Wednesday, July 28, 2010

AMCON as a Fillip to Nigeria’s Economy

The signing into law of the Asset Management Corporation of Nigeria (AMCON) law by President Goodluck Jonathan on Monday, 19 July 2010 is long overdue. The bill which was recently passed by the two chambers of the National Assembly was initially part of the Prof. Chukwuma Soludo’s 13 point banking reform agenda way back July 2004. However, the bill was stalled in the parliament until the incumbent Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi re-introduced it at the National Assembly as part of the current banking reform measure which he kick-started in July 2009. The law, to my mind is highly desirable going by the several advantages that will likely accrue to our banking nay financial sector and concomitantly the nation’s economy. Some of the envisaged benefits of the bill as highlighted by the president during the signing ceremony are that:

The new law will ensure the stability of Nigeria’s financial sector and stimulate national economic recovery. AMCON, according to the President, will help to stimulate the recovery of Nigeria’s financial system from recent crisis by boosting the liquidity of troubled banks through buying their non-performing loans, helping in the recapitalisation of banks in which the Central Bank was forced to intervene, and increasing access to restructuring or refinancing opportunities for borrowers.
The law will also help in boosting confidence in the banks’ balance sheets and Nigeria’s credit and risk ratings, restore confidence in Nigeria’s capital markets, and prevent continued job losses in the country’s banking industry as well as safeguard the interests of depositors, creditors and others in Nigeria’s financial system. The Central Bank of Nigeria said it proposed the establishment of the AMCON as a way of freeing the banks of toxic loans estimated at N1.5 trillion and to enable them resume lending to the economy. CBN governor observed that it is a commitment to cleaning up bank balance sheet and restoring confidence in the capital market thereby setting the country on the path of growth. With all the aforementioned benefits, one cannot but commend the initiative of Central Bank in this regard.

The stage is now set for the full operations of the new corporation as the relevant authorities move to establish the Board and the management team. This is the crux of the matter. Nigerians are never bereft of noble ideas such as this; our major challenge has been that of faithful implementation. As CBN and Federal Ministry of Finance commence the setting up of the structures that will drive the process, there is need for them to recruit the best hands for the job. Not political jobbers and professional politicians who will see their appointment into the board or management team of AMCON as a reward for their loyalty to the president or his political party. There must be milestones and timelines set for the management team of AMCON as well as open and periodic performance review so that the public will know if the set objectives for the establishment of the corporation are being achieved. With the proposed buying off of the toxic assets of the banks, it is hoped that the current credit squeeze in the financial sector will give way to easy access to loan-able funds by the banks to the critical sector of the economy. Beyond these measures however, CBN and other regulatory authorities must keep track of activities of the banks and the financial sector of the economy to ensure that corporate governance and proper risk management are not compromised particularly in granting credit facilities to customers and investors.

Wednesday, July 21, 2010

INEC board and electoral reform

This is, indeed, an exciting time for Nigeria. After an initial lull in the preparation for the 2011 elections, two recent events have brought about some animations in the polity - the announcement on June 8, 2010, of the nominees for the chairman and board members of the Independent National Electoral Commission, and the successful alteration of the 1999 Constitution by the Senate and the House of Representatives on June 2 and 3, 2010.
The presidential nomination and endorsement by the Council of State, of Professor Attahiru Jega and 10 other national commissioners, as well as 19 other resident electoral commissioners to fill the vacuum in INEC has been largely well received, except for the pocket of protests about the partisanship of few of the nominees.
Good enough, the President promised to replace all the nominees with party affiliations. This is heart-warming. Attahiru Jega is the first northerner and Muslim to be appointed Chief Electoral Officer of Nigeria. The good thing about Jega’s nomination is that he possesses the requisite pedigree being a political scientist, a university administrator and one-time member of the Electoral Reform Committee, which charted the transformation agenda for the country, between August 28, 2007 and December 11, 2008.
Also, out of the 13-member board, INEC now has three female national commissioners, from one in the last set. This is also commendable, as it shows that Nigeria is taking her national gender policy and other international covenants and protocols on gender serious. Nigerians wait with bated breath to see if these handpicked men and women will be able to deliver to us credible polls, come 2011.
Some of the hurdles that still need to be crossed in our preparation for the next general election are the screening of the nominee national commissioners and chairman of INEC by Senate, and the conclusion of the Constitution and Electoral Bill amendment exercise. The pleasant thing is that, work on the amendment of the legal framework is at advanced stage.
At present, we are a step to the conclusion of the Constitution amendment exercise, as two-thirds of the 36 states have to concur with the altered sections of the Constitution as proposed by the National Assembly before we can start to reference the amended version. With the support from the state governors, and the Forum of Speakers of state House of Assemblies, it is hoped that Nigeria can have cause to celebrate a successful constitution amendment exercise in its 50th year of political independence.
Some of the key constitutional amendments which elicit hope of democratic consolidation and prospects of better elections are as follows: Financial autonomy for INEC, national and state Assembly and the Judiciary; Amendment to section 156 and 200 of 1999 Constitution, which now prevents chair and members of INEC board, as well as those of State Independent Electoral Commission from belonging to political parties; Alteration of Section 145 and 190 of the 1999 Constitution, making it mandatory for president and governors to transmit a letter to the Senate and Speaker of House of Reps (for President) and Speaker of State House of Assembly (for governor), respectively when going on vacation or incapable of discharging their duties of office; The amendment to Section 160 (1) to the effect that INEC’s powers to make its own rules or otherwise regulate its own procedures shall not be subject to the approval or control of the president; Timeline for conclusion of election petitions (180 days at the tribunals and 60 days at the appellate court), and the reduction of tribunal judges from five to three.
Other noble alterations include, the elimination of tenure elongation through the back door, with the amendment of section 180 subsection 2c to read: “In the determination of the four year term, where a rerun election has taken place and the person earlier sworn in wins the rerun election, the time spent in office before the date the election was annulled shall be taken into account.” The National Assembly is also poised to come up with guidelines for internal party democracy and empower INEC to play more active role in ensuring that political parties observe principles of internal party democracy.
It is hoped that by the first week of July 2010, all the remaining issues about the legal framework viz constitution and electoral act amendment would be sorted out, and the new board of INEC inaugurated, to enable them commence prompt preparation for the next general election, which is due in January 2011, going by the provisions of sections 76(2), 116(2) and 132(2) of the amended Constitution, which now put elections at not earlier than 150 days and not later than 120 days before the expiration of the term of the incumbent political office holders.
However, even if and when all these are done, the greater challenge will be that of implementation of these new laws. Nigeria’s political system will only derive maximum benefits from these new legal provisions, when relevant authorities and political elite decide to play by the rules. Culture of impunity must be broken.