February 2023 election. It is a season to witness the ascendancy of a massive, multi-billion Naira campaign industry that rivals the national budget. So, how will Bola Tinubu, Atiku Abubakar, Peter Obi, and presidential candidates of other political parties in Nigeria fare in the rat race to outspend one another? Where does each of them hope to secure this breathtaking campaign funding?
Campaign funding or financing is a major and important part of the electoral process. It is the how, when and where political parties and individuals vying for elective offices will raise and spend money with which they will influence political votes in their favour. In developed democracies, campaign financing is a big issue that the state is interested in. This is because it involves major ethical issues that can compromise the integrity of the electoral process.
All over the world, election campaigning is not a tea party. Because money is both spirit and human, money has a mouth, talks, and is a major voice in electoral politics. Elections require considerably huge expenditure. Between the years 2000 and 2012, it was estimated that the total spending in American presidential elections almost doubled from $3.1 billion to $5.8 billion.
To safeguard the integrity of the electoral process, laws are enacted to guide and guard the infiltration of “bad money” into elections. In America and other democracies, violations of these laws carry strict penalties. While private funding of political candidates and political parties by individuals looks harmless enough, it is most times an innocuous channel of funneling drug proceeds and slush funds into the system. Many a time as well, it provides opportunities for individuals and corporations to hold governments by their esophagus. This they do by donating huge amounts of money to candidates and political parties during electioneering and wringing commitments off them for favours of state commitments in policy and funding when elected.
Not lacking in-laws to curtail the infiltration of “bad money” into the electoral process, Nigeria is however acutely lax in implementing these laws. A combination of a political culture that has accepted gifts as normal and a porous banking system that is easily the funnel of unsieved funds are the Achilles’ heel of this menace. Thus, poisonous money is injected into the electioneering process, with very serious implications for the results of elections and the candidates who ultimately become representatives of the people.
For instance, the new Electoral Act 2022 contains very robust sections on campaign financing, ceilings, and penalties for violations of the law. To curb bad money from meandering into campaign financing, Section 90(3) stipulates that “a political party shall not accept any monetary or other contribution which is more than N50,000,000 unless it can identify the source of the money or other contribution to the Commission.”
While in western democracies, the fear is that big corporation and wealthy individuals could wangle their ways into the state purse by stealth and corrupt its system, in Nigeria, the reality is that stolen government money constitutes, at a conservative estimate, 95 percent of funds used to campaign for political offices. The Nigerian system is aware of this, accepts it as fait accompli, and closes its eyes to the numbing reality.
The kind of massive corruption that goes into campaign funding should be an issue of interest to Nigerians. It is the reason why we must be bothered about where Tinubu, Atiku, and Obi, the three major presidential contenders and governors in Nigeria, will secure the multibillion Naira funds they need for the February 2023 election.
From their first day in office, governments in Nigeria begin to ferret the nooks and crannies of the government purses for funds to prosecute their re-election campaigns. In the run-up to the 2015 election, the $2 billion arms deal money, an arms procurement deal of the Nigerian government, eventually morphed into the Dasukigate, a widespread embezzlement ring perpetrated through the office of the National Security Adviser. Officially christened as a fund budgeted for procurement of arms to fight insurgency, it was however an underhand fund for the 2015 elections. Jonathan’s opponent, Major General MuhammaduBuhari confessed his financial incapability and Nigerians applauded him. It should however be written in the Guinness Book of Records that a man who confessed to owning 150 cows could, in the same breath, fund a multibillion Naira election that ensured his win. Later revelations came out that funds used for the campaigns were siphoned from state governments’ purses, as well as from questionable characters in society, to actualize this dream.
During the political party, primaries held a few months back, a top presidential contender was said to have demanded and got the sum of half a billion Naira from a state government for every state he visited to solicit delegates’ support. Kickbacks from contractors, secured through hyperinflation of costs of projects and stolen monies kept in the hands of proxies, find their way into campaign funds immediately after the electioneering process kicks off. Though there is a policy and law backing up a cashless economy that Nigeria claims to be running, the country is still steeped in a Ghana-Must-Go bag economy. Politicians have consistently frustrated the cashless economy policy. This they do by compromising and colluding with bank executives to get out physical cash to prosecute their nocturnal spending. One of its offshoots was a bullion van loaded with cash suddenly appearing in the Lagos home of a leading political baron. Politicians approximate the state.
This is why we must be interested in where the money to be used in prosecuting the 2023 presidential election comes from. A departure from the culture of depending on slush funds from state or federal government to fund campaigns is being devised by Peter Obi of the Labour Party, the man who goes by the sobriquet “he no dey give shishi!” According to the media report, in a bid to raise the sum of $150 million in the Diaspora and N100 billion in Nigeria,, LP has embarked on a tour of Canada and Germany and seven cities in the US, with the aim of raising this campaign fund.
While it is not in the public domain how he wants to source his own fund as well, the candidate of the African Action Congress (AAC), OmoyeleSowore is said to be banking on crowd funding from Nigerians and aides from foreign agencies to sustain his campaign financing. The dilemmas both Obi and Sowore would face are, first, that laws forbid foreign donations to campaigns. In America, federal law prohibits “contributions, donations, expenditures, and disbursements solicited, directed, received or made directly or indirectly by or from foreign nationals” in connection to any federal, state, or local election. Section 225 (3 and 4) of the Nigerian constitution is similarly provided. Again, there is the fear that the lax monitoring of the campaign funds system in Nigeria may allow a huge percentage of these funds to go into personal pockets.
While Atiku Abubakar, the candidate of the Peoples Democratic Party, (PDP) has been flaunting his octopodal business empire with ease, he has not for once mentioned whether it is from this huge purse that his campaign funds will come. It is however public knowledge that the bulk of his campaign funds will come from government money given to him by his loyalist state governors, as well as former and present occupiers of government positions. These monies are federal and state monies funneled out by stealth. Atiku himself has waffled through the sources of his borderless wealth which many allege is linked to the subversion of public financing rules and boring holes into the national till, with pipes fixed to his belly, while he was in public service.
The same goes for the candidate of the All Progressives Congress, (APC) Bola Tinubu. On Friday, the Atiku Campaign Office attacked Tinubu by calling him a billionaire without a known business. This is a euphemism similar to what Americans mean when they say, we have seen the bucks, where is the shop? What is being alluded to is the theft of public patrimony for sustenance. To date, though the humongous wealth of Tinubu has kept tongues wagging, no one can say precisely what is its source. Like Atiku, it is said that the bulk of his campaign funds will come from governors in charge of public money in Nigeria, especially those in his APC and individuals who hold cash cow positions in federal and state-owned agencies and corporations.
As the presidential campaigns begin this month, Nigerians must begin to ask their candidates specific questions about how they will finance the elections and specifics of accountability in campaign financing. In developed democracies, a trackable account is opened and a certified accountant is put in charge of the campaign office account. Every penny, whether secured through crowdfunding, or public or private funds, so far it goes into this account and is periodically subjected to the accounting scrutiny of auditing. Not doing this same thing with our candidates and political parties vying for offices in 2023 is akin to opening the doors of Nigeria’s decision-making offices to the god of Mammon. It will also amount to a triumph of the whims of evil forces in society.
Drug monies, laundered funds, and all manner of illicit funds easily find their way into election funds and this constitutes what Yoruba call the kandaninuiresi– the pebbles trapped in a bowl of rice – of electoral politics. It is a pollutant that has spiritual implications of fouling up and contaminating the whole process. As we go into the campaign exercise, valid questions of where, when, and how of campaign funds must be asked and satisfactorily answered.
From Experiment To Experience: Why the Nigerian Central Bank Needs its Traditional Navigators Back, By Chibuikem Ugo-Ngadi
Commerce Takes the Central Helm
If you’re tuning into this, you’re likely aware of Yemi Cardoso becoming the new chief of the Central Bank of Nigeria (CBN). His appointment, following Godwin Emefiele’s exit, is notable for another reason: both are commercial bankers, and their leadership comes at a pivotal moment for our economy.
For those who’ve journeyed with my earlier piece, ‘A Call To Action,’ I won’t delve into the detailed statistics again. However, to give you the big picture, our economy is on shaky ground. The naira’s value keeps dwindling, now taking over N1000 to match a single USD. The task of steadying this precarious situation leans heavily on the decisions and actions of the CBN and its helm.
While the trend of appointing commercial bankers to lead the CBN brings forth concerns, it’s not a question of their competency in the banking sector. They excel there. However, piloting the Central Bank has its own set of challenges distinct from commercial banking. The differences and intricacies of central banking are profound, and that’s where my reservations come into play.
At first glance, central banks and commercial banks might seem to operate within the same realm – the financial sector. However, their mandates, operational scopes, risk management practices, and utilised tools delineate two distinct worlds.
Central banks serve a broader public interest. Their primary objective is maintaining economic stability for the nation. This means they work to control inflation and ensure steady economic growth. On the other hand, commercial banks are primarily business entities. Their driving force? Profit. They focus on attracting customers, granting loans, and providing other financial services to ensure their bottom line grows.
Scope of Operation:
Central banks have a wide lens, monitoring the entire economy. They pay close attention to various economic indicators and global trends to make informed decisions that impact the nation. Commercial banks, however, operate on a more individualized scale. They cater directly to their customers, whether individuals or businesses, offering services that respond to specific financial needs.
When central banks think of risks, they’re looking at the bigger picture. They’re concerned about large-scale economic threats that can affect the whole country. Commercial banks, in contrast, handle risks that directly impact their day-to-day operations. This includes managing potential loan defaults or keeping up with shifts in the market.
Tools and Mechanisms:
Central banks use tools meant for guiding the entire economy. They employ methods like adjusting the amount of money in banks or setting key interest rates to influence economic conditions. Commercial banks, however, use their tools in a more direct manner. They decide on loan interest rates, offer deposit schemes, and introduce new financial products to attract and serve their customers better.
Navigating Two Worlds: Profit vs. Policy
Merging the distinct worlds of central and commercial banks requires careful consideration. While central banks are dedicated to ensuring national welfare and economic stability, commercial banks have profit as their primary goal. As commercial banking leaders transition into central banking roles, there’s a vital concern: could they inadvertently favour their previous domain?
This is more than just an economic dilemma—it directly influences the trust that the public places in these pillars of finance. Central banks are guardians of our financial health, setting rules to foster a robust economy. In contrast, the profit-driven nature of commercial banks often sees them navigating these rules inventively.
Furthermore, the importance of relationships in the commercial sector can’t be understated, yet central banking demands unwavering impartiality. Introducing a leader from the commercial world might blur the lines of decision-making, raising valid concerns about whether the broader economic interests remain the focal point.
In the intricate dance of global finance, the choreography of central banking leadership remains crucial. We’ve explored how central and commercial banks dance to different beats. Now, let’s shine a spotlight on Nigeria’s recent break from tradition.
Over the recent years, Nigeria has embarked on what can be termed a ‘recruitment experiment’. The rhythm shifted recently as the trend favoured promoting commercial bankers directly into the central bank’s top role, a distinct departure from traditional appointments. The result: Nigeria’s monetary choreography seems to have missed some crucial steps, leading to disruptions in our macroeconomic performance.
One can’t help but think this isn’t just a twist of fate. While the federal government’s fiscal choreography has certainly added complexity to the central bank’s performance, decisions like the FX Swaps, Naira Redesign Rollout, and Ways and Means Lending resonate as tunes unfamiliar to the seasoned central banking ear. It’s like a skilled ballerina suddenly trying to lead a breakdancing performance.
“Those that are doing it, do they have two heads?” as often quipped in Nigerian households. Globally, it’s a rarity to see a central bank led by someone without deep roots in central banking. While commercial bankers in other countries do occasionally don the central banker’s hat, they usually do so after an extensive apprenticeship in central bank policymaking.
Consider Jerome Powell of the US Fed: his journey from corporate banking and legal practice to the helm of the Fed spanned several years, allowing him to immerse in the central banking culture. Or Andrew Bailey of the Bank of England, whose decades-long waltz within the bank’s corridors prepared him for the top job. Even in emerging economies, leaders like Pan Gongsheng in China and Shakitanka Das in India have risen after extensive experience in their nation’s policy tapestries.
So, while commercial banking insights might offer some flair, nothing replaces the deep, nuanced expertise of a career spent in central banking. As the world’s financial ballet continues, it’s time Nigeria reconsiders its lead dancer.
The Pillars of Traditional Central Banking
Grounded Knowledge in Monetary Dynamics:
Central banking goes beyond mere figures. It’s a complex interplay of strategies, forecasts, and responses. Those who’ve spent their careers in central banking have a hands-on understanding of these complexities. They’ve been in the trenches, navigating global economic shifts, balancing inflation, and setting interest rates. This isn’t just textbook knowledge. They’ve witnessed how policy decisions play out in the real world, equipping them with insights that are tough to replicate.
Objectivity at the Helm:
In the vast world of finance, varying sectors sometimes have clashing goals. Career central bankers stand out with their honed objectivity. Their journey within the policy-centric environment of a central bank ensures they approach challenges without any tilt towards commercial banking influences. This unbiased stance guarantees decisions made prioritize the nation’s overall economic well-being.
Steady Policy Hand:
A stable economy thrives on clarity and predictability. Enterprises, investors, and the general public all benefit when there’s a consistent policy direction. Central bankers, with their repository of past experiences and policy impacts, offer this steady hand. Their decisions aren’t hasty but are rooted in long-term objectives, reducing abrupt policy changes that can disrupt markets.
Years in the central banking sphere mean they’ve forged essential ties. They’ve worked side-by-side with diverse teams, partnered with governmental bodies, and conversed with international peers. These connections are invaluable. When a new policy is on the horizon or when feedback is needed, they have a ready network to tap into, ensuring efficient and informed decision-making.
Charting the Right Course
As Nigeria stands at the precipice of an unparalleled macroeconomic tempest, the actions of the Central Bank in the coming months will either anchor us firmly or leave us adrift. While the allure of shortcuts in policymaking might seem tempting, it’s crucial to remember that the Central Bank isn’t just another institution; it’s our nation’s flagbearer in the global financial arena. It’s our voice, our representative, asserting our place on the world stage.
The Central Bank should be our sanctuary from the pitfalls that often plague Nigerian policymaking. It should be a beacon of steadiness amidst the chaos, guiding our economic ship through tumultuous waters with an experienced hand at the helm.
To mitigate the challenges ahead, it’s imperative we revert to the tried-and-true: placing the keys of the Central Bank in the hands of those who know its every corner, its every nuance. For the health of our nation, the vibrancy of our economy, and the future of our people, it’s high time we return the Central Bank to its rightful stewards: the career central bankers.
Dr. Yemi Cardoso, welcome to the hottest seat in Nigeria, By Dele Sobowale
“When the going gets tough, the tough gets going.”
Right now, nobody on earth has a tougher assignment than you. You have my sympathies. Because you lead a team of Deputy Governors, all new to the Central Bank of Nigeria, CBN, embarking on the nearest thing to “Mission Impossible”, I want to start by congratulating you on your appointment as Governor of CBN. The occupant of that seat is the Governor of Governors. None of the thirty-six elected Governors can impact our lives as the CBN Governor. In fact, once you are sworn in, you will become the second most powerful man in Nigeria — after the President. It is an awesome responsibility which will test your competence and character every single minute.
So, let me start by assuring you of support in the discharge of your duties — as long as you operate within the confines of your legal responsibilities. Despite the fact that you are Yoruba and from my Popo Aguda area of Lagos Island, I must inform you that it is the policy here to be objective and not allow ethnic sentiments to get in the way of the truth. You must agree that Nigeria’s interests demands nothing else. Incidentally, you are the second CBN Governor born and raised in our Lagos Island. Late Pa Ola Vincent, scion of the Vincent family of No.8, Vincent Street, Lagos Island, was CBN Governor from 1977 to 1982. I was not in the media at the time. From information available to me, Pa Vincent served without blemish. I wish you the same — whether one or two terms.
So, rest assured that you will receive support when it is the right thing to do irrespective of the number of those rising against you. You will also receive lessons in history of the CBN, and advice; whether you ask for it or not. That is one of the responsibilities of those privileged to write columns; dispensing views. As a matter of fact, you are about to receive a few now, which it will profit you to remember.
Short history of CBN.
“When an old man dies, you lose a library.” – Anonymous.
Because you are being thrown into the deep-end of financial crisis engulfing the CBN, you will not have the time to read the history of the bank. Let me summarise for you the crucial ones that must be remembered.
As you will soon get to know, I have been on this page since 1987 and have observed five CBN Governors at close quarters. Abdulkadir Ahmed, 1982-1993, was the longest serving Governor, eleven years in all. He taught me a lesson about how powerful CBN Governors can be. He ordered me arrested and detained for more than twelve hours on account of one article written, titled ”CBN: Confused Bank of Nigeria”. I warned the Governor that a dual-exchange rate system would defeat the aims and objectives of the Structural Adjustment Programme, SAP, launched by the Babangida administration. I also opposed the weekly Dutch auction of foreign exchange to banks. Ahmed was furious. The affair ended peacefully by Divine intervention. He lived long enough to see SAP become a major problem for Ex-President Babangida, as all the banks engaged in round-tripping and steadily pushed up the exchange rate.
Dr. Paul Ogwuma, 1993-1999, and I actually worked together without meeting face to face. My article titled FUNNY MONEY, not only exposed how most of the banks were falsifying their Annual Reports and Accounts, it led to the promulgation of the Failed Banks (Recovery of Debts) and Financial Malpractices Act of 1994. I had pointed out in the article that virtually all banks, at the time were falsifying their accounts. It made no sense that banks would be declaring record profits and paying huge dividends to shareholders in an economy that was growing at two per cent and there was massive unemployment. Nineteen banks were specifically named among those I suspected distressed after analysing their returns for three years.
In the end, 17 of the banks went under. Two were saved by forced merger by the military government. I was warning the Abacha government despite two trips to detention under the regime. The bank crisis which started in 1994 resulted in the crash of the Nigerian Stock Exchange, NGX, two years after.
Chief J O Sanusi, 1999-2004, was the last CBN Governor to start and end his five years tenure without a major incident. Why he was denied a second term by Obasanjo remains a mystery. He was, however, the second Yoruba Governor of CBN to be appointed.
Professor Chukwumah Soludo, 2004 to 2009, was the first of three highly controversial governors we have had in a row. They include Malam Sanusi Lamido Sanusi, 2009-2014 and Godwin Emefiele, 2014-2023. Before going forward, let me give you the first strict warning. Avoid radical changes and don’t tamper with the currency. Soludo was denied a second term in office because Banking Consolidation collapsed. From 25 banks approved in 2006, by the CBN, less than 12 were in good shape by 2009. More importantly, Soludo had to go because he had proposed re-decimalisation of our currency as a short-cut to taming rising exchange rates and inflation. The measure would have meant that our highest currency would have been N100; billionaires would have become ordinary millionaires; and millionaires mere “thousandnaires”. He had even minted coins for ten and five naira to replace bills.
He announced the reforms to a packed hall in the CBN Auditorium; and received polite applause. I was there; and that evening attended a meeting of highly influential people in Kano — where a call was made to Yar’Adua by one of them. “Soludo must go”; said the billionaire to the President. Thereafter, Soludo was only marking time.
“People with vision usually do more harm than good.”- —John Major, British Prime Minister, 1993.
Unfortunately, Soludo left one massive problem which has refused to go away. The Assets Management Company of Nigeria, AMCON, was the offspring of a Banking Consolidation failure. Soludo convinced Obasanjo that instead of 73 mostly poorly capitalised banks, what Nigeria needed were a few well-capitalised banks – and the sooner the better. We agreed with him on the need for bigger banks; but disagreed on the speed. Speed kills as Soludo would find out later. By 2008, virtually all the approved banks were hanging on the ropes. The global banking crisis of 2008, from which Soludo said Nigeria was insulated, and we disagreed, had caught the country unprepared. Banks, self-advertised as sound, award-winning chief executive officers, tumbled like castles built by children on the sea shore. Some ran away; some were jailed; all left a mountain of toxic loans — N6 trillion high — which the CBN had to acquire to avert total collapse of a sector Soludo promised to strengthen. Nigerians who invested in bank shares, when consolidation started, lost trillions to Soludo’s vision.
CBN has a bundle on its hands. That calls for the third lesson. Be careful with visionary changes; they are counter-productive more often than not. Soludo’s admirers stop the history where he launched banking consolidation. They are too ashamed to recall that First Bank shares sold for N75 at one time and Intercontinental went for N56. Where is Intercontinental now?
Sanusi and Emefiele teach different lessons
Because Sanusi Lamido Sanusi and Godwin Emefiele teach different lessons about the relationship between the FG and CBN, I will stop now.
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