Soludo: his brilliance and delusion

By Jonah Etufunwa

Prof. Chukwuma Soludo

I am an ardent lover of Soludo, but I have so many bottled up reasons to disagree with him for the first time this week. I also have much respect for him, for no one has a better curricula vitae than him for the position he occupies today in Nigeria.

Born brilliant, strode brilliant and appointed Governor of Nigeria’s Central Bank based on his brilliance. I stand to be corrected of this view.

It is interesting to know that Soludo is really mortal and prone to the misdeeds of lesser mortals! Governor of the Central Bank of Nigeria (CBN), for his academic and professorial brilliance, remains an academic colossus on mind. Nothing else! Legends have it that he never for once took second at school. He took first all the time and ended up with Grade One in his School Certificate Examination and First Class in his degree course.

We learnt he also came tops in his master’s. He always topped his class and department at any given time. A genius indeed! There was not better admiration for this enigma than his exceptional academic and professional intelligence. Everyone was dazzled by his brilliance and he started brilliantly as his Governor of Nigeria’s CBN.

From nowhere, at least, not imagined by his contemporary mortals, he conceived a novelty: Consolidation of the banking sector. He was applauded and supported by the President of Nigeria and Nigerians in general. Nothing could stop him from being perceived as a genius. And he strode the landscape as one. He really deserved it. There was no aorta of doubt on the minds of Nigerians, that the CBN Governor was not a mere mortal.

He was perceived as head and shoulder taller than all Nigerians in economic intelligence, especially in money matters. Though, not given to hero worship, I preserved a portion of my heart for honouring him alone as an extra-ordinary human, especially in my thoughts about him. He was actually great in cerebral matters. I joined others in seeing him as a financial saviour. Sometimes we delude ourselves with our thoughts, hidden from our close associates. Nothing would have stopped me from hero-worshipping Soludo, if not for my religious training. I know that nobody is perfect. We all make mistakes and Soludo would not be different from this nature of man. I am not deliberately looking for ways to denigrate the ‘wisest’ man in our midst. I simply took him for what he stands for – extra-ordinary cerebral gift to Nigeria!

My first disappointment with him was when he allowed himself to be deluded by the former president Obasanjo over the printing of coins. Before they printed those coins, I personally knew that the coins would become artifacts immediately. I knew that denominations alone, as legal tenders, would not help us control inflation. Soludo would have thought the way I thought but too much acada intelligence was making him mad. He was living by ‘book,’ that was why he created coins that could help us to have such prices as 10kobo, 50kobo and one naira denominations that could not buy anything. And yet Obasanjo and Soludo went ahead to print and distribute legal tender metals that were utterly useless and only useful for decorating our ‘centre tables.’ I knew the coins would become so even before they were printed. I could not understand why both the President and the CBN Governor could not see what I saw as a lay economist. Obasanjo was busy making life difficult for ordinary Nigerians through multiple taxations and principally by increasing the prices of Federal Government’s products, such as PHCN bills and petrol products. Prices of such things cannot be increased without other products being affected on the upward side. Such prices daily affect cost of production and yet the President and the Governor of Money (Soludo) wanted magically different from what they sowed. You cannot be fuelling inflation and at the same time dousing it. They sowed whirlwind and expected to reap peace. They wanted inflation controlled without any input from their own end. How impossible!

Another laughable policy that Soludo did not succeed implementing was the case of N20 being the highest denomination in our cash economy. With the aforementioned state of inflation, just imagine how that could only have scratched rather than solving or checkmating inflation. I just knew it could never work. May be, we would having been paying more money to transport our currency for buying things than the prices of the products themselves. What the economy needs are just three activities: One, production; two, production; three, production. ‘Africa Must Produce!’ one editor wrote some time ago in one of the dailies. Nigeria Must Produce! Productive activities would solve our economic problems, not economic theories. Economics, no doubt, is a real science, and only scientific measures can solve our problems, no just acada approaches. For example, no rhetoric can solve our bearish capital market, but once the scientific or economic forces involved are right, our woes would be past. Same solution is what our forex market needs.

I do not need to be an economist to know that the U.S.’ financial recklessness of their economy would eventually affect Nigeria. When Soludo insisted that we were insulated, I knew he was lying deliberately or he wickedly ignored the facts on the ground just to delude or soothe us. I knew he was also deluding himself. I began to doubt his professorial wisdom and acada stardom. I became afraid of the unavoidable disgrace that would soon confront him since our economy was almost dollar dependent; not only ours, but the entire world’s.

If you love somebody, you would not want evil to befall him. I did not want shame to come Soludo’s way; I didn’t have to be an economist before knowing that he was not correct. I began to doubt the practical usefulness of his unquestionable brilliance. Knowledge is wisdom in the brain (mental wisdom) but it becomes real knowledge when applied to solving problems successfully. Soludo’s acada knowledge has no benefit for us in small things, but only in one big thing – bank capitalization – that has now left our banks near empty after bloating. As a member of the country’s economic management team, I expected Soludo to be shouting that the banks were not doing the right by not financing the real sector. He did not also warn Nigeria for spending excess crude oil revenue on wasteful things, anything outside the real sector is practically wasteful. Income equals consumption plus savings. We concentrated on consumption instead of savings, which ultimately means investment. I hope Soludo would not end up an all-rounder disappointment on our financial landscape.

Finally, I share the fears of many that saving the naira is not what can bring a lasting solution to our forex problem, but still those three things: Producing, producing and producing and diversifying our earning power of foreign exchange. Think about agriculture. It would help us save money on our international food bill, feed our agro-allied industry and earn us income through exports. Someone even suggested that spending on infrastructure rehabilitation would create employment and since Nigeria does not have money for that now, then public private partnership scheme would be the answer; and it can be a catalyst. We would not depend on crude oil alone. With oil alone, it is like we are unemployed as a nation.

It is just like an unemployed man who has little savings that may ordinarily last for many weeks if spent on his daily needs and he only sees solution of his inadequacies in spending his savings to buy what he needs NOW. I think what this man needs are two: gainful employment or gainful investment and not just meeting up his present needs by blasting off his savings. Soludo’s forex solution is too simplistic and lacking true wisdom. If the 20 billion dollars are spent on forex to shore up the value of the naira, how long would we shore the naira up? Who would eventually benefit? Of course, the exporters of what we are using the forex to pay for. The exporters would produce more and employ more of their citizens and raw material producers for their export (product).

If we want to banish poverty, we must never depend on oil alone. This is not Soludo’s department, though, he should tell his master, Yar’Adua and Nigerians the truth about what should and should not be implemented.

Our only source for financing our national budget is through sale of crude oil. The income is calculated in dollars. The world’s industrial activities are experiencing a depression. The demand for oil has fallen, can we now be expecting our income from oil to remain okay? Brilliance or no brilliance cannot change our fortune unless we think about other things to sell in order to get dollars or pounds or other international currencies for financing our budget. Our budget implementation is import dependent; because we are a consuming nation. We may still be importing toothpick and handkerchiefs. Bicycle spoke is not produced here. Producing spokes would depend of iron and steel technology and availability of energy (electricity) which we do not have. Fundamentally, all we need is production, but we lack the foundation, the platform. We can only start by building from the foundation. Soludo as a brilliant should have been bemoaning all that we lack fundamentally, that are hampering his ability to control inflation and contribute to the growth of the economy.

Soludo is a man I admire so much for his grey matter, can someone help us know why he has not been telling us the truth, because I still believe he knows the truth. If he does not, I think we need to know why.

My thoughts about Soludo are even driving me nuts. Someone, please, help us to find why the genius professor of economics does not know and do simple things that are true of scientific ECONOMICS.

Delay of Public Offer Returned Money: Wema Registrars Accuses Access Bank of Forgery, Manipulation

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Mr. Gbenga Oyebode (SAN) Chairman of the Board of Access Bank Plc was intent at justifying his bank’s decision to change its registrars, so, he announced to shareholders gathered at the venue of the bank’s 2008 Annual General Meeting that because his bank was dissatisfied with the services of its former registrars, Wema Registrars, over the handling of its last public offer, Access Bank decided to jettison the registrars services of Wema Registrars for a new registrars firm, United Securities Limited.

That public condemnation of the services rendered by Wema Registrars sent a surge of outcries through the ranks of personnel at Wema Registrars culminating in a formal protest to the management of Access Bank and a threat to head for the court of law if the libelous condemnation of Wema Registrars as contained and read by the Chairman of Access Bank at the last AGM was not retrieved and apologies offered. Wema Registrars threatened to sue for a redress of N.5billion if Access Bank refused to address its demands.

Will this be the torrid end to a business relationship that had flourished for close to a decade? Those that have followed events that marked the relationship between the bank and registrars say a legal battle may truly be imminent especially in consideration of the disdain with which Access Bank had dealt with its erstwhile registrars even up to the point of demanding an apology for the public hacking of the quality of services rendered it (Access Bank) by Wema Registrars.

“Wema Registrars was not going to make a fuss over the ways Access Bank had conducted its public offer. As far as we are concerned, we’ve done a good job of even saving them from present sanction by the Securities and Exchange Commission for the many breaches of regulatory compliance guidelines relating to public offer allotment and returned monies.” A Wema Registrars insider says.

“Of course we knew they had decided that they were going to establish their own registrars firm, this was clearly stated in their public offer prospectus, we couldn’t have been bothered, it is their right, but what I think is not right is for them to hang our reputation on a bad name in the public to justify and cover up their manipulations of their own public offer. I don’t think this is appropriate for a financial institution that wished to be respected.” The source protests.

Historically, Wema Registrars had managed registrars related functions for Access Bank since 22 December, 1997, it (Wema Registrars) was in charge of the bank’s first public offer in 1998 where the bank raised the sum of N462,000,000 mainly through 5,347 subscribers. And had since then, managed three other public offers (2001, 2004 and the now controversial 2007). Wema Registrars also handled the bank’s 2001 right issue and 2006 bond issue as well as the share reconstruction exercises between Access Bank, Capital International Bank and Marina International Bank in the run up to the consolidation of the bank.

So, why did the management of the bank’s 2007 public offer turn such a sore point in the relationship between the bank and the registrars?

Another Wema Registrars source argues that this could be adduced to the bank’s desperation to manipulate the offer proceeds and conveniently use Wema Registrars as the fall guy if the regulatory authority smelt the rat, and as things turned out, to also use their (Access Bank) own deliberate obfuscation of the offer allotment and returned monies process as good excuses to persuade shareholders and regulatory authorities of their need to change registrars.

“The fact of intent at manipulating the offer was clear enough.” The source says. “Despite the fact that the offer closed two weeks later than earlier scheduled because of an extension from the original closing date of August 29th 2007 to September 12th, 2007, the registrars did not receive the returns from Access Bank, as required, until very late. In fact, one of the returning agents to the subscription that had sold 261,849,400 units valued at N3,901,556,060 to about 4000 subscribers did not submit details of its returns to the registrars until December, 2007, just some few days to the final submission to the Securities and Exchange Commission.” The source reveals.

“Even at that, so many agents attempted to submit to the registrars much later than this date but they were rejected by the registrars, but obviously, the bank did not reckon with the breaches of the regulatory authorities, so they accepted the agents’ late returns without recourse to the registrars. This led to so much hiccups in the shares allotment process.” The source added.

Matters became rather desperate when the Securities and Exchange Commission specifically directed by a letter of January 4, 2007 to the registrars that by January 11, 2007 the dispatch of returned monies to subscribers that were not fully allotted shares they paid for.

Meanwhile, all monies raised had, at this time, being domiciled in the vault of Access Bank with direct control by the bank. Ordinarily, this should not be. A capital market veteran informs that funds raised during public offers should be the direct responsibility of the registrars until all necessary administration had been concluded on the offer.

“It is at this point in time that the issuing house(s) would turn over the funds to the issuer that is the company raising the funds through public offer.” The veteran explains.

Issues on dispatching returned monies to unallotted subscribers became rather suspicious when, according to a source, Wema Registrars dispatched a letter to Access Bank to prompt an early dispatch of cheques for returned monies but the bank refused to even acknowledge the letter. Two other letters, one on January 21 2008 and the second on February 1, about a month after the dispatch was supposed to commence, did not elicit any form of response from Access Bank. It was not until February 15, a clear month plus four days after the dispatch should have commenced when, Wema Registars, according to inside source, was compelled to write another reminder to Access Bank, outlining the grave consequence of the breaches of regulatory requirement regarding the dispatch of returned monies that the bank decided to give consideration to the registrars request by calling a meeting for February 21, 2008 where issues of the returned monies will be ironed out.

An official that was present at the meeting intimates Fortune and Class Weekly that representatives of the management of the bank decided to change the rules of returned monies to subscribers by insisting that notifications should be made through the media that subscribers with over 50,000 unallotted shares should go to Access Bank’s designated branches to collect their refund.

“We protested that this was a clear breach, informing them that the SEC may not take kindly to the arrangement because the bank should not, in fact, be seen as having control over the funds raised through the public offer at that point in time. But then, they insisted, so we really had no choice but to concede to them. Now, at this point, a draft of the newspaper advertisement for the notice to investors was handed over to the registrars who published it on Monday, February 25, 2008 in the Punch and This Day newspaper.

“Besides, a draft of the letter informing investors to approach Access Bank directly for their refunds was also handed over to the registrars by Access Bank. This was vetted by the registrars, provisionally appended her signature and then returned the draft to Access Bank officials on the understanding that the Registrar would check with the Securities and Exchange Commission to ensure that the actions would not contravene the Commission’s directives on matters relating to returned monies.
When the registrars asked for the draft for further inputs, according to Fortune and Class Weekly source, officials at Access Bank were not forthcoming.

“We were already frustrated when, suddenly, on March 6, more than two months after the dispatch of the refund should have commenced, in fact, it should have been concluded by that date, about 4,000 letters were brought in cartons to the registrars office.” The source says.

The registrars staff were patently aghast at the letters suddenly dumped in their office by Access Bank.
“We were more than surprised when we opened one of the letters. We realised that Access Bank had, in fact, printed our official letter headed paper without discussion or approval from us and, had, gone ahead to print the draft letter we thought still needs some inputs, on the forged letter headed papers of Wema Registrars.

“The clear conclusion we reached at this point in time was that Access Bank did the printing of the forged letter head paper without the registrars knowledge to cover their many breaches of the Securities and Exchange Commission’s guidelines for the refund of the returned monies. This was further reinforced by the fact that Access Bank dumped the offensive letters in our office on the same date the officials of the Securities and Exchange Commission were examining their (Access Bank) books with respect to the public offer.

“The same day they dumped the letters, we forwarded a letter of protest to them (Access Bank), copied to the Director-General of SEC, dissociating ourselves from the non compliance of Access Bank with the SEC’s regulations on returned monies as contained in the forged letters.” The source reveals.
Curiously, sensitive as this matter had turned out; the Securities and Exchange Commission is yet to take an active position on the issue. This troubles other capital market operators that had been following the unraveling of the suspected breaches involved in the Access Bank public offer.

“This is typical.” A capital market operator says. “This explains why so many subscribers to public offers get short changed. You can imagine what beneficial transaction and trades the bank would have undertaken with money that should have been refunded to subscribers for close to a year after the conclusion of the offer way back in September 2007. What is the excuse the SEC would give for not investigating this case which had been formally reported to it by the registrars that managed the offer? The apparent lethargic reactions to sensitive issues like this only lead to loss of confidence in the stock market because the exploitation of the mass of investors is obvious.” The operator protests.
An Access Bank spoke person, Mr Segun Mamora, however insisted that the bank had to be directly involved in dispatching returned monies to its public offer subscribers because it became apparent that Wema Registrars could not manage the volume of responsibility deriving from the massive number of subscribers to the 2007 public offer.

“The fact is that when it was becoming obvious that the time was running out on the schedule of returned monies for the offer subscribers that were not allotted, we had to call a meeting where we met with the Registrars. After evaluating the situation, we all agreed that Access Bank should assist Wema Registrars in the dispatches. A letter was drafted which the parties agreed to and we undertook to dispatch them as agreed.

“There is no issue involved here, Access Bank and Wema Registrars have both gone before the Securities and Exchange Commission to explain the matters involved and it has been resolved.”

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