Editorial: Emefiele’s reappointment: A break with tradition

Generally, public policies and government actions, more often than not, are a function or product of tradition, which is an established way of doing things. The reason is that tradition makes for stability and predictability in conduct and expectations. But sometimes, traditions can be established in error, or it may have outlived its designed or expected purpose. This seems to be the case with the appointment and tenure of the governors of the Central Bank of Nigeria, CBN.
Since the return of democracy in 1999, all the CBN governors had served for only one term – and there have been three of them. Mr. Joseph Sanusi declined a second term for personal reasons, particularly his age. Both Prof. Chukwuma Soludo and Mallam Lamido Sanusi as he was then, were young and ambitious enough to desire and deserve second terms. But for political considerations, they were denied. Only one governor, Alhaji Abdulkadir Ahmed, had served two terms during military rule.
Our society is one where politics interfere with most actions of government especially those of critical nature and political importance. This has had unsavoury and deleterious effects on our development, as sometimes the right things are not done because of political considerations. It appeared the appointment of the CBN governor had become a victim of this treacherous tradition before last week. So we believe President Muhammadu Buhari has do well by breaking from this ignominious tradition with the reappointment of Mr. Godwin Emefiele as CBN governor..
All over the world the office of the central bank governor or chairman is revered and highly institutionalized because it is the face and embodiment of the financial system. A major function of the central bank is the determination and control of the price system, which include inflation rate, interest rate and exchange rate; these are the determinants of every economy. A major adverse change in any of them can spell doom for any economy. It is noteworthy that despite the turbulence which beset the economy in the wake of the oil price slump in 2014, Nigeria has emerged from recession more strongly than previously.
Having been appointed by the previous government, it is a mark of statesmanship and upholding higher moral for this government to done the unusual by not only retaining but reappointing him. It is a clear vote of confidence and approval of his dexterity in the handling of monetary issues. It is to his credit that the exchange rates of both the official and parallel markets for the first time have almost converged, completely dismantling the corrupt and unsettling arbitrage culture that had nigh destroyed the economy.
From every indication, Mr. Godwin Emefiele has learned the ropes and proved his mettles in the course of the past five years. It has been a tortuous and turbulent journey that could have broken most faint hearted persons. On the balance he has distinguished himself and operated as a team player and humble leader. He has kept the economy from harm’s way having piloted it out of an unnecessary recession which it was plunged into for no fault of his. He was appointed at a time of national economic distress and change of policies which made the recession inevitable.
The ban on 43 items from forex at the height of the currency crisis was a master stroke that saved the economy from collapse. There has been a boost in local production of the 43 items banned which has created domestic demand for the items concerned, employment generation, substantial forex owing to the reduction in the import bills of the country and improved domestic capacity. The CBN intervention in the area of agriculture, manufacturing, Micro, Small and Medium Enterprises (MSMEs) and infrastructure has yielded multiplier effect on the economy.
The foreign reserve of Nigeria has risen to $45 billion and the CBN in its quest to ensure greater accessibility to forex, established the Investors’ and Exporters (I& E) Window in April 2017 as well as the forex window for Small and Medium Enterprises, SME.” It was also to his credit that Skye bank was not allowed to collapse and disrupt the sysem.
At the Bureau De Change segment, there has been a significant appreciation of the Naira from over N525 per dollar in February 2017 to about N360 per dollar today. Rates at the I & E Window also appreciated from nearly N382 per dollar in May 2017 to just over N360 per dollar. In addition, exchange rate pressures normally witnessed during the general election cycles was absent in 2019 polls.
This Anchore Borrowers’ Programme scheme stands out as one of the major achievements of the Bank in its intervention effort. The goal of the programme is to collaborate with anchor companies involved in the production and processing of key agricultural commodities. As at December 2018, a total sum of N174.48 billion had been disbursed through 19 participating Financial Institutions (FPIs) to finance 902,518 farmers, working with 194 anchor companies. During the period, 2,807,775 and 8,423,325 direct and indirect jobs respectively had been created under ABP. This is unprecedented.
However, despite his glaring achievements in the first tenure, those are now in the past. As he begins the second and final term, there is urgent need for greater leadership and visionary policies to drive the economy out of its present drift. Fortunately, he seems to recognise this fact when he told the senate during the confirmation meeting that tough times lie ahead. Although the CBN is essentially a monetary control institution, the lack of fiscal policy support from this government has compounded its responsibilities.
It is not enough for Emefiele to tell the senate and by extension, Nigerians, of the impending gloom; most perceptive Nigerians already know that, and several international bodies have warned about it. The challenge before Emefiele and the government is what should do be done about it. Every economic indicator points to the fact that the economy is in trouble. With GDP growth rate at less than two percent in 2018, it does not require much expertise to predict the bleak future ahead. This is compounded by the resurgent inflation rate of 13 percent, unemployment at 24 percent, exchange rate of N360 per dollar and Monetary Policy Rate, MPR, at 14 percent.
To make matter worse, the infrastructure deficit has continued to exacerbate with most public services such as power, energy, education, health, security and roads in deplorable conditions. No economy can survive, let alone prosper with the degree of debilitating issues across its social and economic fabric. Although most of the issues do not all fall into the remit of his office, it is all about the economy stupid! If the economy is stable and growing, most of these issues will become less threatening.
So Mr. Governor, there is work to be done and urgently too and the second term is the appropriate opportunity to leave a legacy. First and foremost, there are issues in the banking system. What happened to Skye bank derived mainly from regulatory failure. Speculations have been rife about some other banks in similar situations. CBN must act promptly to remove any such suspicion from the system.
Also the multiple exchange rates system has served its purpose and should be discontinued. Both the IMF and World Bank have called for its abolition because it is discriminatory and a disincentive to foreign investment. CBN’s intervention programmes of over N170 billion have been largely targeted at a particular part of the country and his is also discriminatory. Also the funds earmarked for the SMEs are held up in the banks and very little gets to the intended targets.
The mindless defence of the naira with the nation’s scarce forex is unnecessary and goes to sustain our bloated appetite for foreign goods. Today the nation has become a dumping ground for all Chinese goods that local industries are struggling to keep afloat. Such money could be ploughed into infrastructure to stir up economic activities and create jobs. This is the time to show leadership, not to continue to manage what leads to nowhere.