So much has been written about the Nigerian bank crisis and the ‘surgical’ operations being carried out by the capitalist financial doctors, led by Central Bank of Nigeria (CBN) Governor Lamido Sanusi. Revelations of crass swindles by the 'larger-than-life' bank ex-chiefs have generated bank fraud in Nigerian banking, provoking much angst against these hawks who lived like Shakespearean shylocks. While they lived opulently on shareholders’ wealth, country folks continued to live in unending misery, spiced with chronic unemployment and under-employment. It was not uncommon months ago to see our self-styled enterprising students and youths with multimedia gadgets, listening to the ‘sacred’ messages of our entrepreneurial gurus in the banks’ exquisite boardrooms. Today, the bank hawks earn the opprobrium of even their ex-fans. This explains why the Lamido Sanusi’s reform pills have at the beginning gained support from a sizable section of the populace. To the market women and men, the revelation about billions squandered and looted again brings out their anger and frustration about the state of the nation. However, without a careful analysis, and the labour movement taking a revolutionary position, the working class will be victim of another vicious cycle of capitalist crisis of plundering.

While the Sanusi reform has gulped over 600 billion naira (N), there is already a planned massive retrenchment of more than a quarter of bank workers in months to come. This is an attempt to place the frauds of capitalist class on the working people. Before long, several business concerns in manufacturing, services and other financial institutions – many of which are directly or indirectly involved in the bank crisis – will follow this vicious route. Ironically, the so-called reform has not been reflected in the labour practices of the banks, a situation that has seen bank and financial workers not only overexploited but also subjected to job uncertainty. Are the Christmas gifts of N620 billion from the CBN and the government’s N200 billion not justifying this? Otherwise, how will the CBN and the government give out close to a trillion naira to 14 banks without being concerned about the working conditions of bank workers?

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Despite all the propaganda about the Sanusi reform, it is clear that it is just like building a skyscraper on a quicksand foundation – the bigger and costlier the structure, the greater the loss and despair that will accompany its collapse. The current reform is just an extension of the Soludo reform, which laid the basis for the current crisis. It will be recalled that just like Soludo’s consolidation and Sanusi’s reform, Abacha’s bank tribunal before it had also tried to scapegoat fraudulent bank bureaucrats in an economy enmeshed in con and decay. As if that was not funny enough, many bank spin doctors, who did the dirty jobs or were indicted during the Abacha era, are today in big business and political power. So, do not be surprised when those currently being prosecuted among bankers become policy-makers tomorrow.

The Soludo consolidation reform was so-called 'predicated on making Nigerian banks strong enough with adequate capital base to fund economic development'. But at the end of the day, the reform was nothing short of a massive fraud. In truth, Nigeria’s pre-consolidation 89 banks could hardly withstand any adverse effect of risks. But the character of Nigerian banks reflects the nature of the economy, which depends on the importation of semi- and finished goods, the export of raw materials, totally dilapidated infrastructures and an uneducated population. This has meant recurrent unemployment and the attendant mass poverty of over 70 per cent, which leads to an abysmally low purchasing power. This will be reflected in the rate of activities of the banks and their shareholder/customer base. To expect Nigerian banks to be more advanced than their economy will be daydreaming. Thus, these 89 banks, in search of quick profits, invested in speculative and unproductive activities – stock market manipulation, forex deals, money laundering for corrupt politicians and loans to elitist businesses – which only recycle the already made wealth from the poor to the rich few.

But Soludo’s CBN and the government, rather than stop this horrible drift, preferred to embolden the rapacious profiteers. Rather than expand public and social infrastructures and massively invest in manufacturing, using huge public resources, the CBN and the Obasanjo government, in collusion with capitalist local and multilateral vampires, expanded the reigning but ruining order by asserting by fiat the merger of banks. This in itself, despite the Obasanjo government’s capitalist ideological commitment, was against the free-market ideology that proclaims free competition. But the government was only interested in creating new set of global mega-billionaires, who will be the basis of measuring the country’s GDP (gross domestic product) and economic growth. They knew too well that massive investment in social and public infrastructure will reduce the money to be gambled upon by the looting class, while multinational vampires and their international strategists (the IMF (International Monetary Fund) and the World Bank) will have little access to cheap wealth. They knew that it will be a class suicide to implement social programmes that will heavily tax the rich, who have amassed huge wealth from the public till.

After the consolidation, billions of dollars accruing from crude oil sales were handed over to these business shylocks. Money were given out to these banks to manage for government through various intervention programmes like agriculture loan funds, extortionate contributory pensions and a monetisation policy. While the government paid banks for these activities, the same government through the CBN will borrow the same monies from banks through issuing short-term bond papers and treasury bills at an exorbitant interest rate of up to 15 per cent – more than twice of the level charged by the CBN (MPR) on loans to banks! In 2006, Nigerian banks were allowed to participate in the arrangement of fraudulent debt buyback, which saw over US$12.4 billion of the nation’s wealth siphoned off to multinational financial vampires. Also, in 2007–08, Nigerian banks were given license to ‘manage’ over US$7 billion from the over US$60 billion excess crude wealth. Few months after, the same government issued treasury bills at huge interest rates. What a nice and legitimate way of robbing the nation.

With oil contributing over 90 per cent of the government’s wealth receipt, the CBN has already assured banks uninterrupted profits even if the productive sector continues to tumble at less than 40 per cent capacity utilisation. Banks, in a craze for mega profits, embarked on series of public offers so as to rake in billions from political looters and big business. These monies were recycled to gain from government neoliberal policies through the privatisation of oil wells, public corporations like cement companies, ports and fuel imports financed by the banks. Searching for more wealth, coupled with unprecedented wealth available to bank managers, maddening stock gambling and perfidious profit-taking, ensued with bank managers and shareholders sharing out profits from immature and unrealistic loans (in an infrastructure-deficient economy), and inflating bank share values by insider buying. The base for this madness is not farfetched: the huge wealth at their disposal and the bankruptcy of Nigeria’s business and political class.

All this continued far into the Yar’Adua government's tenure. In fact, the economic strategists of the Yar’Adua government saw nothing wrong in Soludo’s cheap loans to the banks and costly treasury bill. When Soludo’s CBN gave N200 billion to banks as an agricultural loan with a stringent condition that interested farmers should have a N200 million value (in a country where over 95 per cent of Nigerian farmers are peasants), the Yar’Adua government only concurred.

It took the near collapse of the world capitalist economy – which led to the downward spiralling of crude oil prices (which were themselves over-priced by mindless speculation on the stock market) – to expose the deep-rooted rottenness of the Nigerian economy. It also shows the bankruptcy of Nigeria’s economic strategists and IMF/World Bank spin doctors. Practically, the much-touted economic growth is predicated on oil wealth receipts, the fraudulent wealth of a few billionaires, and the paper wealth of financial institutions. At the end of Soludo’s reform there were over 30,000 bank layoffs and several thousands sacked through Obasanjo’s neoliberal reforms. The former bank managers and major shareholders who ruined the unsuccessful banks looted over N55 billion from these banks while poor depositors were made victims. Many of these bank managers and shareholders have found their way back to the banking system.

Having said all this, it is vital to ask the question of whether Sanusi’s prescription is a departure from a ruinous road. Without incurring the wrath of Sanusi's fan club, the fact does not place Sanusi’s reform on another path from the ruinous past. If, as Sanusi said in a forum, the indicted bank officers should be taken to the guillotine for the massive fraud they perpetrated, what about a government that played a central role in the handout spree to banks, which laid the basis for the whole shenanigan. Sanusi also commended Yar’Adua for being dispassionate on the reform even when his family interests in one of the banks are at risk. But Sanusi failed to tell us what the president and his family were doing when all the tomfoolery was perpetrated by his bank. Was the president’s family, as a significant shareholder, not a beneficiary of the massive racketeering perpetrated by the family bank? What was the role of the family in the operation and profit-making of the bank? That Sanusi, rather than address these issues, exhibited an already superfluous show of sycophancy, actually shows the direction of Sanusi’s reform.

Looking at the reform itself, it is glaring that it cannot go beyond the boundary of the existing shenanigan economy. Pumping N620 billion into 14 banks as a way of recovering the economy is itself a fraud. According to official data, just 8 per cent of the 20 per cent of Nigerians who have access to financial services control around 90 per cent of bank deposits, while just 1 per cent of Nigerians control 80 per cent of the nation’s wealth. Thus the N620 billion bailout benefits the top echelon of Nigerian economic strata. Worse still, it is those billionaires, who severely and collectively plunder these banks, who are also the major shareholders and depositors in these banks. Sanusi’s feeble excuse that the bailout fund belongs to the CBN is funny. Assuming without conceding that the N620 billion belongs to the CBN, the question is who funds the CBN? Is the banks’ reserve with the CBN up to half of the bailout fund to these banks? What this implies is that public resources are being used not to bailout teeming millions of Nigeria’s hoi polloi, but the few already rich who caused this crisis in the first place.

Then, what is the bailout fund meant for: Is it to fill the bottomless pit of bad debts or buoy up the economy? If it is to fill the pits, this is an assured failure. According to the CBN and the EFCC (Economic and Financial Crimes Commission), of the over N1.5 trillion bad debt, less than 20 per cent has been recovered. If the N620 billion is added to this, it is still less than 65 per cent of the bad debts. Even if this amount provides the fund to start some minimal activities, the banks will not restore to profitability in the immediate period. Whether the EFCC can recover a sizable amount of the bad debts will sake the weak foundation of Nigeria's economy as virtually every major player of Nigeria’s economy are directly or indirectly affected. If their estate or collaterals are liquidated, will that save an economy that depends on big business? Aside from the fact that the properties will lose value, which will reduce the cost to be recovered, those who will buy are the same rich few who are in one way or the other involved in the bank scams. What will happen to the ‘real’ economy?

Will the CBN’s N620 billion be used to fund small and medium businesses? This is not straightforward. In the first instance, what militates against small and medium industries is not only lack of credit, but the high cost of production which makes local products uncompetitive. To spur this sector of the economy will require government's massive investment in infrastructure – an integrated transport system, an adequate and stable power supply, the agricultural system – while there must be deliberate government investment in the provision of free, quality education and healthcare, and massive jobs through public works meant to raise the purchasing power of the over 70 per cent of poor Nigerians and make them participants in the economy. Contrarily, the government has further committed itself to anti-poor, neoliberal policies while corruption is rife, with cases like Halliburton, Willbros and Siemens being covered up.

What applies to the small and medium industries should simply be magnified for the big industries. What then do the CBN and the government expect the banks to spend the over N800 billion bailout fund on? The reality is that the monies will go through the past processes: investment in government treasury bills; funding of the oil importation-cum-privatisation of public corporations; and continued speculation. It is not accidental that the government is insisting on deregulation and privatisation. These are means of spurring profitability for banks and private big business, while avoiding the ‘rigours’ of committing themselves to developing infrastructures and improving purchasing power. Before long, the government will start borrowing at high interest the same bailout money by issuing bonds to banks.

Sanusi hinted of the possibility of handing over banks to foreign investors. This in the first instance is an acceptance of the bankruptcy of Nigeria’s business class, and indeed the capitalist political class at large. But an invitation to foreign investors is just an extension of bankruptcy. Sanusi’s attempt at portraying foreign investors as better capitalists is misplaced as the current global economic meltdown is a product of the perfidy of the Western capitalist class. In fact, foreign financial rating agencies clearly supported the banks’ racket through their dubious ratings. Furthermore, the foreign big business operating in Nigeria – in oil and gas, construction and finance – have only served as conduit pipes for massive capital flight and plundering.

Economically, it would be a second form of slavery. Foreign control of the financial sector will mean foreign control of the economy. It will mean that the government will have to implement further neoliberal policies – the commercialisation of education and health, the privatisation/re-privatisation of public utilities, massive job losses and salary stagnation through various anti-labour policies, and devaluation of the currency – meant to limit expenditure on social services in order to have a stable flow of profit repatriation. Furthermore, foreign investors cannot trust the Nigerian capitalist class, therefore they will have to have a stake in major sectors of the economy as a condition for funding the economy. Politically, direct foreign intervention in political and military policies will be necessary as a way of securing foreign business interests. This will imply increased spying activities in the country. Already many of these economic and political policies are currently being implemented as conditions for loan taking and servicing. With Sanusi’s pills, the next economic crisis, a normal occurrence in a capitalist boom-and-bust system, will be severe for the working people.

A sober analysis of the banking crisis will show that Nigeria’s capitalist business and political class are at a dead-end. Sanusi could not even attempt a partial nationalisation of the affected banks, as done by his masters in Western countries. If over 200 big companies could own trillions in bad debt, is it not sensible that such companies (and the affected banks) should be taken over by government and put under the democratic public control of workers, communities and consumer associations. Democratic public management and ownership of the controlling big businesses in Nigeria will mean a massive government commitment to the provision of free, quality education and healthcare; public mass housing, an integrated transport system (road, rail, air and water); mechanised, poor peasant-based, environmentally friendly agriculture; a sustainable power and energy system; decent job provision for all able-bodied citizens with a living minimum wage and pension; social security; and massive industrial development plans.

But it will be illusory to expect the political class and the capitalist spin doctors like Sanusi, who are part of the problem, to vote for public ownership. It will take huge movements of workers, the youth and the oppressed for this to be achieved. This explains why over 10 years of civil rule have meant continuous misery for the vast majority and wealth for the few. Therefore, as against the collaborationist and uncritical support of the labour leadership for Sanusi’s reform, this is the time for the labour movement to build a mass, democratic fighting platform which will mobilise the enormous anger, energy and commitment of the majority of working and impoverished masses for the nationalisation of the commanding heights of the economy under the democratic control and management of the organised working and poor people. The labour movement, pro-labour, socialist and youth organisations must be able to link the current struggle against deregulation and for a N52,200 minimum wage with the need to fight for the radical overhaul of Nigeria’s economy through a social revolution. This underlines the need for a national summit to build a revolutionary, socialist-oriented political platform. A genuine, socialist and workers’ government will serve as beacon for working and poor people, in not only Africa but the whole world. This is the lesson of the current bank crisis.

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* Kola Ibrahim is an activist based at Obafemi Awolowo University (OAU), Enuwa, Ile-Ife, Nigeria.
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