No jetlag. Always on the move: from Cambodia to Arusha, there was always a mission to accomplish. From New York to Switzerland, there is no mountain too high for him to climb. Like a constant eastern sun, he’s always rising to the occasion. A strategic thinker and global player, he has witnessed, first-hand, how adversities metamorphosed into successes –from the Rwandan genocide to the Cambodia civil war. A banker, economist, risk manager, Prof. Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria is a man of many parts; an inventive soul and patriotic Nigerian. Driven by the need to chart a new course for the country, he has founded the Institute for Governance and Economic Transformation – a think and do-tank. In this interview with Azuka Ogujiub, Moghalu talks about his time working for the United Nations, the Global Fund and the CBN. He also reveals the things that make his family tick
You have had a career that spans across the globe. Please tell us more about it.
I have been a lawyer; a journalist; a United Nations diplomat; a central banker; political economist; an entrepreneur; and a university professor. Who knows? It might just be that I’ve not finished yet! Although I studied Law as my first degree, master’s degree in International Affairs at The Fletcher School of Law and Diplomacy at Tufts University in Massachusetts, USA was interdisciplinary. The Fletcher School was the first exclusively graduate school of international affairs in the United States, established in 1933 jointly by Tufts and Harvard universities. I studied a combination of international law, diplomacy, and international economics and political economy.
I can’t overstate the importance of my Tufts education. It enabled me to think in a certain way and to understand the real world – because in reality all these subjects are interconnected. Of course, my further education in risk management, macroeconomics, financial management, leadership, strategy, was also helpful in handling various responsibilities as my career progressed. Later, I obtained a doctoral degree in International Relations at the London School of Economics and Political Science.
My family was another major influence. My childhood was international; my late father, Elder Isaac Moghalu, was one of Nigeria’s pioneer Foreign Service officers. We lived in Geneva and then in Washington DC, where he was posted in the mid-1960s. So, my dad naturally supported my interest in an international career as I was growing up. I remember that, as a young boy and a teenager, I always read the ‘World News’ section of the newspapers first before reading anything else.
When did Nigeria realise that the financial meltdown was going to hit us back then with you as the Deputy Governor of the Central Bank of Nigeria?
I think it took the appointment of Sanusi Lamido Sanusi as Governor of the Central Bank of Nigeria for Nigerians to realise that our financial system had been severely affected by the global financial crisis. The CBN under Governor Chukwuma Soludo also had to contend with the serious damage that had been done. But I think they tried to handle it in a different manner so as not to affect the confidence of citizens in the banking sector. But under Sanusi’s leadership, we took a different approach: disclose but act to restore confidence at the same time. I think this approach worked. Remember that 90 banks had been consolidated into 24 banks under Prof. Soludo’s consolidation exercise which raised the minimum capital for banks from N2bn to N25bn. The purpose was to make the banks stronger and get them to lend to the real economy because many of them were simply boutique firms mainly into currency trading and round-tripping. But we saw later that ‘big’ was not always the same as ‘strong’.
About eight to 10 banks out of 24 were wobbly due to their over-exposure to loans to oil businesses that went bad after the global crisis created a recession that led to a crash in the oil price. They had lent a lot of money to customers to buy shares in the Nigerian stock market. But this market also collapsed as foreign investors withdrew their investments in a ‘flight to safety’ as global financial markets collapsed. Several banks were also heavily exposed to lending to the federal and state governments – and the government’s revenues dried up as oil prices crashed. In short, the sector was swimming in a sea of, what in finance we call, ‘toxic assets’ (systemic bad loans).
But the problems in the banking sector were not just because of the global financial crisis. Even more important, from what I saw when I joined the apex bank, risk management and corporate governance in the commercial banks were extremely weak. The CBN conducted what we call a ‘stress test’ and found out that some systemically important banks were in fact tottering on the edge of collapse. Millions of Nigerians would have lost their life’s savings if those banks had failed. The total financial damage would have been about N1tn if CBN had let that happen. It was at this point that I was brought back from Geneva and appointed Deputy Governor of the CBN in charge of Financial System Stability to lead the execution of extensive reforms in the system. Sanusi had been a risk management expert in some of the commercial banks before becoming CBN governor. He was interested in my background in risk management and corporate governance; my international exposure, and he also felt that my not having worked in the domestic banking industry was an advantage because it would help me make more independent judgments and impose ‘discipline’ without the complications of previous relationships in the sector.
So, how did you help to stabilise the financial system?
I led the team that carried out the extensive reforms that stabilised Nigerian banks. First, we had the National Assembly pass the law that created the Asset Management Corporation of Nigeria. The whole point of creating AMCON was that it would be a vehicle to absorb and manage the toxic loans of the affected banks, leaving the banks with a clean balance sheet which would help restore confidence. We also used AMCON to bring the Negative Asset Value of several banks which were below zero up to zero before investors could come in and invest in the banks and before some mergers and acquisitions of banks took place. I led corporate governance reforms in the banking system. We also introduced structural reforms such the new banking model which established different categories of banks with different capital requirements instead of a ‘one-size-fits-all’ uniform capital requirement that was not working out very well. So, global Nigerian banks with subsidiaries abroad had the highest capital requirement of N50bn, national banks needed to have minimum capital of N25bn, and regional banks required N10bn in capital. I was passionate about protecting Nigerian financial consumers from the excessive bank charges imposed by many banks. My team ensured the recovery and refund of about N14bn to bank customers while I was at the CBN. We abolished ‘universal banking’ by getting the banks to divest all their non-core banking businesses. This was a way to manage risk in the banking system because having banks that could do several other financial businesses at the same time under one roof increased the risk of depositors’ funds being used to shore up such businesses.
I was responsible for the supervision of all the commercial and merchant banks in Nigeria, the development finance banks, AMCON, finance houses, and bureaux de change through the various departments in the FSS directorate that reported to me. I had to give final approvals before anyone could be appointed the chairman, a non-executive or executive member of the board of directors or the managing director of any bank in Nigeria. Of course, as a deputy governor of the CBN I was also a member of the board of directors of the bank and a member of its monetary policy committee. Overall, I think it is beyond any dispute that the reforms we executed restored stability in the financial system. No bank failed. No Nigerian lost a kobo of his or her savings despite the distress their banks faced. We made sure of that outcome; unlike the failed-banks crisis in the 1990s in which many Nigerians lost their deposits.
What was your experience working with the United Nations?
I joined the United Nations Secretariat after my master’s degree at The Fletcher School in 1992. First, I was posted to the UN peacekeeping mission in Cambodia for one year. The mission was headed by UN Under-Secretary-General Yasushi Akashi of Japan, who is also an alumnus of The Fletcher School. After Cambodia’s civil war was ended through negotiations steered by the UN and the major world powers, the UN ran the country as a ‘transitional authority’ for a year. We then organised and conducted elections and handed over to the newly elected government. In 1993, I was appointed a Political Affairs Officer in the Department of Peacekeeping Operations (DPKO) at the UN Headquarters in New York. I worked and learned the ropes of international diplomacy under great superiors such as Kofi Annan of Ghana, then the Under-Secretary-General and head of DPKO, who later was elected UN Secretary-General; Iqbal Riza of Pakistan; the Assistant Secretary-General, Hédi Annabi (of blessed memory) of Tunisia; Elisabeth Lindenmayer of France; Dmitry Titov of Russia; and Shashi Tharoor of India.
While serving in New York I was Desk Officer for Somalia, Rwanda, and Angola. I learnt the art of conflict resolution and nation-building. I learnt from working under Mr. Annan how to manage teams made up of diverse nationalities, cultures and ethnic groups. In 1996, I was posted to the UN Mission in Croatia, based in the country’s eastern Slavonia region, as Political Adviser to the Head of Mission, the United States Ambassador, Jacques Paul Klein. I wrote the strategic roadmap document for the UN’s achievement of its mandate including national elections and the re-establishment of Croatian authority over the Serb-held areas of eastern Slavonia, and I was the UN Representative on the Electoral Commission. From Croatia I moved to the UN International Tribunal for Rwanda based in Arusha, Tanzania, in 1997 as legal adviser and spokesman for the international tribunal. We prosecuted the former political and military leaders that planned and executed the Rwandan genocide of 1994 – because justice for crimes of that scale was necessary if full national reconciliation was to happen in Rwanda. From that assignment I saw why and how rule of law matters for national unity and development. The impunity practised by these leaders when they were in power had now been met with accountability. Those leaders were all convicted and sent to prisons in various countries based on agreements we had negotiated with those countries. Many Rwandans and people all over the world hailed this development. At the time this was unprecedented in Africa. Later on, of course, we had the trials of Charles Taylor of Liberia and Hissène Habré of Chad.
Apart from your time in Arusha, did you have other assignments?
After Arusha I switched from political and legal affairs to international development finance in my UN system career. I responded to an advertisement in The Economist and was headhunted (by Odgers Ray & Berndtson based in London), appointed with a promotion and posted to Geneva, Switzerland as Head of Global Partnerships and Resource Mobilisation at the Global Fund to Fight AIDS, Tuberculosis and Malaria in 2002. With this senior appointment I attained full diplomatic rank in the UN service, with full diplomatic privileges from the Government of Switzerland. While I was at The Global Fund we took the Fund’s assets to the level of $20bn. I was a member of the Risk Management Committee of the Fund and helped develop its risk management framework. The Fund had social investments in the forms of grants to over 140 countries in Africa, Asia and Latin America, including Nigeria. I represented the Fund and mobilised political and financial support for it from the G-8 countries during G-8 Summits, the U.S. Congress, the UK Government, other donors and, developing countries. I spent six years in this assignment and attained the highest career rank of director in the UN system.
Where did you go from there?
In 2006, Annan appointed me as a member of the high-level Redesign Panel on the UN Administration of Justice System. We were based at UN Headquarters in New York for six months on special assignment. I worked with other members of the panel: retired Australian supreme court judge, Mary Gaudron; Canadian appeals court judge, Louis Otis; Egyptian international law professor and former judge ad hoc at the World Court at The Hague, Ahmed El-Kosheri; and former Peruvian foreign affairs minister Diego García Sayán. We consulted the member countries of the UN and the management and staff union (labour union) in the UN. The nominal rank attached to the special assignment was that of Under Secretary-General, the highest political rank in the UN other than the secretary-general and his deputy. We overhauled the accountability, regulatory compliance and dispute resolution framework governing the management and staff of the UN around the world. The UN General Assembly adopted our report and recommendations with much praise, and adopted a resolution ushering in fundamental changes in the UN internal justice system that are still in place today. This assignment was the highlight of my nearly 17-year career in the UN system. I returned to Geneva and the Global Fund. In January 2009, I resigned from the UN system and founded my risk and strategy consultancy, Sogato Strategies, in Geneva. We soon attracted important clients doing transactions or investments in Africa such as the Swiss bank, UBS, and the Swiss agro-chemicals multinational, Syngenta. I was having a good time when Nigeria called me in late 2009 for national service.
What do you think Nigeria can teach other countries and what can we learn from the countries you have lived in?
Nigeria has much to teach other countries. We remain a vibrant and dynamic country in spite of the many challenges we face. Our movie and music industries are globally renowned. Our Diaspora is on the cutting-edge of their professions in many countries around the world. On the other hand, we also must learn from other countries that only our citizens can change their own political and economic destiny by exercising our voting rights. We are too docile and tolerant of bad governance in this country. Poverty should not be an excuse to tolerate the poor state of our economy, health systems and infrastructure. We need to learn to use our democracy to better our lot by selecting the right kinds of leaders. It is not enough to merely survive day to day. We must make progress. We also need to learn from more mature countries and democracies about how to manage our ethnic and religious diversity.
Are there lessons Nigeria can learn about national healing and reconciliation from Rwanda? You’ve written some books in that line.
Yes, my very first published book was titled “Rwanda’s Genocide: The Politics of Global Justice”. Rwanda offers a very powerful lesson about how we can shift the narrative from one of negativity (the genocide) to one that is positive (Rwanda’s economic and developmental progress since the horror of the genocide). Rwanda has confronted its history through the gacaca courts and reconciliation progress and moved on. Ethnic identification is banned in all Rwandan state documents. I think in Nigeria we are avoiding confronting our national history and using it as a lesson learned so we can avoid future mistakes. And the rule of law remains an illusion in our country. Speaking of books though, I think my third book, ‘Emerging Africa: How the Global Economy’s Last Frontier Can Prosper and Matter’, a roadmap on economic development and transformation, is my most important work to date.
Having come out of the recession, what do you think is Nigeria’s economic outlook?
Nigeria’s economy is in very bad shape despite the technicality of coming out of recession. Nothing has changed fundamentally for the better. We are still dependent on oil for 90 per cent of our foreign exchange earnings. Our fiscal revenues still depend on crude oil earnings and our fiscal policy is weighed down by massive and unproductive recurrent expenditure. Poverty rates are at 60 per cent. Electricity and other infrastructure are still scandalously weak after 57 years; healthcare is in shambles, and so are education and human capital development. We still have multiple exchange rates in our economy coupled with inefficiency and corruption. What’s there to crow about if not just that some people want to keep worshiping the gods of small things and make a lot of noise about small movements in GDP growth that is not inclusive? There is a difference between economic growth, economic development, and structural economic transformation. We need to begin to focus on holistic development which dwells on the overall quality of life and the strength of our institutions.
What specific steps need to be taken to stimulate the economy?
We need to focus on stimulating the economy through job creation, fiscal, monetary, and forex policies that bring capital into the economy. We need to stop foreign borrowing and develop a more efficient tax collection system that taps into the informal economy in order to get more revenue and stop mortgaging our future through foreign loans. I have called for the creation of a massive public-private partnership venture capital fund to invest in small businesses that create jobs. The Federal Government’s N500bn social intervention fund is a waste of Nigerian people’s money. It should be scrapped and the money invested in such a venture capital fund, which should be managed by the private sector part of the partnership.
There will be a slight improvement in GDP growth but not the fundamental paradigm shift in our quality of life that we need so badly. A lot of things should have started in 2015 immediately this present government came into office. Our politics remains a big problem because its logic is not aligned to real economic development. Two, we do not have an overarching national vision that drives economic policy and management. And three, we seem set to continue with oil dependency for the foreseeable future – in reality. This will expose Nigeria to another round of negative economic shocks in the not-too-far future. Surely, if we have better political leadership, we can have a very different future.
With your career spanning various countries and continents, how have you kept the home front going?
I think it has given my children a broad view of the world while understanding and still being proud of their identity as Nigerians. For example, my kids have native level fluency in French from our time living in Switzerland and France when I was serving in the UN system. When we arrived in Switzerland I insisted they should go to Swiss schools where everyone spoke French and very little English, instead of international schools where English was the dominant language. That decision paid off. Sometimes, when they want to ‘conspire” against their mother and me, they speak ‘deep’ French instead of English or Igbo. They also have friends from all over the world from the various countries we lived and where they went to school. Apart from God, my late father shaped my worldview. My mother, Lady Vidah Moghalu, a retired dietician and now a full-time Christian evangelist, was the bedrock of our domestic family life when I was growing up.
In my adulthood, my wife – Maryanne Moghalu – gave up her early career as a banker and followed me all over the world after we got married in 1994 when I was working at the UN Headquarters and living in New York City. She has played a critical supportive role in my life and career, which sometimes has also included criticising me! I am a big-picture visionary and strategist with a worldview and a lot of drive. She is a practical person who keeps me grounded on earth. My children are what I live for. They matter very much to me and I try to make time for them because I believe that worldly success without a solid and happy family is hollow. The kids are also very supportive and I discuss my various ventures with them.
What are the things that make your family tick?
As I said, my wife is a practical but loving and sentimental person. She is the master of logistics and I call her my Minister of Finance because I am always too busy to handle a lot of personal finances. You also cannot cheat my wife in a commercial transaction because she’s an expert in haggling. My kids are fun and very thoughtful. We have trained them to be domestically able to support themselves with cooking and so many other things. My first child and son, Tobenna, a graduate of Neuroscience, who plans to go to medical school and become a doctor, is a very thoughtful and serious-minded young man. My second son, Sochimaechi, who is studying Psychology in university, says he doesn’t just believe, but knows he will be a successful chap. My third son, Yagazie, is a man with many big dreams. He is a first-year university student of Economics; but is already setting up a company with his friend to sell things online. My last child and daughter, Chidera, is a very sweet and lovely child who helps her mother look after everyone else in the house. She is socially conscious and loves to serve in leadership roles in school.
What has been a philosophy you abide by that has played an important part in your success?
I believe deeply in God and the power of His Grace through Jesus Christ. I have a worldview of manifest destiny that has driven me in life. That worldview makes me look at what is possible, not what is impossible. I believe that, in a competitive world, Africans are God’s children too, entitled to a place in the sun. My worldview has driven me to do a lot of what I have done on the global stage. I believe I should live a life of consequence for my immediate society in Nigeria, so I am focused on lifting up my fellow men and women, not just on myself and my own individual success. Frankly, the Grace of God has enabled me achieve a lot in life. And now, I am not interested in personal success anymore but how Nigeria can create a better life for all its citizens. That’s why I founded the Isaac Moghalu Foundation (IMoF) 13 years ago – in 2005 – to work in our rural communities at home even while I was still in active service at the UN. That’s why I have given up my professorship in one of the most prestigious universities in America to return home and found the think and do-tank, the Institute for Governance and Economic Transformation (IGET) in Abuja to educate our citizens on how to achieve a better democracy, good governance, and inclusive growth.
Which was the last book you read to relax, and what did you like about it?
I read a lot of books; for knowledge and not relaxation. Don’t forget I am a professor – so books are part of the trade. What I read for relaxation are magazines of various types: political, economic, and social. So you could say I combine relaxation with study at the same time. In that context I have enjoyed the books by the Cambridge University economist, Ha-Joon Chang. One of which is, ‘Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism’. He is a great and contrarian intellectual who challenges the status quo thinking about economic development.