George Etomi, a legal practitioner, is the chairman of the Nigerian Bar Association (NBA’s) Section on Business Law. He is our guest for the week. In this interview, he spoke on the present economic reforms of the Federal Government, noting that Nigerians and its leadership should have a charge in attitude, if the on-going economic reforms are to achieve anything meaningful.

According to him, the N25billion re-capitalization for banks is a welcomed development, adding that it is important that there is a change in our business habit, as the country was heading for precipice, before the introduction of the present reforms.

He tasked the Economic and Financial Crimes Commission (EFCC) to safeguard against being used by those in power, noting that the principle of the commission which is a welcomed one, has made Nigerians to be careful, as people now know that their criminal activities may be looked into by the commission.  According to him, “the commission should guard against being used for ends that totally negates the noble roles they should be playing for the society.” Excerpts:

Q: Presently, the issue of reforms seems to have attracted a lot of comments, particularly in the banking reform, which has reduced the number of banks in the country to 25. What is your assessment of the entire reform programme, particularly the banking reform?

A: The first thing is for us to appreciate that these reforms are necessary, that is the first thing. Whether it is having the desired effect, in my view, is too early to assess.  We would later know whether or not they are going in the right direction.  I think at this stage, it is a little premature to either give an overall condemnation of the entire programme. But I must note that the way we were going before now, we were definitely heading for a precipice.  Suddenly, we are having painful decisions being taking to ensure that we reverse the trend in our life styles, business habits and personal habits. If any indication exist to let us know what sort of confident that may be built, we can put the recent debt forgiveness. The truth is that the parameter for debt forgiveness is that the countries that you have borrowed from will not ordinarily just forgive you the debt. They will make demands for certain types of behaviour before they can forgive the debts.  But by the time they arrive at a decision to do debt forgiveness, it is by itself an endorsement of your reform programme. So if that is any indication, the fact that we have been forgiven our debt, the reforms is perhaps a testimony and the right way to go.  With particular reference to the banking sector, again we have just seen the conclusion of the re-capitalization exercise, which has now left us with 25 banks.

I can’t go too forward to say whether this will be successful or not, but again as an indication of whether it will be successful, one ought to look at where we were coming from.  Even at the level of capitalization that the banks were before they moved-up, many of them were bankrupt, even at that poor level. Yet the unsuspecting public kept depositing money in these bankrupt institutions.  In a sense, the reform in the banking sector is most welcomed.   Today, I can tell you that the depositor will be more confident to go and deposit his money in a bigger bank with a deeper pocket.  Secondly, with the consolidation over, many banks are now dealing with employees’ placement or displacement as the case may be.  But once all those necessary consequences are over and done with, these banks will settle down to do what I will call, lending for the purpose of development.  So, if you have a good proposal, you can walk in confidently, if it is assessed, they can put money behind you, unlike in the past.  The reason why the banks never lent money out is that they never had it in the first place.  What they do is to place it into short term instrument, which was why if you were importing something within 90 days circle, you are a favourite of the banks, but if you want to build a factory, that requires 18 months to construct, you will basically waste your time going to them.  And until they (banks) begin to lend to what I will call the real sectors of the economy, you will not generate that level of economic activities to bring about prosperity.

So hopefully, with the advent of the 25 strong banks, you will now begin to see lending to the real sectors.  For example, I do not even see why there can’t be what I call lending for infrastructural development. Two or more banks coming together to float a 30 years bond to somebody who says he wants to build a mega-high way or rail road, so that like what you have in other parts of the world, the banks become an instrument of development.  If you go to other parts of the world, real-estate development, like the VGC are funded by banks.  There are estates, 10 times to size of VGC, funded by banks.  They just go in there, construct the roads and provide every other infrastructure and they sell the plots or the completed houses to individuals.  The same bank makes mortgage facilities available to you, so that once you have a descent and a hardworking member of the public; you can go there and get a house that befits your status. These are forwarding looking things we should hope go get with this reform going through.

Q: You talked of the insolvent banks. Banks unable to pay customers and do what they are expected to do. But we know for a fact that these banks are supposed to be supervised or monitored.  So who do we blame for allowing the banks to degenerate to the level of not being able to pay out money to depositors?

A: You are right. It also shows that there is some failing with the regulatory authorities.  Don’t get me wrong. By the time it gets to a point where a bank is insolvent or a single individual in the bank owes so much to the bank, running into billions and it is not picked up by the regulatory agencies, is an indictment on the regulatory agencies. So hopefully, that will be a thing of the past with the N25billion re-capitalization of the banks.

Q: You also spoke on debt forgiveness and the acceptance of Nigeria’s reform by the international community.  Meanwhile, a lot of people have argued that the debt issue is more or less mortgaging our economy to them, because what we have done is to allow the easy access of everything in Nigeria to the west. We sell all we have to them, open-up everything to them to our detriment, while in actual fact; you can hardly have access to the economy of - be it the United State of American, Britain, France, Japan and a host of other power. Are these so-called reforms to our advantage?

A: When you say we are selling out everything, let us accept one fact of life today, the world is becoming a global village and everything we do, affect others.  Not even the Cubans of this world, the Russians of this world live in any isolationist fashion. So let’s stop feeling sorry for ourselves. What it simply demands of us is to live up to the challenges it imposes.  The debt forgiveness is real, it restores back the credit worthiness of our country and so the red flag that used to rise when you talk of lending to Nigeria is no longer going to be there.  However, for there not to be a repeat of the things that led us down this path, certain demands will be made of us, so that we can stay in tune and stay to what we call, a level of international best practices.  So it is not peculiar to Nigeria. When these western economies lend to each other, they make demands.  When Britain was owing the IMF, they had somebody from IMF sitting at the Bank of England, ensuring that they were spending money and doing things with fiscal discipline. So we should stop feeling sorry for ourselves. This should rather bring out the entrepreneurship in us. Instead of taking raw cassava out of the country, we should keep it here, process it and export it as finished product. You make more money by processing it here, you make foreign exchange from it and also create job for our people. The world lives on trade amongst one another. The only area I agree with you is that we must change our habits of exporting our raw materials, only for them to be refined in those countries and imported back at exorbitant cost, that is the challenge we all face.

Q: You noted that Nigeria is now credit worthy. What justification do we have for borrowing more money, if the billions we borrowed before now were not used for the purpose for which they were borrowed?

A: It is all about our changing our habits as I have earlier said. If we do not learn to do business differently, we will go down the same path. So, it is a wake up call. Nigeria is Nigeria. There is no difference between us as individuals. If you borrow money from a bank and rather than invest the money, next thing you are buying new cars, marrying more wives, suddenly, the money is gone. You look right and left, no where to get the money to repay, because you never invested it. And suddenly through the grace of some benevolent, you are forgiven and you are given another chance, would it not be stupid if you get the money and just go back the same path. For me, if I get it the second time, I would have hopefully, learnt sufficient lessons to say, I better go and invest in agriculture, I will give my children education and invest in things that will give return in future. In those good old days in Nigeria, agriculture sustained Nigeria as a country. We prosecuted the civil war without borrowing from any body. But today we can’t do any thing without wasting money.  It goes beyond looking at any one person; there is a lot of personal discipline we all must exercise.  There shouldn’t be any free cash to go round any longer.

Q: On the role of Economic and Financial Crimes Commission (EFCC). Some people have praised the commission for bringing a little bit of sanity, while a lot more have criticized it for being an instrument of vendetta. What is you assessment of the commission?

A: You see, I like what you said.  With the EFCC, it can no longer be business as usual. So the principle of the EFCC is a good thing.  But again in developed economies, it is the presence of sanction regimes, that put people in the street in a straight jacket. The presence of the EFCC is naturally worrisome to many, so the principle is quite acceptable to a lot, if you ask them they will tell you so. People now, no longer just willingly do wrong, because at the back of their mind, they know the EFCC will come after them. One major criticism is that the commission if unchecked, we could create a monster out of it. And many people today see it as witch-hunting apparatus, if you don’t like somebody’s face or because he does not share the same political views with you, the EFCC is called in. EFCC should safeguard against being used for ends that totally negates the noble roles they should be playing for the society. So it is two sides of a coin and I think hopefully, they would address the complaints, so that they will be respected and adored for cleaning the system. But let’s face it, they are threading on paths where nobody had threaded in the past, but they must also ensure they are relevant to the public by not being used as tools to witch-hunt.

Q: You said no other institution has done what the EFCC is doing, but I can recall that during the Gen Abacha’s regime, we had the Failed Banks Tribunal, which was even more dreaded than the EFCC.

A: Yes, but that was a tribunal, if you remember. The tribunal was the adjudicator. But in the case of EFCC, it still has to go court. Instead of tribunal, EFCC goes to court.  They are not the same. In the case of the EFCC, we are talking of the agency that drives investigation, looks at things. The 419 thing has drastically reduced.  It is no longer the celebrated thing it used to be. You will remember that there was a time in this country, acknowledged 419ners held lavished parties, even friends of top people in government,  today that phenomenon has practically disappeared.  And really, this is what governance is all about.  If you can get a large majority of your subjects, playing within the law, you will just have a narrow band of law breakers to deal with.  And that is really what we need to return to Nigeria for discipline to come back. Lets now leave the police and the EFCC to deal with a narrow band of people, which is why abroad, if you commit a crime, it does not take them long to find you because they know the profiles, because the large majority of people are law abiding. Nigerians by and large are law abiding people. It is just that human nature is such that if they feel that there in no sanction for wrong, they will do it, but if there is sanction, most human being will choose not to even find out if they will be caught. People just do what the law said they should do. Then those who want to be adventurers are the ones now you will discover that the law will be looking for.

Q: On the role of the Law Reform Commission and the legislature, how would you assess them?

A: The law reform commission is the one that is empowered by the law to actually be the body that coordinates a lot of these reforms laws, the legislation that brings about reform. That is what they are primarily up to do.  But up to this moment, they have not played that role well.  Although many insiders would tell you that they have been very active, but that they suffer from lack of proper funding.  But the issue on ground is that the legislature sees the commission as rivals, querying why the commission would make or pass laws, while that is what they (legislature) are elected to do.  There is need to reconcile those two positions, so that the disagreement does not stand in the way or impede these legislation that should give the reforms teeth.

Q: The Nigerian Investment Promotion Council, what role do you think it should play in all this?

A: If you go to the NIPC and talk to them, they will tell you that government conceived them as a one stop agency for foreign investment.  That is, if a foreign investor comes into Nigeria and goes to them, they will tell the investor where to get certificate of incorporation, get permit to do business, get all they need and you don’t need to go to different offices to procure the relevant and necessary documents. And therefore, they should be seen as the gateway to investment in Nigeria. I am sure they are complaining that now that a lot of reform is going, that they have not been taking into confidence.  Again, there is a need to  marry all these efforts and see which ones are superfluous and should be modified, see which ones are being wrongly neglected and brought in. That is why I said that what we are trying to do at the conference of the Section on Business Law, which is coming up later this month in Abuja, is to have all these actors talk on a permanent basis, be on the same edge, so that we can achieve sustainable business laws.

Q: And your position on continuing legal education?

A: Continuing legal education is recommended for all lawyers. Law is life and things continue to change. The lawyers that will remain relevant to the society, to the public, to his clients and everybody are those lawyers who continuously educate themselves. One of the papers that will be delivered at the conference in Abuja is one on the importance of continuing legal education as an instrument of achieving reforms. What we are saying is that, outside of what you studied in the university, you should continue to educate yourself. Go for workshops, go for seminars. If you can afford it, go abroad or here in the country. What we are saying is that learning process must continue and this is the advice we give the younger members of the bar.  What we are advocating is  that the older members of the bar should support the younger ones, so what we can have a complete conglomerate of lawyers that command the respect the society places on them, because when you introduce somebody as a lawyer, automatically, the society expects a little extra from him than an ordinary graduate. He has to justify that and we are recommending that the continuing legal education is one way to do that.