By Stanley Opara

Friday, 19 Nov 2010

The Vice- President and Senior Fellow, Centre for Global Development, Mr. Todd Moss, has said that Nigeria may benefit from the global economic crisis .

Moss said this in Washington DC while giving a testimony at a congressional hearing, titled, “Global Financial Crisis and Financial Reforms in Nigeria,”on the crucial role that Nigeria‘s economy plays in Africa and the global economy.

He said,” The global economic crisis may turn out to be a good thing for Nigeria.”

Moss said the pressure of the global crisis both exposed the hidden problems in the country‘s banking sector, thereby forcing the actions of the regulatory authorities which were targeted at making the financial sector stronger and more competitive.

The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi and the Director-General, Securities Exchange Commission, Ms Arunma Oteh, were specially invited to the Hearing by the United States Congress Subcommittee on International Monetary Policy and Trade, a statement from the CBN said on Thursday.

Moss, who was the third witness at the hearing, also said Nigeria‘s banking troubles were largely local in nature.

He called on the Nigerian authorities to deal with the fiscal situation as a matter of urgency, citing the savings in the Excess Crude Account which stood at $20bn just 20months ago but now almost completely depleted.

He emphasised that Nigeria ‘s success was undeniably in the US national interest, asserting that as a regional powerhouse and a neighbourhood enforcer when necessary, Nigeria was key to regional security.

“Nigeria is vital to the US energy security, as well as a lynchpin in the global fight against 21st century transnational threats such as terrorism, diseases, drugs and arms trafficking. A strong Nigeria can be an indispensable ally to contain those threats,” he noted.

The meeting was an open hearing presided over by the Chairman of the Subcommittee on International Monetary Policy and Trade, Mr. Gregory Meeks, supported by Ranking Member, Mr. Gary Miller, with other House Representatives, the press and the public in attendance.

In his opening remarks, Meeks recalled his meeting with the governor of CBN in February 2010 during a bi-partisan congressional mission to Africa aimed at gaining insight into the programmes implemented by governments and multilateral institutions to tackle the impact of the financial crisis and global economic recession on African nations.

He said, ”We were fascinated by the CBN governor, and impressed by the tough, decisive and transparent actions that he and his colleagues had taken in Nigeria in a way that many Americans wished had also been done here with the leaders of financial institutions that benefitted from taxpayer funded bail-outs.”

Meeks said it was uncommon for senior government officials from another country to agree to testify before the US Congress, but conceded that ”these are unusual times, as the global financial crisis from which the world is only beginning to emerge continues to hang over many nations‘ recovery plans.”

In a two-hour hearing, the witnesses summarised their written submissions and then answered questions from the House.

Sanusi, however, reiterated the background to the crisis in the Nigerian financial sector, recounting the stress tests conducted on all banks and a further examination of the nine banks identified as ‘distressed‘.

He reported that the sector was beset by liquidity problems, the collapse of interbank lending, ‘bubble capital‘, asset concentration and serious governance issues, which led the CBN to embark on an aggressive reform program whose key features include; the removal and prosecution of ‘bad‘ Chief Executive Officers.

Others, he added, included the recapitalisation of fragile banks; the establishment of the Asset Management Company of Nigeria which is unique in Nigeria, to buy up ‘bad loans‘ and help recapitalise the distressed banks; the review of the universal banking model; and the integration of the financial sector with the real economy.

The CBN Governor also said that the regulators were following the capital inflows to ensure that ”the right kind of financial and economic policies are in place to attract the right kind of Foreign Direct Investments.”

Sanusi pinpointed agriculture and the power sector as key sectors which have huge potential for the country, illustrated by the fact that agriculture contributes 42 per cent of the nation‘s GDP but remains largely in primary production, with only 4 per cent of GDP coming from manufacturing.

He said that the Power sector is potentially bigger than the telecoms sector, and reported that President Goodluck Jonathan was doing all the right things to ensure significant progress is made with the Power sector reforms.

On her part, Oteh said that SEC was committed to creating ”a world class capital market in Nigeria that would foster meritocracy, encourage innovation and entrench good governance.”

”This is the decade for Africa,” Oteh said, as she addressed the issue of US investors finding interest in Nigeria and anxieties over speculative bubble.

”There are huge investment requirements, hence opportunities, across different sectors which current FDI levels cannot fully address,” she added.

Source: Punch