Saturday, April 10, 2021
Add this page to Blinklist Add this page to Add this page to Digg Add this page to Facebook Add this page to Furl Add this page to Google Add this page to Ma.Gnolia Add this page to Newsvine Add this page to Reddit Add this page to StumbleUpon Add this page to Technorati Add this page to Yahoo

ideas have consequences

You are here:Home>>Emeka Chiakwelu>>admin


Website URL: E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Monday, 10 January 2011 15:38


Sanusi Lamido Sanusi: Afripol Person of the Week

The Governor of Central Bank of Nigeria (CBN), Malam Sanusi Lamido Sanusi has been in the position for less than two years but has taken pragmatic steps to reform Nigerian troubling banking system. Since his inception as the head of Nigerian Reserve Bank; the financial and economic experts at Afripol has been monitoring his application of monetary policy to stabilize the banking sector of the economy. We all can agree that he has done his level possible best, with affirmative result.

Malam Sanusi Lamido Sanusi is a free market banker and is dedicated in deepening a disciplined banking system with a well thought monetary policy. He has taken a bold but prudent step to rectify the crumbling Nigerian banking system. He introduced a reformed blueprint grounded in transparency and probity to check profligacy.

Without fear or favor he exposed the lapses in Nigerian banks and took the necessary steps to make things better. The failed banks were bailed-out, rescued and rejuvenated. The culprits in the banking sector especially the managing directors of five banks were sacked and the debtors to the banks were made to pay back the illogical deferred loans.

With quantitative easing he injected liquidity into the monetary base that aided to ease the credit crunch that brought back the availability of credits to the business community.  With the prudent monetary policies, the Nigerian economy was not decelerated and the economic growth appreciated. At the end of the fourth quarter of 2110, the Nigerian economy was cruising at annual rate of 7.8 percent.

Sanusi brought a culture of professionalism and transparency that have been fizzled out for a while in Nigerian banking sector. He did not waited for banking sector to completely fall apart before he commenced with his encompassing and comprehensive banking reform. The good works he did as the chieftain of Nigerian Central bank has brought glowing attributes and accolades to him. Last week a well respected British publication, The Banker conferred to him the World’s Central Bank Governor of the Year for 2011.

Some experts were concerned about the large injection of funds into the banking sector, but this is not a zero-sum game but a win-win exercise for both the taxpayers and the banks. While the banks were rescued, the economic growth was not interrupted and taxpayers in near future will be compensated when the toxic securities are traded.

As a citizen and patriot, Sanusi spoke out on the nation spending one quarter of its generated fund on the business of running the country’s national assembly. This is about 25.4percent of Nigeria’s overhead cost in a country with 70 percent of its citizens living in poverty. Malam Sanusi Lamido Sanusi never back down and stood up for his principle and freedom of speech.

Sanusi has brought back the respect that the Nigerian banks once enjoyed, and foreign investors are looking favorably to Nigerian banking stocks. The most important accomplishment is bringing back confidence in the banking community. The Governor of Central Bank must be guiding and monitoring the inflationary trend that may be threatening to these great efforts and reforms.

For his hard work, vigilance, pragmatism and patriotism; The Management and Staff of Afripol Organization chose Malam Sanusi Lamido Sanusi as the PERSON OF THE WEEK.

Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa. This e-mail address is being protected from spambots. You need JavaScript enabled to view it



Saturday, 01 January 2011 18:16


Afripol Most Influential Africans

Nelson Mandela: A symbol of freedom to the emerging continent and Mandela has become the conscience of the world. Mandela is a role model for a goodwill mindset; embracing reconciliation, forgiveness and unity in his native South Africa. The troubled continent littered with wars and disturbances needs Mandela's methodology for making sustainable peace.

President Goodluck Jonathan: The president of the most populous and influential country in Africa which is Nigeria. He has displayed maturity in tackling Nigerian huge and complex problems. A democrat who has shown credible interest in leading Nigeria to her vision of becoming the richest and most successful democracy in Africa.


President Goodluck Jonathan                                                               Prof. Wangari Maathai

Prof. Wangari Maathai:  A warrior for the environment and has made planting trees in Kenya a point of duty. The first woman in Africa to win Nobel Peace Prize and the founder of The Green Belt Movement.

Chinua Achebe: A writer and author of “Things Fall Apart” that delved into the crash of civilizations when colonialism stepped foot in Africa. Achebe is a civic activist and chronicler of African storytelling; he has done more to express African state of mind to the world.

Wole Soynika:  The first African to win Nobel Prize in literature. Wole Soyinka is a dramatist, poet and civil right activist. Great Soynika is a lion of Africa who has used his powerful intellectual acumen to mesmerise the world community.

Muammar Gaddafi: A colorful and influential leader in Africa. No matter what you might say or think of Gaddafi, nobody can deny his influence in Africa. He is political savvy and made the strategic move of re-establishing relationship with the West. He played a significant role in the formation of African Union. The most recent summit between Africa and Europe was held in his capital city, Tripoli, Libya.

(L)Muammar Gaddafi                                           (R)Kofi Anan

Charlize Theron:   The Oscar winner South African movie star. She has become a household name in Africa in general and South Africa in particular for her charity works. She is the founder of The Charlize Theron Africa Outreach Project – “committed to creating a safer and healthier life for impoverished children and communities of South Africa, and other African nations, with a particular focus on individuals suffering from HIV/AIDS.”


Kofi Anan: A Ghanaian diplomat that needs no introduction, the former Secretary General of United Nations. At the end of UN tenure, Kofi Annan, became the Chairman of the Alliance for Green Revolution in Africa, organization dedicated to African food sufficiency and security,

Kase Lawal: The founder of CAMAC International and the chairman of Camac Energy, a NYSE /AMEX Company.  A business baron and 21st century business executive. His prominence in the global business scene has become something of great interest to African and he has become a role model to aspiring business executive in Africa and in African American community.


Chinua Achebe                                                                                                    Wole Soynika

Aliko Dangote: The founder of Dangote Group. Forbes magazine documented him as the richest Nigerian business executive. An intelligent and modern African business tycoon, whose conglomeration/empire has given thousands of jobs to Africans.


Philip Emeagwali: The inventor of the fastest computer.  Philip Emeagwali has been called “a father of the Internet” by CNN and TIME, and extolled as a “Digital Giant” by BBC and as “one of the great minds of the Information Age” by former U.S. President Bill Clinton.


Ellen Johnson Sirleaf:  The first woman president in Africa. She is committed to building the war torn Liberia. Ellen Johnson Sirleaf has become an inspiration and role model to millions of African young women, girls and the youths of the continent,

(L) Ellen Johnson Sirleaf                           (R)Jerry Rawlings

Nduka obaigbena: The founder and chairman of Africa’s widely read newspaper named ‘Thisday’ and flagship magazine 'Arise', an international voice of Africa. His influence stems from his unflinching and sustaining commitment to African culture in the globalized media.

Jerry Rawlings: The former president of Ghana made the greatest impact on this West African nation after Kwame Nkrumah. He made radical reforms that transformed Ghana to a progressive capitalistic democratic society. His influence has not waned, he still plays vital role in cessation of conflicts in Africa especially at the ongoing fracas in Ivory Coast.

Mo Ibrahim: The Sudanese business mogul and billionaire. His commitment to democracy and good governance drove him to create a foundation that monitors and rewards good governance for African Heads of States.


(l)Charlize Theron                                                  (R) Mo Ibrahim


Africa Political & Economic Strategic Center (AFRIPOL) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

Nigeria is steadily but gradually accumulating foreign debts

Nigeria is leveraging her good credit standing for massive and staggering borrowings.  The dizzying amount of money that numbers in billions of dollars will be flowing into Nigeria’s coffers. Nigerian government has confirmed that it secured a $900 million loan from China after she signed the loan agreement with the Export-Import Bank of China. The China loan was part of the larger borrowing package of $1.54 billion approved by Nigerian Senate. The remainder of the borrowings of $152.2 million and $170 million will be coming from World Bank and French Development Agency respectively. Then comes the $500 million Euro-bond expected to be traded on the EU capital market and the borrowing continues.

The $500 million Eurobond was slated to go to European capital market December 2010, but according to Dr. Abraham Nwankwo, Director-General of the Debt Management Office (DMO), “Given the rumblings in the euro zone over the past few weeks ... we have considered it important to watch carefully over the next couple of weeks and as soon as possible make the offer.”

“The $500 million Eurobond is the commercial portion of the $3.702 billion foreign loans from different sources, as part of the $5.3 billion peg placed on external borrowing by the National Assembly, out of which approval had earlier being granted for $2.4 billion. The loan to be secured on concessionary terms and with a repayment period of between 20 and 40 years by the Abuja would also have a moratorium of seven to 10 years and is for use to address major infrastructure gaps across the country.”

In October 2010, Reuters reported that Nigeria auctioned 123 billion naira in sovereign bonds: "Nigeria sold 122.93 billion naira ($820 million) in 20-year, 7-year and 3-year sovereign bonds at its tenth debt auction of the year, the Debt Management Office (DMO) said on Thursday. Sub-Saharan Africa's number 2 economy sold 58.76 billion naira in the 20-year, 37.50 billion naira in the 7-year and 26.67 billion naira in the 3-year instruments at Wednesday's auction. All the instruments are re-openings of previous issues, the debt office said in a statement."

According to Nigerian government, the borrowed money will be utilized for revitalizing and upgrading Nigerian dilapidated infrastructures.  Minister of Finance Olusegun Aganga, confirmed during a press conference that $900 million loan from China will be utilized for the “construction of a $500-million railway linking the capital to the northern city of Kaduna and a $400-million public security communications project.”

What's going on?

Even with Nigerian economic growth of 7.8 percent in 2010, Nigerian credit rating was downgraded to BB-, by an international ratings agency, Fitch Ratings. The rating of BB-minus was three levels beneath investment grade because Nigeria continued to withdraw excessively from its crude account. But even with the excessive withdrawal, Nigeria’s appetite for borrowing was not satiated.

Dr. Abraham Nwankwo, Director-General  (DMO)

Nigeria with her bold and can-do attitude of borrowing begs for some explanations.  Nigeria has a documented history of mismanagement and corruption. It might be easy to borrow massively and piled the debt on poor Nigerians in the name of fixing and providing infrastructures. But it may not be easy to pay back the loans. Where is the assurance that all these funds will be efficiently allocated and used appropriately for the planned projects?

The Finance Minister Olusegun Aganga and DMO chief, Arthur Nwankwo were quick to say that Nigeria’s debt-to-GDP ratio that stood at 13.8 percent has not exceeded the international permissible benchmark for third world countries.

Nwankwo, his words, “The international benchmark requires that countries in our group do not exceed a debt to GDP ratio of 45 per cent, which means that we are at a very comfortable level… After exiting the Paris Club, we have maintained prudence and restraint in ensuring we do not go back to the dark days, “we are under pressure to mobilize funds for infrastructure deficit.” While it was reported in the news that Aganga said, “Nigeria’s debt to GDP ratio which currently stands at 16.6 percent is low compared to the internationally acceptable benchmark of 40 percent for developing countries.”

Minister of Finance, Olusegun Olutoyin Aganga

The so-called international acceptable benchmark needs more explanation to Nigerian people, while one person is saying 40 percent, another is saying 45 percent. Apart from the numeric inconsistencies, the international body that set the standard does not have the final say on what Nigeria will do to protect herself from financial crisis. The Euro zone has their deficits and debts ratios-to-GDP benchmarks. Nigerians and Africans are busy quoting some international standard without making any initiative to come up with their standards and benchmarks. When Nigeria falls again into higher debt trap and inflation, there will be no international body to bail Nigeria out.

The Nigerian financial managers and leaders especially the Minister Finance and DMO should take some responsibilities and stop quoting the so-called international standard. Nigerians would like to hear those in authorities say that the borrowed money will be properly utilized with accountability and probity.

In spite of the so-called international permissible benchmark, the increasing borrowing by the government is giving a serious concern to so many Nigerians. The elite and ruling class might not lose sleepless nights but the average Nigerians are worried that borrowed money might not be utilized for the proposed projects. And their concerns are rooted in history of mismanagement of erstwhile loans of yesteryears.

When these resources are prudently invested and the projects intended are efficiently completed especially the electricity project, it will enable Nigerian economic growth to amplify and highly appreciated. But when resources and funds are mismanaged the Nigerian people will be laden with a heavy yoke and sadden with massive debt.

Nigerians do not want history to repeat itself, which is going back to the gloomy days of payment of monstrous foreign debts. When Nigeria settled her debts from Paris and London clubs, her citizens cheered on the development. Nigerians are not ready for IMF austerity measures and servicing of unending foreign loans with its unending arrears and malleable interest rates.



Monday, 20 December 2010 00:04

Ghana becomes oil producer

Transparency and probity to avoid oil curse

As President of Ghana, John Evans Atta Mills turned the wheel to officially lunched Ghana into the family of African oil producers, Ghanaian at home and abroad were overwhelmed with joy.  Ghanaian friends, well wishers and oil companies were elated. It was a day that will be etched in the annals of the country’s history.

President John Evans Atta Mills joined with other former presidents of Ghana - Jerry John Rawlings and John Agyekum Kufuor together with other dignitaries were on the board of the Floating Production Storage and Offloading (FPSO) Kwame Nkrumah vessel.  On the vessel, President John Evans Atta promised his country men and women that they will not be victim of oil curse but rather oil will be a  blessing to develop their country.

On the former presidents of Ghana, President Mills gave great compliments on their vision and fortitude on making oil search and discovery possible. On Jerry Rawlings, he said, "oil exploration was greatly intensified and requisite infrastructure and legislation were put in place," while on John Kufuor, President Mills continued, "It was during his stewardship that oil was struck in commercial quantity."

President Rawlings and Emeka Chiakwelu President Rawlings, Mrs Nana Rawlings and Emeka Chiakwelu The former President of Ghana, Jerry Rawlings receiving Afripol Achievement Award from Afripol's Emeka Chiakwelu.

Tullow Oil, an exploration firm in 2007 made the crude oil discovery at Jubilee Field and Kosmos Energy confirmed the discovery at Odum-2 appraisal well offshore Ghana . Both Tullow and Kosmos Energy are stakeholders of the oil wells at  22.8 and 30.8   per cent respectively.  The well is about 4km northeast of the Odum-1 well, which lies approximately 18km east of Kosmos' Mahogany-1 exploration well and the Jubilee oil field.

“It marks a three-year journey which began with the announcement in June 2007 that crude had been discovered in commercial quantities offshore. The Jubilee Field is estimated to hold 1.8 billion barrels of crude, but there have since been other discoveries which would boost the reserves significantly once appraisal works are completed.”

“The well has encountered a gross reservoir interval of 153 metres containing 32 metres of net hydrocarbon pay in stacked reservoir sandstones, comprising a 17 metre oil bearing zone below a 15 metre gas-condensate bearing zone. A combined hydrocarbon column of at least 350 metres has been established between the lowest known oil in Tweneboa-2 and the top of the gas-condensate at Tweneboa-1, demonstrating this is a highly prospective and extensive turbidite fan system “

Ghana will generate up to 40-50 percent of its foreign revenues from the export of crude oil. Ghana is anticipated to drill 55,000 barrels of oil a day, increasing to 120,000 by next year

When oil was discovered in Ghana, the former president of Ghana, John Agyekum Kufuor proclaimed that “Ghana will fly” with the discovery and subsequent oil production.  Kufuor implied that with the new found oil wealth, Ghana will develop and make life better for its citizen. Without being pessimistic, friends of Ghana desire greatly for Ghana to succeed and to show to the whole world that Africans can also be good managers of oil wealth. Many nations including Norway, Britain and other oil producing nations do not have monopoly on sound oil management and accountability, Ghana can do it too.

But it is easier to point fingers to other African oil producing countries, principally Nigeria and Angola, calling them corrupt and insincere for mismanaging their oil wealth. Without doubt these two largest oil producing nations were vulnerable due to paucity of strategic planning and lethargy. The resources they generated from oil exports were not prudently managed and invested for the greater good of their respective countries.  Ghana can do better and prove to the world that Ghana can avert the so-called oil curse.

Ghana must be precautious, careful and not overconfidence. No country chooses to be corrupt, but when they failed to set up the civil and social infrastructures to curb and control corruption they may end up become a victim of corruption and lassitude.

Ghana needs strategic planning, transparency and accountability to avoid making the mistakes that comes with steady flow of revenues from oil export.  Ghana does not necessarily need perfect individuals to manage their oil wealth but laws, social and civil infrastructures rooted in transparency and accountability to avoid mismanagement.

Transparency and open book

By this the Ghana National Oil company and the government will not hide anything from their citizens. No gimmicks and tricks in the name of national security to keep away the eyes of the people from not knowing the daily transactions by classifying records, data and in formations. The government should allow the people to have access to the information. The government can set up a website that shows the records of daily amount of crude lifted and total revenues derived from daily transactions.

Strategic planning

The government of Ghana with the approval of the House of the legislature will nominate intelligent men and women from all walks of life from market women to seasoned business individuals and bureaucrats. These people will be empowered to come up with ideas on how to invest and utilize the oil wealth. The recommendations they give will be approved by the national House and signed into law by the president.

Legislation against corruption

Ghana does not need saints and perfect individuals to run the oil wealth. Ghana needs strong and implementable laws on the book to checkmate corruption and increase accountability. The laws must be enforceable which become check and balance on the system. The laws must have teeth and no individuals will be above the law. A law is necessary to prohibit kick backs and bribery from oil companies and transnational corporations.

Active and probing media

Local media in Ghana and Africa must rise to the challenge and report news without seeking approval from the ‘big’ men of Ghana. The media must be willing to go the extra mile with investigative journalism and keep the people fully informed with the latest developments. Media is the peoples’ last resort to know what the governing class is up to and when the media fails to do the job, it spells a bad omen to a nation.

Sovereign fund and Economic diversification

Ghana may eventually decide to open a sovereign fund to enable the country to invest in international markets with high appreciative returns. The strategic planners will run the fund together with country’s president and the finance minister of Ghana.

Economic diversification is necessary for economic growth and stability. Ghana will not want to suffer the fate of many oil producing countries that focus only on oil at the expense of other sectors of the economy. This is the time for Ghana to invest in agriculture and social infrastructures that will enable the country ‘to fly’ and soars without falling down.

Africa Political & Economic Strategic Center (AFRIPOL) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

Nigerian Taxpayers to buy $14.6 Billion of Toxic Debt

Taxpayers of Nigeria will be exposed to toxic debts of the past rescued banks and the Nigeria’s Asset Management Corporation (AMCON) is expected to buy $14.6 billion of bad debt to recapitalize the rescued banks.  The Asset Management Corporation is a state-owned entity that was set up to handle and accomplish the transaction.

The burden on the backs of the Nigerian taxpayers can be backbreaking, the resources that would have been utilized to ameliorate living standard are being diverted to salvage the banking sector. Almost 70 percent of Nigerians are mired in poverty surviving with less than two dollars a day. The country’s crumbling infrastructures needed rebuilding and makeover. But rescuing and recapitalization of the failed banks probably have the zenith priority.

Without doubt Nigerian structural imbalances especially in the areas of banking and finance must be rectified but the burden of the banks bailout and recapitalization must be equally distributed. The responsible parties and culprits that caused the banking failures must also face the music and taxpayers must be rewarded with transparency and probity.

“The state-owned Asset Management Corp. of Nigeria, or Amcon, will value loans backed by shares in listed companies at about 60 percent of the 60-day average price to Nov. 15,” while the unsecured loans will be estimated at a quantify valued of 5 percent of the principal and original value according to Central Bank of Nigeria (CBN).

“Central bank Governor Lamido Sanusi said on July 1 that Amcon would clear about $10 billion of toxic debts by year-end at a cost of “roughly” $5 billion. Much of the bad debt stems from loans to speculators in the local stock market and operators in the oil and gas industry. The purchases aim to revive lending by the banking industry. Nigeria, Africa’s most populous country and biggest oil producer, last year fired the chief executive officers of eight lenders and bailed out the industry with $4.1 billion to avoid a collapse of the industry. The Senate approved the appointment of board members for Amcom on Nov. 3.”

The shares of the toxic banks debts purchase will be “assume” by Asset Management Corp. of Nigeria (Amcon). These assets will be retained by Amcon for at least two years before the shares will be trade in an open market. The point must be made that these banks were infused earlier with almost $4 billion for their rescued while the managing directors that mismanaged banks and shielded their debts from the book were dismissed by Central bank Governor Sanusi Lamido.

D8/Trading floor

Monetizing debt and effects of inflation

The government intervention through AMCON in the purchase of the toxic debts enable those banks to be replenish with funds to further and enable financial transactions. Money for this bailout which is to increase the money supply does not fall from the sky. The Central bank of Nigeria (CBN) has to print more money to purchase the bad debts packaged in form of stocks and assets. In this situation a whopping $14.6 billion will be injected into the banks’ bloodline.

Many of African countries have GDP smaller than injected fund and Nigerian economy is not a methodical and disciplined run economy. The injection of $14.6 billion poses the danger of triggering higher inflation. Already the Nigerian Federal Reserve Bank appears to be floundering in the task and control of inflationary trends. CBN at the end of 2009 promised to hold down inflation below 9 percent but at the end of third quarter of 2010 inflation was standing at 13.6 percent. By September inflation fell to 13.4 percent but it is not likely to slow down as the application of monetary policy wanes.  This is not to suggest that Sansui’s CBN is losing the battle on inflation but there is so much the monetary policy can do.

It does make sense to regulate on the frequency of the fund infusion in the market. A massive in flow of fund may do damage to the monetary base and increase inflation. Nigeria does not need market disruption and stress from increasing inflation. The increasing flow of money into the financial market can allow the ugly head of inflation to surface. AMCON and CBN have the expertise to deal with that therefore we will not have sleepless nights on that.

The troubling trend

The Nigerian taxpayers who are the stakeholders in this transaction must be properly informed on the dangers of the investing of 2.2 trillion naira ($14.6 billion) on bad debts of rescued commercial banks. These commercial banks were recapitalized with $4 billion in the past and now again this gigantic sum of money is being sink into the banks.

Although AMCON, the state-owned company underwriting the transaction has pledged to be transparent with the holdings until the shares are traded. The point is that there is no guarantee that taxpayers will have appreciative returns when the assets are sold. The government promised to revitalize the lending institutions and increase liquidity in the market by devouring the toxic debts. But in a free and capitalistic economy that is devoid of central planning and command economy the government expectations may not be realized.

The bad debts may not be necessarily toxic to Nigeria’s economy as a whole. Of course, it does impact on the financial market but its severity has been minimized with the initial $4 billion recapitalization of the failed commercial banks. The government’s concern was that bank lenders were holding on given loans to business entities therefore it became necessary to infuse a large fund to stop the credit crunch and sputtering or even the insolvency of the economy.

Nigeria’s economy at the moment is not doing badly and GDP is evidently bulging. As of the last quarter the economy has been growing at over seven percent and according to the financial minister Olusegun Agaga the economy is expected to grow up to ten percent in 2011. This is an affirmative and tremendous growth by any standard, showing that further injection of funds into the banking sector may not be intrinsic.

We are not suggesting that buying the toxic debt is not needed but Nigeria’s economy will not be detracted without the transaction. The acquiring of the toxic debts by the government will probably enhance the market confidence and encourages investors to look favorably into the Nigeria’s financial stocks.

This is bailout and handout capitalism, where taxpayers rescued failed business transactions of the well connected companies.  The danger to this that it may likely to bastardize the emerging Nigerian capitalistic economy which is centered on risk taking and taking chances. The detrimental ramification is the spurring of cronyism, dependency and the ultimate death of innovation.  When government increases spending by buying toxic debts from commercial banks, its dominant role comes with more regulations which is a threat to laissez-faire capitalism.

The taxpayers may not have to worry a lot because those handling the transactions including CBN’s Sansui, Finance minister Agaga and AMCON’ Chike-Obi are men of integrity and accountability.  And with these gentlemen Nigeria is probably in good hands but Nigerian taxpayers with healthy skepticism must “trust but verify.”


The President of Tanzania Jakaya Kikwete has named a United States of American citizen Doug Pitt - The Goodwill Ambassador of the United Republic of Tanzania. President Kikwete honored Mr. Doug Pitt for humanitarian and philanthropic activities in Africa. The ceremony took place at NYC’s Essex House on April 19, 2010.

Doug Pitt is a director of Africa 6000 International and also a photojournalist. The charity organization, Africa 6000 International is helping and financing the supply of fresh water in the rural communities in east Africa.

Doug Pitt is also a major participant of the ‘Care to learn’ project that focus on hunger, hygienic and health of our school children in the global village including America. This particular project have co-members including his movie star brother Brad Pitt and Hollywood star Angelina Jolie.

For his hardworking, steadfast commitment to our collective humanity and his tireless, unflinching fight to combat hunger, disease and to promote health in our children, the Management and Staff of Afripol chose Doug Pitt as the PERSON OF THE WEEK.

Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa. This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Rules to strengthen Nigerian banking system

The apex bank of the land, The Central bank of Nigeria (CBN) is formulating a policy equipped with rules and regulations to prevent future banking crisis. The governor of central Bank of Nigeria Sanusi Lamido confirmed that as he addressed a forum of bank directors in Lagos. The CBN chief said the rules will be directed to the lenders and together with “international advisory panels” the banking crisis can be put to rest.

Nigerian banking crisis confronted the country's economy in the second quarter of 2009 and the banking integrity was badly threatened and damaged. The banking meltdown brought the marketers confidence on nadir level. There was a consequential liquidity problem and that slowed down the growing economy. Therefore it became logical that the Reserve Bank should come up with regulations to tighten and addressed the laxity in the system.

The CBN chieftain Sanusi confirmed that the new rules will “forestall the pitfalls of the past where corporate governance malpractices brought a number of banks to their knees" and the subsequent “bailout of some notable local banks in the second half of 2009 underscores the importance of sound corporate governance practices and professional ethics”.

At the time of the banking crisis, Sanusi’s Central Bank of Nigeria (CBN) announced the dismissal of managing directors of five banks in Nigeria - Intercontinental Bank PLC, Fin Bank, Union Bank, Oceanic Bank and Afribank. And on top of that many influential individuals and companies were fingered on not living up to agreements of the debts they own to those banks. The reason given by Sanusi Lamido’s CBN for letting them go is principally due to:

“Excessively high level of non-performing loans in the five banks which was attributable to poor corporate governance practices, lax credit administration processes and the absence or non-adherence to the bank’s credit risk management practices. Thus the percentage of non-performing loans to total loans ranged from 19 per cent to 48 per cent. The five banks will therefore need to make additional provision of N539.09 billion. The huge provisioning requirements, have led to significant capital impairment. Consequently, all the banks are undercapitalized for their current levels of operations and are required to increase their provisions for loan losses, which impacted negatively on their capital. Indeed one is technically insolvent with a Capital Adequacy Ratio of (1.01 per cent). Thus, a minimum capital injection of N204.94 billion will be required in the five banks to meet the minimum capital adequacy ratio of 10per cent.”

The failed banks were later recapitalized by CBN at the tune of 620 billion naira ($4.1 billion) and injection of such a large fund probably solved the problem of liquidity but the danger of increasing inflationary trends looms with such a large injection of the fund. Nigerian inflation stood above 10 percent since the injection of the funds. We are not suggesting with certainty that the enormous fund injected did trigger the rising inflation but no enlightened market observer will deny the correlation between excessive liquidity and inflation.

Prior to the proposals of new regulations, Emeka Chiakwelu the Principal Policy strategist at Afripol stressed that CBN must go further and come up with a doable comprehensive blueprint to reform the banking sector. To look into the rules and ordinances of the banking and readjust them where there are lax and weakness in the system. At this time of global economic meltdown, the last thing Nigeria needs is to be weakening further by problems of the banking sector. The ramification will be capital flight and restriction of flow of capital for wealth creation in Nigeria. Already the Standard and Poor’s lowered Nigeria credit rating from BB-minus to B- plus.

Central bank of Nigeria (CBN) was said to be carrying out a banking reform in early 2010. With this new incubating regulation it means that the core of the matter was not solved nor resolved in the initial banking reform in Nigeria.  To make laws to avert profligacy is one thing, but to implement the laws in order to check excesses is where efficiency, discipline and call to duty are urgently needed.

Nigerian Banks must not abandon the serious job of tackling inflation and building a stronger currency to the central bank. They can be a partner to monetary and fiscal policies of the government by adhering to rules and regulations of banking sector and not trying to exploit the loopholes for short time gain and by so doing weaken the banking sector.


Saturday, 30 October 2010 05:13

Kenyan Reserve Bank depressing Shilling?

Kenyan shilling may not survive currency war

The Central Bank of Kenya has been levied the accusation of deliberately weakening the value of her national currency shilling in order to make Kenyan agricultural products and tourism more attractive to foreign marketers. The Governor of Central Bank of Kenya (CBK) Njuguna Ndung’u said that the accusation has no basis and no legs to stand on.  Governor Njuguna Ndung’u denied that Kenya was pursuing a weaken currency policy, a paradigm that is becoming chic among ambitious exporting and emerging nations. Kenya may have a reason to depreciate the value of her shillings to counteract the effects of global recession and drums up demands for local products and services.

Kenya has a market economy with few government controlled industries. Most of her foreign currency generated is based on commodity export and attraction of tourists to the famous Kenya wildlife industry. The major export of Kenya is coffee together with tourism are the major sources of foreign revenues.  With the global recession and economic meltdown of many industrial countries, foreign donor nations have drastically cool-off on foreign aids. Therefore many developing nations who were the receivers of foreign aids have to buckle up and compete for attraction of capitals and revenues and Kenya is no exception.

Kenya is not a wealthy country and a large percentage of the population survived with less than one dollar a day. Kenya has a recorded GDP of $30.355 Billion (2008) which has grown significantly from $17.43 billion (2005).  With the relatively peaceful environment emerging from awful political violence a while ago, Kenya is poise for a growth but the world recession has made competition tense for export and attraction of foreign capital. Kenyan government has been intervening in the foreign exchange market and utilized the accumulated revenue from export to buy foreign currency and by so doing weaken its local currency.

“Currency dealers in commercial banks have in recent months pointed to the Central Bank’s intervening hand in the currency markets as the single biggest factor that has kept the shilling weak, even as increased foreign currency inflows from agricultural exports and a rebound in tourism dictated that the shilling should be strengthening.

The dealers have said that CBK appears to be inclined on maintaining a weak shilling by buying from the market dollars and other major world currencies in large quantities whenever the shilling has shown signs of gaining value. The Kenya shilling has weakened from Sh75.5 to the dollar to Sh80.60 since the start of the year — earning exporters more shillings per unit of their produce.”

The tendency to interven becomes inevitable to exporting countries that are afraid of having an appreciating and stronger currency which may depress export by making their products and services expensive to the international buyers. The danger of inflation looms with stronger currency and excessive liquidity in the market. In this case the central banks will moderately increase the benchmark interest rate and up the foreign reserve war chest to protect its currency from foreign predators. Kenya is doing the best she can to keep her head above water and compete in the aggressive international trade and market.

Governor (CBK) Njuguna Ndung’u Photo/Business Daily

“Kenya’s import bill has grown to Sh438 billion in the first half of 2010, up from Sh245 billion in 2005, compared to exports of Sh196 billion in the first half of this year and Sh120 billion in 2005.The Central Bank accumulates foreign currency reserves for use in paying government debt, paying for imports and supporting foreign missions.”

Governor Njuguna Ndung’u has stood by his words that his country was not pursuing the policy of depressing its currency. The downside is that Kenya does not have adequate resources to wave-off wealthy nations that are competing in globalized market with same interest and motivations. With her minimal economic strength and limited resources Kenya may not sustain a currency war when it becomes imminent.


Africa needs peace and stability for progress

Peace is good for business and peace is the dwindling capital that Africa lacks. No place can thrive with trade, industry and commerce without quantifiable peace. For Africa to compete for capital and investments, she must be able to attain and maintain a sustainable quantifiable peace.

Africa is bedeviled with political instability due to lack of peace manifested by ubiquitous wars and intra disruption among many countries in Africa. The paucity of peace makes it difficult for Africa to progress and advance economically. The absence of peace in Africa and among many African countries makes it nearly impossible for attraction of investments to see the light of the day. The resistant of investors do not involve only the attraction of foreign capital but connotes domestic African investors who are hesitant and adamant of putting their resources in the continent.

This development encourages and booster capital flight and the shunning and abandonment of the African landscape. In globalized economy no one that understand how capital function in free enterprise can blame capitalist and investors for sending their capitals to a conducive environment where they can expect appreciative returns and safety.

Take a country like Nigeria, the most populous nation in Africa is endowed with both natural and human capital but rudimentary deterrence including paucity of quantifiable peace becomes a stumbling block to sustainable economic progress. The problems of kidnapping, urban crimes and political uprising especially the issue of Niger Delta deter foreign investments and trigger capital flight.

Peace can be quantified in the sense that there is a repository of peace that a nation needs to make capitalism and free enterprise functional. Safety of investments including protection of life and property are necessary for sustainable economic growth. Peace can be measured with regards to the crime rate, mini-wars and political disturbances which can become a threat to trade and commerce in a given area. In most industrialized and advanced nations they enjoy high quantifiable peace that allow their economic advancement to be sustainable.

Most third world countries have low quantifiable peace that abhors economic progress and creates infertile landscape for investments. These rich countries including USA, Japan, Germany and others can maintain a sustainable economy because they do not have a major internal disturbances, ubiquitous crimes and internal uprising that can deter economic progress and development. This is not say that they do not have problems of crimes and political turmoil but they can mange their internal issue to a barest minimum that poses no threat to free market and capitalism. They have organized structural architecture that is capable of taming and restructuring peculiarity and abnormality in their system.

The problems of low quantifiable peace associated with developing nation is a reality because they cannot sustain economic progress for a prolong time. At a certain period one of these developing countries will be in the news for making progress with affirmative economic indices then the next period they become destabilized due to instability brought either by religious or political disturbances or due to high level of crimes.

In this case, these countries especially in the South of Sahara cannot manage the internal conflicts and the uprising of internal mobs that are claiming grievances to ethnic oppression therefore are seeking self determination. The major issue is that countries with low quantifiable peace do not have the structures and channels to resolve internal conflicts nor do they have resources and know-how to manage those ills that are confronting economic advancement in their respective countries. The existing courts, laws and legislations are outdated, weak and flimsy to make a real impact on the polity and on the prevailing status quo.

Often, some African countries campaign for investments by rebranding their countries but they fail because they have not attacked the crux of the matter which is political instability impelled by paucity of peace . They must first and foremost quenched the fire engulfing their countries before seeking for investments and attraction of capitals. The former US Secretary of State once emphasized that capital love to go to where it is loved and pampered. African countries have not done the necessary things needed to receive capital, thus making it safe and happy, to stay put without migrating to the greener pasture.


Independent Referendum to be closely monitored and implemented

Sudan as a nation has never known peace since her independent from Britain in 1956. There were always inter or intra tribal conflicts, regional division, ideological fragmentations and religious conflagration. There were two protracted civil wars and Darfur conflict that resulted into genocide. These intractable problems have never gone away and the constancy of these problems has disorganized the largest land mass country in Africa. Sudan is endowed with natural resources notably crude oil but massive poverty, diseases and wars have become the landmark of the troubled land.

At this moment emerges a window of opportunity from the notably Peace Accord made between the Islamic North and mostly Christian South that called for a referendum in January for the self-determination of the South. This opportunity to end the wars, genocide and abhorrent status quo in Sudan cannot be allowed to flatter away. The Bush administration must be acknowledged for their contribution to the advancing of peace making between the warring factions in Sudan that culminated to the Peace Accord, subsequently with the scheduled forthcoming independent referendum in January.

The Obama administration and United Nations must utilize all the leverage they can muster to make sure that the Sudanese government of President Omar al-Bashir do not back down from the timetable and the implementation of the accord. Earlier, President al-Bashir was indicted by International Criminal Court at Hague for war crime in the Darfur genocide.  Although President al-Bashir has assented that he will abide by the outcome of the referendum which will surely result to the secession of the Southern Sudan but the watchful eye of the world is still necessary.

Sudan's President al-Bashir (r.) and First Vice President Salva Kiir Mayardit (Southern leader) Pics: Christian Monitor

United Nations must make the necessary arrangement to ensure that the outcome of the referendum will be honored in orderly framework. The presidential candidate Barrack Obama was talking up the issue of Sudan during his campaign for presidency and was showing all the signs of being on top of it once he got elected. The critics of Obama administration including Human Rights organizations and some members of US congress were complaining that his policy on Sudan is murky and that may be unfounded.

President Obama administration is backing the independent referendum which he reiterated America’s support during his appearance at the United Nations conference in September. President Obama said, "The stakes are enormous, we all know the terrible price paid by the Sudanese people the last time north and south were engulfed in war -- some 2 million people killed."

The United Nations General Assembly cannot afford to be playing child’s picnic with the issue of Sudan because the downside will be a horrible ramification that will quadrupled human sufferings that comes with massive loss of lives, property destruction and with unspoken tolls of hardship. United Nations has to put more resources and energy by aiding African Union and listening to the counsel of Nigeria’s Professor Gambari, United Nations Special envoy to the Arab League Summit that he is offering in order for the cessation of the violence to be sustainable. African Union (AU) can be of great help because Sudan is in their turf but AU lacks the necessary fund, resources and logistic to implement the accord singlehanded.

Khartoum government may likely back down from the accord without any credible power breathing down over their back. Bashir government has every reason to withdraw from the peace accord because the oil resource is in the south. Therefore the United States and United Nations can bring firmness on the issue that will not provide the Khartoum incentive to be become reluctant to implement the accord.

This is not the time to appease tyrants and dictators who are not willing to work together with global community to foster tranquility and peace in their corner of the world. As Sudan is aspiring to be a democratic nation and a responsible nation she will follow up with the peace accord and avert further destruction of her land. President Bashir has to display a statesmanship with responsibility that will convince the peace loving people of our globe that his quest for peace and unity is without doubt.

Peace can be made self-evident not by words and promises but action and commitment to peace. The world community must be willing to work with the Sudanese government to bring to an end the wars and disease in the land. At the end of the day if the South ratified the referendum by voting Yes, then their self-determination will be honored and respected. And that will mark a new chapter in the annals of peace making and a new dawn of peace will commence in the troubled land of Sudan.

In 21st century Africa, peace is a precious resource and Africa must be willing to do anything within her power to maintain a peaceful continent. The greatest bearer of brunt of African wars, instability and dilemma are women and children. The children of Africa and Sudan must be protected from wars, diseases and abuses emitted by their selfish leaders and war lords who were bent on implementing ideas and policies that do not promote peace, liberty and unity in the political landscape.




Page 3 of 7