in a long-term strategic way. There are many victories during an election.\nMany Nigerians are more enlightened because of the ideas I brought forward and\nthe solutions I offered to address our problems. That is an achievement. <\/p>\n","protected":false},"excerpt":{"rendered":" We can\u2019t make progress unless we elect knowledgeable, competent leaders \u2014 Moghalu<\/p>\n","protected":false},"author":1,"featured_media":576,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4],"tags":[148],"class_list":["post-565","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-polity-politics-governance","tag-kingsley-moghalu"],"jetpack_publicize_connections":[],"yoast_head":"\n![\"\"](\"https:\/\/i0.wp.com\/towncryyers.com\/wp-content\/uploads\/2020\/02\/Kingsley-Moghalu-1.jpg?resize=727%2C465&ssl=1\")
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