Editorial: 1001 Reasons why Godwin Emefiele should be reappointed as CBN Governor

CBN Governor Godwin Emefile

Five years ago, when he was tapped for the job by the floundering Jonathan administration, Business Hallmark had felt queasy over the choice of Godwin Emefiele as CBN Governor. And obviously for good reasons. The core question many in the finance community were asking was, “Godwin who?” Indeed, who was Godwin Emefiele? Of course, he had a designation; Managing Director, Zenith Bank Plc (By the way, is it a stylistic aberration that subsequent chief managers of Zenith Bank don’t bear the moniker; GMD/CEO, since the regime of founding top gun, Jim Ovia?) anyway.

Even as the MD of Zenith, many did not think that Emefiele was qualified to be saddled with the onerous responsibilities of managing the monetary policy of Africa’s leading economic power house. Despite his glittering successes at Zenith, a bank whose top line numbers he grew at a very impressive rate, he was still regarded lightly within banking and finance industry circles. The reason for that were mainly due to the ever-luminous image of Mr. Jim Ovia. The Zenith founder had so dominated the bank’s landscape, that Emefiele’s effervescence was beclouded. Thus, even though he had excelled magnificently on his job, he remained largely obscure; a quiet and self-effacing backroom operator who appeared to shun the limelight. Because he was also famously taciturn, in what has now become a notorious Zenith Bank institutional culture, no one, not least of all this Newspaper, could easily say what Mr. Emefiele’s views on the seminal issues of monetary policies were. The cumulative impact of all those grey areas, were a cold as ice response by relevant stakeholders to his ascension to the CBN top job.

In truth, this Newspaper was not unduly worried about his competence. What upset the butterflies in our stomach was the issue of corporate governance. We did not believe that it was right for a major operator to be named as the national monetary policy czar. By the way, we still don’t. Our position is that Regulation and Operation are two distinct activities that should never converge. In a society like Nigeria, riddled by colossal institutional abuses, it is the path of wisdom to make every effort to keep regulatory function as far away as possible in order to maintain the sanctity of the institution. On that premise, we were not enamored of the appointment.

In the event, Mr. Emefiele has disappointed almost everyone of us naysayers. Plucked from the relative obscurity of his comfort zone and thrust into the eye of the raging storm, he has rapidly transformed. For a man who hugged anonymity as a creed, he has embraced the blinding glare of the limelight and engaged with the exacting demands of the job, most admirably.

He came to office at a time of great upheaval in monetary policy. The economy was in a tailspin. The foreign exchange market was in turmoil with foreign reserves heading south. The operating environment was worsened by the national electoral cycle which created a perfect storm. By the time the dust settled, all the economic indices were belly up. Interest rates gyrated awkwardly. Inflation rates roared upwards. Exchange rates went through the window and Nigeria embarked on its slow march on economic death row. Perhaps as a fitting icing on the cake, oil prices collapsed. All too suddenly, Nigeria’s economic boom went burst and her freewheeling days were over.

THE MAN FOR THE MOMENT….

The core duties of a central banker in any clime, since Walter Bagehot delineated the salient features of the institution in the classic Lombard Street in 1873 are; manage the famous three macro economic prices; Interest rate, Exchange rate and Inflation rate and in addition, maintain financial sector stability. A cursory review of what these rates were prior to Emefiele’s appointment and what they are today, speaks eloquently to his job performance. It is note worthy that despite the turbulence which beset the national economy in the wake of the oil price slump, Nigeria has emerged from recession more strongly than previously. It took the steady, unflappable hand of an Emefiele, surprisingly sharply focused and firmly committed to his vision, to steer the ship of the economy to shore. In the process, he has proven to be a tenacious stickler for moderation and the sensible approach. In the manner reminiscent of such famous central bankers like Alan Greenspan, Emefiele dispensed with the histrionic flair and some will say, self-promoting proclivities of some of his predecessors, to adopt a conservative and understated posse. In banning some import items from foreign exchange coverage and insisting on the policy in the face of wide scale hue and cry, he demonstrated a principled trait that many found surprising, and then admirable. Under his watch, inflation rates have fallen steadily. Today, it is at an impressive 12.4%. Business Hallmark has learnt that his aim ultimately, is to achieve a single digit inflation rate. However, whether that is achievable in the face of the Government’s expansionary fiscal policy, is yet to be seen. Most worrisome is that Interest rates have proved more resolute.

But to his credit, various monetary policies in promotion of Agriculture and SME’s have ensured that credit is now more readily available to farmers and small-scale business owners at affordable single digit rates. The impact of all these on food sufficiency has been dramatic. The Agricultural sector has boomed, which is perhaps the main reason for the steady fall in headline inflation rates.

In managing the financial sector, Emefiele’s proactive actions in quickly intervening in the erstwhile Skye bank, ensured that the stability of the sector has remained intact. As various operators confessed to this Newspaper, “The Gov,” as he is fondly called, husbands the financial sector carefully. Obviously taking advantage of his rich experiences as a top banker, he recognizes the primacy of banking sector stability in overall monetary and fiscal policy stability, so he keeps an alert eye on it.

Certainly, Mr. Emefiele has not run a perfect shop. There is the lingering issue of divergent interest rates which many critics contend create room for arbitrage and rent seeking. The path of wisdom is to have a single exchange rate which will make the entire foreign exchange market clearly free and more transparent. There are some who argue for a full deregulation of the market. Of course, that would not be the preferred policy option of this Newspaper.

All in all, we believe that Mr. Emefiele has done a good job, is doing a good job and will certainly do a better job in the years ahead. He has steered a steady course amidst turbulent waters and has provided a very safe pair of hands on a most challenging job in an exasperating ecosystem.

IT AIN’T BROKEN, SO WHY FIX IT?

By June, Mr. Emefiele’s initial tenure will be over. Predictably, the hustle for his replacement has long began. Many potentates are lining up for consideration. Going by the practice of recent history, CBN governors have had to serve single terms. But it was not always so. And it does not have to be so. It is the position of this Newspaper that it should not be so; Mr. Emefiele does not need to be changed just for the sake of it.

The President, Muhammadu Buhari, has no need for a fresh pair of hands, except of course to create a job for the boys which on its own is no reason to hire a brand new CBN Governor. In four years, he and Mr. Emefiele have struck a surprising rhythm which has served the country well. Maintaining that rhythm will surely serve the country even better than the disruption of a politically motivated change. As the old football lingo goes, “Why change a winning team?”

For this Newspaper and millions of reasonable members of the public, we don’t see any reason why.