Soludo's Legacy

Chukwuma Soludo was already an accomplished person before he became Central Bank Governor. Appointed Chief Economic Adviser by President Obasanjo as the second term commenced in 2003, he was an early and critical member of the Ngozi Okonjo-Iweala economic team that later turned out to be without doubt the most successful that Nigeria had since independence. I was probably the first Nigerian to publicly celebrate that team beginning from December 2003, when I declared them my “Team of the Year” and in December 2004, “Still Team of the Year”. But even before his appointment into government, Soludo was by all standards a successful person-a first class economist, a professor and an international consultant with an impeccable academic and professional resume.
As Economic Adviser, he was also in charge of the National Planning Commission and can claim some credit for producing the National Economic Empowerment and Development Strategy (NEEDS), the blueprint upon which the significant economic reforms of 2003 to 2006 was based. The fact that the International Monetary Fund accepted that domestically-written document as sufficient basis for supporting Nigeria’s reforms culminating in the Paris Club debt write-off is a particular credit to Okonjo-Iweala, Soludo, Mansur Muktar (then in charge of the Debt Management Office, now Nigeria’s Finance Minister) etc. It is also significant that based on the strength of the NEEDS programme and the reforms entailed there under, the IMF devised a new instrument, the Policy Support Instrument (PSI) which was first applicable to Nigeria.
As CBN Governor, Soludo’s singular legacy was banking consolidation which transformed Nigeria’s banking and financial services industry. It was a risky and revolutionary industry restructuring but it was a credit to Soludo and the regime’s political will that it was successfully accomplished with minimal adverse consequences. I have written several times and I still believe that having succeeded with consolidation, Soludo’s error was to encourage a second round of capital raising rather than actually “consolidating” the institutions that emerged from the rushed mergers and acquisitions of 2004-2005. The industry needed to deepen skills and competences, build institutional capacity in risk management, corporate governance, systems and processes etc and the regulator itself needed to upgrade its ability to supervise the post-consolidation banking industry, but instead fed by hype and over-celebration, Soludo actually instigated multiple capital raising by banks who had not acquired the capacity to manage at their new “mega-bank” status.
Some of these errors resulted in the current problems in the banks which Lamido Sanusi is addressing and somewhat call to question Soludo’s legacy. But then in spite of the eight or ten banks which have run into fairly serious problems and the huge write-offs which the rest of them are having to make, the shape of the Nigerian banking industry going forward, will still have been determined by Soludo’s banking consolidation. It is impossible to visualise say Access Bank, Skye Bank, Stanbic IBTC, UBA, Ecobank, Diamond Bank, Fidelity etc in their current forms without the consolidation exercise. And the nation’s ability to withstand the global economic and financial crisis without a domestic economic collapse has been partly as a result of consolidation.
Beyond the dent on Soludo’s legacy by the industry’s current challenges, the “Polymer” bribery allegations emerging from Australia have also threatened Soludo’s legacy. It is not difficult to envisage a scenario in which embarrassing allegations emerge! But it is Soludo’s engagement with Anambra politics that most potentially threatens to leave his reputation and legacy in tatters! Any intelligent person familiar with Nigerian politics (PDP-style) can reconstruct what is going on in Anambra State. Evidently Soludo has decided that after losing his Governorship of the Central Bank, it would be desirable if he acquired another Governorship-of Anambra State. Rather than speak to the voters in Anambra State, and the membership of the PDP who vote in the party primaries, he has (again PDP-style) convinced Chief Tony Anenih (who hails from Edo State), Alhaji Dahiru Mangal (from Katsina ) and perhaps Dr Alex Ekwueme (an elite politician who may have lost his links with the party’s grassroots) that he is the right person to “capture” Anambra State.
Given the calibre of persons supporting him, it is also not improbable that he has secured a tacit endorsement from Aso Rock! He then proceeds into the party primaries and when it is evident that he is losing, he procures a court injunction to stop the process from producing an embarrassing, but fair outcome. And then the party caucus sitting in Abuja contrives to declare Soludo as the party’s governorship candidate. Shame! And all this is in aid of the governorship ambitions of a gentleman who just a few weeks ago served as Governor of our Central Bank? Now Soludo’s intellectual sparring partner is Chief Chris Uba and at least this time, the moral justification appears to be on Chris Uba’s side!!! Soludo’s father has been kidnapped, allegations are circulating that contestants in the aborted primaries were bribed to drop their objections to the Abuja imposition, and Chris Uba has now according to newspaper reports alleged that Soludo offered him $10million to support his ambition. At the rate Soludo is going, whatever is left of his legacy will be in ruins by the time he is done.