Ray Echebiri (2024), The Power of One Man: How The Soludo-Engineered Consolidation Transformed Nigerian Banks To Global Players. 1badan: Safari Books. ISBN: 978-978-60684-2-8. 268 pages.
The easiest way to rob a bank is to own a bank. A bank under the direct assault of its directors and managers is bound to fail.”
This telling quotation sums up a bank report by the industry examiner, the Nigerian Deposit Insurance Corporation, quoted in this tight book.
Ray Echebiri’s in-depth exploration of the trajectory of Nigerian banking following the 2004 bank consolidation effort has come at a most opportune time. Nigerian banks are in a race to raise their capital bases in another round of capitalisation that recreates the 2004 Bank Consolidation. The figures are only higher, thanks to inflation and the devaluation of the naira.
Echebiri set out to celebrate the achievement of the eponymous Governor of the Central Bank of Nigeria, Prof Chukwuma Charles Soludo, who conceived and delivered the project, hence the book title. However, the book ultimately celebrates the power of a compelling idea and how it changed the Nigerian banking industry and set a template for Africa.
Echebiri has written a detailed and factual account of a significant historical event. His account draws extensively from the rich trove of data and anecdotes in various reports, notably those of the Nigerian Deposit Insurance Corporation, the Central Bank, and media accounts of the many characters and personalities that ran banking in Nigeria pre- and during consolidation.
The chapter “Background: The Liberalisation of the Nigerian Economy” shares many anecdotes about the ruinous practices of many persons entrusted with banking licenses.
The reader gets a fresh accounting reminder about the failure of many popular banks such as Eagle Bank Limited, Prime Merchant Bank, Ivory Merchant Bank, Commerce Bank Limited, Credite Bank, ICON Limited (Merchant Bankers), and Highland Bank Plc.
The narratives are sobering. Banks that went under, the book tells, had similar problems. “There was weak and, in some cases, total absence of clearly identifiable governance structure; poor risk management and internal control mechanisms; insider abuse by directors and top management, especially regarding the large portfolio of non-performing loans with which many of the failed banks were stuck; constant squabbles, in-fighting and power struggle by directors on one hand, and mutual mistrust/suspicion between board and management on the other”.
Before the consolidation exercise, 41 banks fell victim to the systemic distress of 1995-1998. The consolidation exercise saw the demise of even more banks, reducing the headcount from 89 to 25.
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The Power of One Man focuses on
• the banking consolidation of 2004/2005, with a detailed account of the events leading up to the exercise, the process, and its aftermath.
• The role of the CBN Governor, Prof Chukwuma Charles Soludo, and
• The impact of the consolidation.
It is a significant book. It provides a comprehensive historical record of that pivotal moment in Nigeria’s economic history, analyses policy decisions by offering insights into them, and provides a leadership case study.
It offers details of the buildup, including significant reforms such as introducing the Nigeria Deposit Insurance Corporation by Decree 22, a new Central Bank of Nigeria statute, and the Banks and Other Financial Institutions Decree.
The 268-page work contains six chapters and 28 sub-chapters. It ends with a profile of what the author deems “The Gold Standard of Banking Consolidation.” These are FUGAZ, five banks that exemplify the positives of the exercise: First Bank of Nigeria, United Bank for Africa, Guaranty Trust, Access, and Zenith Bank.
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The book narrates that consolidation dealt with economic, financial, regulatory, and operational challenges. The economic and financial difficulties included raising the substantial capital needed to meet the new minimum capital requirement of N25 billion, valuing assets and liabilities, integrating IT systems, and the global economic downturn that followed soon after the exercise.
Developing a robust regulatory framework to oversee the new banking sector was complex. Other operational challenges included staff redundancy, integrating various corporate cultures, and managing public perception and confidence. A significant challenge that the existing banks even faced was resolving ownership disputes and ensuring transparency in the ownership structure of the merged banks.
A notable inclusion is a speech by Prof Soludo outlining the case for “Consolidating the Nigerian Banking Industry to Meet the Development Challenges of the 21st Century”, delivered on 6 July 2004.
Dr Echebiri approached his task with a disciplined focus. He kept his brief of telling the 2004/2005 Banking Consolidation story. He carefully avoided delving into the second round of consolidation initiated by Soludo’s successor as Central Bank Governor Sanusi Lamido Sanusi.
Echebiri has the pedigree and leverages his training and experience to write the book. He is a financial journalist and development economist with expertise in reporting national and global economic matters. His book follows the tradition of journalists on specific beats deploying their access and knowledge of the issues to go beyond news reports into detailed interrogation of the topical problems. It is a worthy contribution to the literature on Nigerian banking.
