A stitch in time, an adage says, saves nine. For the suspended Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, a voluntary exit from the scene with former President Muhammadu Buhari would probably have saved him all the troubles. Now that his day of reckoning has come, he needs to be held accountable for all past mistakes or misdeeds of his former office.
For Godwin Emefiele, former governor of the Central Bank of Nigeria (CBN), his current travails were foretold; he didn’t need any prophecy from whatever quarters to know that trouble was lurking in the corner. The most surprising thing to most people, however, was that he missed a golden and honourable opportunity to quit the stage with his erstwhile principal, President Muhammadu Buhari on May 29, 2023.
By offering to stay on beyond the exit date of the former President, he inadvertently exposed himself to this avoidable ridicule and helpless web that he now finds himself. Emefiele, the suspended CBN boss, is not yet before the crucifix; far from it. He has a lot of leverage to fall back on, no doubt whatsoever, but it’s certainly not going to be a pleasant experience for him; nor a good narration for the country’s CBN Czar, who ought to be retiring to a well-deserved rest, having served as the country’s Central Banker for almost two terms of five years each, save for just 10 months. Many think his strategy failed him and beclouded his sense of reasoning.
For the most part and nearly over the nine years that Emefiele was in the saddle, he was credited for initiating and shouldering the key components of the economic thrust of the Buhari administration. His brief, though limited to monetary policy and interest rate determination, he was, nonetheless, active, most times in driving fiscal policies as well. His push for expanding the productive base of agriculture through the Anchor Borrowers’ Programme (ABP) saw to the increase in rice production mainly, and other staple foods, readily came to mind. The effectiveness and the long-term impact of the CBN intervention in the agriculture sector were checkmated by the later-day activities of herdsmen and the general state of insecurity that pervaded most parts of the country, most especially in the Northern part of the country.
Next to agriculture, were several other interventions in critical sectors of the economy, including manufacturing, entertainment, aviation, and funding backward integration efforts, that were intended to indirectly influence the cost of production for firms and impact positively on prices by improving the flow of credit, or funds. However, there are arguments and divergent views on how the CBN under Emefiele handled its core area of monetary matters, including the interest rate regime and foreign exchange management.
For years, even before the onset of his tenure, on June 3, 2014, there were concerns raised by well-informed segments of the society, among them industrialists, manufacturers, bankers, parents with wards studying overseas and the like, about the CBN’s foreign exchange multiple rates regime and the rising cost of money occasioned by high-interest rates charged by commercial banks. While it is difficult to explain why these concerns lingered and remain unresolved, one cannot rule out the Nigerian factor, which always tends to circumvent the rules of the game, and most especially the recent global negative overwhelming impact of COVID-19 pandemic which literarily rubbished all governments’ efforts to grow their economies.
Given the parlous state of the economy currently, where over 85 per cent of the country’s revenue is devoted to servicing its debts, both local and foreign (put at N77 trillion), coupled with the high expectation of Nigerians on the new government of President Bola Ahmed Tinubu to turn the fortunes of Nigeria for the better, it was no surprise, therefore, that something has to give way for the desired change to manifest. Emefiele’s foray into politics and the CBN’s subterranean moves to effect a currency redesign could be seen as the last straw that may have broken the camel’s back and exposed him to his present predicament.Mixed reactions trail Emefiele’s suspension
The Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the suspension of Godwin Emefiele did not come as a surprise. Yusuf, an economist, told The Nation at the weekend that given that the monetary and foreign exchange policy thrusts of President Tinubu’s administration is at variance with the policy disposition of the CBN under Emefiele, the suspension was just a matter of time. “President Tinubu was very clear in his inaugural speech about his resentment of some current CBN policies such as the multiple exchange rate and the Naira redesign policy. The President also hinted at a house-cleaning plan for the CBN. It is impractical to reform the apex bank and review some of its major policies with Emefiele remaining on the seat as Governor,” Yusuf said, adding that it is therefore logical that the CBN Governor be advised to proceed on suspension.
Yusuf further explained that the CBN under Emefiele had presented a compatibility issue between the apex bank and the present administration, thereby making the parting of ways inevitable. “The truth is that there is a major compatibility issue. The parting of ways was inevitable,” additionally,” “the brazen involvement of the CBN Governor in partisan politics was an aberration and most unbecoming. It was damaging to the credibility of the CBN and the reputation of the Governor himself.”
The Managing Director of Economic Associates, Dr Ayo Teriba, said the appointment of the Acting Governor to lead the CBN affords the opportunity to reflect on what lessons from the preceding regimes can teach the country about the next five years. He said Emefiele, a dedicated banker, both by training and nearly three decades of assiduous professional practice, was made to lead a CBN Board on which there is currently no economist, and a Monetary Policy Committee (MPC) on which only a couple of the part-time members are economists.
“While one cannot question the collective wisdom of former President Goodluck Jonathan and the 109-member Senators in nominating and confirming Emefiele for the role, one must point out that the technical expertise required for the Board of the CBN and the MPC to confront contemporary global economic and financial complexities and translate them to growth, employment, price, exchange rate and financial stability outcomes for Nigeria, cannot be currently assumed to exist within the CBN,” he said.
He said both the Board of the CBN and the MPC are now populated by lawyers, accountants, bankers and/or stockbrokers. “None of the current members of the Board of the CBN, or the full-time members of the MPC has any track record of writing to publicly articulate any aspect of monetary policy,” he said.
The Nigeria Country Representative of the European Organisation for Sustainable Development, Jide Akintunde said the fact that the last two CBN governors have failed to complete their legal tenures of office, is a cause for concern. “This trend must end with Emefiele’s suspension. How to ensure this is simply a function of who is appointed as the next substantive governor of the apex bank. It is at the point of the appointment that we miss the road and end up with the inevitability of removing the CBN governor,” he said.
On the impact of Emefiele’s suspension on the exchange rate and economy, Akintunde said the suspension of Emefiele will send conflicting signals to the Nigerian market participants. Fundamentally, this suspension will, by itself, not make much impact. What would be impactful, over the medium term, is what follows from here and who is announced as the next substantive CBN governor.
“I am concerned that President Bola Tinubu – much like his predecessor – may be seen to want to predetermine the reform that is necessary at the CBN. No matter how well-intentioned he may be, this is a problematic approach. Political influence on monetary policy is not going to reassure investors. After a short period of hurrah – which may see the naira marginally appreciate and a brief surge in Nigeria’s main equity index – the excitement will not sustain itself. We will start to deal with the perception of executive influence over monetary policy. Foreign investors would greet such ‘reform’ with circumspection,” he said.
Akintunde said that to reduce the period of wait-and-see attitude about the financial markets and the economy, a new CBN governor-designate should be announced as soon as possible. The timing of the resumption of such an appointee requires a combination of political and technical solutions. On who should be the next CBN governor, Akintunde said the next Governor of the CBN should be someone who is unlikely to be removed before the end of his tenure. But this simple characterisation throws up many important requirements that are discernible from our experience since 2009.
“First, the next CBN governor should be temperamentally fit for the office. We need someone who would focus on doing the job professionally. Two, we should avoid appointing someone who would be transactional, rancorous, and predisposed to conflict of interest. This means such an individual should not be a former private-sector banker. Three, and perhaps, most importantly, the individual should be an intellectual (a necessity for good policymaking) and combine senior-level experience in local and international institutions. If such a candidate has experience in policy-making – especially central banking – that would enable him or her to be ready-made for the job from day one,” he said.
Former Executive Director, of Keystone Bank Limited, Richard Obire, said Emefiele’s suspension would not have come as a surprise to keen watchers of the political-economy space. He said some, maybe many, hold the view that he got a bit too involved in politics mainly due to his desire to run for the office of President. “Some felt his Naira Redesign Policy was badly implemented because it was targeted more at achieving some political aim rather than sensible economic goals. The new President has hinted at his desire to see a unified exchange rate to remove damaging distortions in the foreign exchange market and draw in forex inflows,” he said.
According to Obire, that will be a key expectation of the successor to Emefiele. He explained that current inflation at about 22.22 per cent is high and could go higher with the recent fuel price adjustments and likely wage increases. “Policies to moderate inflation and achieve macro-price stability will be another expectation of the new CBN Governor. A third expectation will be to see interest rates come down and stabilise. The Monetary Policy Rate currently at 18.5 per cent, indicates that the best borrowers will be paying about 20.5 per cent. Most SMEs will be borrowing at much higher rates. This is not supportive of production to drive output and jobs,” he said.
On the impact of Emefiele’s suspension on the exchange rate, Obire said: “I do not see it having any effects. Only a move to unify the exchange rates will change the dynamics towards the weakening of the Naira, at least in the short term until supply increases.”
On his part, the President of the Association of Bureaux De Change Operators of Nigeria (ABCON) Alhaji Aminu Gwadabe, said power is transient, and should be used to better the lots of the people. According to him, the Bureaux De Change (BDCs) faced very severe regulatory challenges during Emefiele’s tenure, which can be reversed by the current leadership. Reconsider restrictions on BDCs operations and open up the forex space for more dollar inflows.
He said: “Godwin Emefiele has both his weaknesses and strengths which will be subject of public discourse as we wish him well in his future endeavours. In every change, there is always an expectation of triggers of sentiments. I, however, foresee positive sentiments in the exchange rates trajectory. We also congratulate the Acting Governor on the new appointment. I have no doubt that he will perform, given his sterling qualities at the Nigerian Interbank Settlement System (NIBSS) as Managing Director/CEO.” Gwadabe said the Acting CBN Governor should use his wealth of experience to usher in confidence in the foreign exchange market.
But Dr. Olisa Agbakoba, renowned human rights lawyer and activist, has faulted the Department of State Service (DSS) on its role in the arrest and detention of Emefiele.
The experienced rights activist said as long as there was no issue of security surrounding why the former CBN governor was arrested, the state secret service had no business with his arrest and detention. Taking to his Twitter handle yesterday, Agbakoba said he had no issue with the suspension of the erstwhile CBN boss, admitting that the suspension did not come to him as surprise but questioned the constitutional framework under which the DSS got involved.
He highlighted that the constitutional role of the state secret service remained internal security, saying unless there is an issue of security, the involvement of DSS in the Emefiele issue was unnecessary. Agbakoba twitted: “The suspension of the Governor of CBN @cenbank from office is not a surprise as his tenure was way beyond monetary policy. But confirmation by DSS @StateDeptDSS that Governor Emefiele is in its custody comes as a shock. The statutory role of DSS is internal security and I shudder to think what role DSS will play in this matter. The rule of law says it all. Can the relevant agency responsible for Governor Emefiele step forward but this excludes the DSS unless this has security implications,” he said.
THE NATION
