So how much toxic assets are our banks carrying?

Aliyu Belgore, the Chairman-designate of the Asset Management Company, has come up with a new estimate of the size of the toxic asset problem. He says 10 of the 24 post-consolidation Nigerian banks are carrying up to =N=3 trillion ($20 billion) in toxic assets on their books. This is double the previous $10 billion estimate of toxic assets for the entire industry (as opposed to just 10 of the 24).

With all due respect to Aliyu Belgore, Mustafa Chike- Obi (managing director-designate), Hewet Adegboyega Benson, Abbas Muhammed Jega and Mofoluke Benedicta Dosunmu (executive directors - designate), this is Nigeria, where contracts are inflated to many times the actual price. Add to this the worldwide practice of politicians, businessmen and bureaucrats who always overstate their budgetary needs for a variety of reasons including (a) the belief that you will get 40 if you ask for 60, so if you want 60 you should ask for 90; and
(b) the desire to create a cushion in case costs exceed expectation (which they always do), as well as to set yourself up to claim credit for finishing the task "under-budget", even though there was never a chance it would cost as much as you budgeted.

Either way, I would hate to see =N=3 trillion in public/government/citizens' funds transferred free of charge (i.e. as a "Christmas gift") to a privately-owned industry when =N1.5 trillion could do the job. Particularly when that industry's problems are self-inflicted wounds driven by greed, a lack of ethics and regulatory agencies' wilful dereliction of duty.

Belgore and the rest of the AMCON management need to be transparent. If we the people are going to pay to bail out the banks, we need to see what, where and why in concrete numbers that can be audited. The usual government practice of throwing numbers at us ("we will need $X billion to fix electricity") without ever explaining where these numbers come from, just simply won't work; indeed, in the example given, electricity, part of the reason for the continuing problem is the utter lack of rational and mathematic logic in anything we do -- we have spent lots of money over many decades without actually getting anywhere, because there isn't any rational logic to how we spend money. Someone just says, "give me this amount of money, it is what I need", we give it to him/her, the money gets spent, and the problem still remains!

Business Day is an excellent publication, and if their article contained no further information about where Belgore got his estimate from, it is likely he provided the Senate committee with no information about how he came up with the =N=3 trillion estimate. More worrying is the fact that the article contained no indication that any member of the Senate committee bothered to ask Belgore to clarify his numeric assertion.

Ach!