The banks are getting back to the old game. Bonuses are up, profits are swelling; the new normal has arrived. This is human nature and capitalism rewards pure greed. From American Wall Street to Nigerian Broad Street, bank books are looking better.

As a former bank, I have many friends in the banking sector. They work hard and put really ungodly hours. I used to leave my house at Ikeja (Nigeria) at 5.30am and returned 11.30pm. It was absolutely normal; after all, we were well paid.

In Africa today, the most hardworking people are the bankers. The level of productivity in the banking sector is second to none. And I want the banks to do well.

When the failure of Lehman Brothers brought the world to its knees, the world experienced how the whole global financial industry has been integrated as a single atomic unit. Only a few like the Canadian banking sector passed through that financial Armageddon with little blemish. Others like US and my native country Nigeria suffered major negative consequences.

American Congress will lead the world as they have always done in many cases. However, the world must not just fold hands and wait for Washington. Especially Africa, this is an opportunity to reform its financial sector and get the engine of economic activity on a solid ground.

We noticed that in the boom years, bankers were celebrated as geniuses. They privatized successes. And when the hell broke, they call the world to help them. And losses were socialized. This kind of artificial distortion disturbs the financial equilibrium resulting to misallocation of scare economic resources in national treasuries.

I recalled that Nigerian Central Bank raised billions of Naira over a weekend to bailout some banks when many universities were shut down because of issues associated with funding. This is a country where education, electricity, transportation and health delivery needed massive injection of funds. Between those needs and banks, the government decided to save the banks, rightly.

Bailouts create disequilibrium in the economic landscape and must be seen that way. It hurts competitive environments and makes losers to become sudden winners.

But boom and bust will always happen. King Solomon said in the Bible that there is time for everything. It is one of those things that can never be eliminated. You can mitigate the impact and plan for it or possibly defer when it happens, but economic boom and bust must take its natural cycle.

Finance has evolved over centuries and there have been countless reforms. But none will ever eliminate busts in the economy. Man by pure greed will always innovate to work around any reform in order to maximize profits. You can only reform what you know today. But technology of tomorrow will create more opportunities that will make today’s reform obsolete. And markets lead regulations by years.

Why not? There are people who have become millionaires because they have computing power to trade. The high speed trading is nothing but using computer speed to outsmart the market. Do we have a regulation for that? When I trade with my average laptop, do I have equal chances of success? Now regulate high speed trading and you will notice that you will need to do that every eighteen months according to Moore’s Law.

To cut this story short, I propose that African Union must do two things:

(1)    Task all member states to introduce a Bailout Levy of 10% on bank profits (before tax).  This is besides the fund allocated for deposit insurance scheme. This levy will be used to bailout banks when they derail and insulate the taxpayers from any help.

(2)    Task all member states to introduce Bonus Levy of 50% on all bank bonuses to employees. This is necessary since tax payers save these bank employees and during the good days, they enjoy the fun alone with their families.  It will be very unfair to allow taxpayers to go through another circle of bank bailout and allow only employees and investors to reap the profits during good times. This levy will minimize that.

I am confident that if African governments implement these policies we can have a banking system that heals itself during bust season, without any support from tax payers.

Editor’s Note: This piece was written at the crux of the last recession