The government of President Olusegun Obasanjo has promised a great deal but delivered rather less over the past seven years. A comprehensive package of economic reforms has been formulated but the government has struggled to implement it in the face of entrenched interests and a legacy of decades of misrule.
Yet there is one sector where genuine progress seems to be being made. Despite the inclusion of some of the largest financial institutions on the continent, the Nigerian banking sector was widely derided for its inability to support the rest of the economy and for the sheer volume of financial irregularities. Now, however, well targeted reforms have not only been drawn up but are being put into practice and there are real hopes that the fortunes of the industry are being turned around.
No matter how strong or talented a leader may be, they can achieve little on their own. In practice, Obasanjo must hand over the task of overhauling each strand of the Nigerian economy to someone who can commit themselves fully to the task. The failure of a particular privatisation or low growth rates cannot be blamed on the president directly, although of course his judgement in appointing heads of key parastatals or privatisation programmes can be laid open to scrutiny.
In the case of the Nigerian banking sector, however, Obasanjo certainly seems to have chosen well. Professor Charles Soludo was given the twin tasks of leading the Central Bank of Nigeria (CBN) and designing and implementing plans for reforming the banking sector.
As was covered in last month's African Business, his efforts have been declared a huge success, just 18 months into the job. The Banker magazine's decision to honour him with its Global Central Banker of Year award speaks volumes, particularly as he becomes the first African central banker ever to receive the award. The key plank of Soludo's strategy and the banking reforms is the Banks and Other Financial Institutions Act. One of the greatest criticisms of the Nigerian banking sector has been the large number of banks operating in the country. Not only did this reduce the strength of the sector, making individual institutions less capable of financing investment in the economy as a whole, it also made regulation more difficult and allowed unscrupulous businessmen to set up banks for doubtful purposes.
The CBN warned that the sector had been "tainted by corruption and mismanagement" and...