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Emefiele’s headache: Naira. Inflation. Debt




The Governor of the Central Bank of Nigeria (CBN), Governor Godwin Emefiele, is an unusual technocrat for many reasons.

He became Central Bank governor in a political climate that exacerbated and widened the disconnect between the monetary and fiscal policy in an administration with enough suspicion for private sector and whose sense of managing the economy is a more inherent command structure leaning.

Within this prism, the job was tightly cut out for Emefiele from the start, and indirectly, as he would be a governor saddled with the responsibility of managing the monetary policy of the nation but also with a huge dose of influence on fiscal policy.

In his career as apex banker he has made history as the only governor to be reappointed for a second term since the return to democratic rule.

It does not stop at that, as he is also the governor who experienced two recessions.

Under him,the burden of Central Bank governor ballooned into greater proportions as the CBN transitioned from merely minding interest rates and inflation to a multi-sectored stakeholder.

On the ropes, it may really ring true that there has not been any governor before him with such gargantuan challenge. Emefiele himself admitted as much while giving his speech at the 55th Annual Bankers Dinner hosted by the Chartered Institute of Bankers of Nigeria in 2020.

On that occasion, Emefiele said that the challenges facing Nigeria’s economy are of a global dimension and not peculiar to Nigeria.

He enumerated several issues and challenges facing the economy.

In his words, “We confess that the problem we face today is of a global dimension. The Global Economy is challenged, just like the Nigerian economy. My appeal to our media analysts is that in the course of conducting their analysis of the Nigerian economy, they should realise that their public comments, particularly if they are alarmist, could create panic in our environment.

“We cherish their counsel, but urge that they be more constructive in their pungent criticism as this could hamper our efforts to return our country and economy back to recovery. When you over dramatize a problem, you create panic that slows the process of recovery.”

According to Emefiele, the times have been challenging, as the COVID-19 pandemic completely ravaged the global economy, but it was quite reassuring that a solution would soon emerge, with the reports of developments of appropriate vaccines by several firms to tackle the dreaded disease.

Mr. Emefiele also said, “Like other economies, the Nigerian economy was not immune from the COVID-19 shock in 2020. Nigeria’s gross domestic product (GDP) contracted by -3.4 percent in the third quarter, a welcome improvement from the – 6.1 percent recorded in the second quarter. The negative rate of growth was due to a series of external factors in addition to the lockdown measures, imposed in order to curtail the spread of the virus.”

Emefiele challenged the banks to optimally harness the huge value-chain opportunities in several sectors of the economy through their intermediation functions, saying:

“Let me also add that while COVID-19 has brought on several challenges to our economy and indeed the banking sector, it offers a unique opportunity for us to build a more resilient economy that is better able to contain external shocks, whilst supporting growth and wealth creation in key sectors of our economy.


“Proactive steps on the part of stakeholders in the banking and financial system in supporting the growth of sectors such as agriculture, ICT and infrastructure, will strengthen our ability to deal with the challenges that have been brought on by COVID-19, while enabling the growth of our economy in general.”

But Dr. Olufemi Omoyele, Director of Entrepreneurship at Redeemers University said “Recovery depends to a large extent, on the full restoration of economic activities in key sectors, as well as the production of appropriate COVID vaccines that will be made available to millions of people across the world. Already the vaccines are available, but beyond this the government must engineer growth through right policies. But inflation is at the highest, prices of consumers goods, cooking gas and households items are skyrocketing. Government must put on thinking cap.”

To hs credit, Emefiele has made strong efforts at ensuring economic growth and financial stability through strategic policies, which have in recent times been criticised by economists and analysts.

“Though, many have criticised these policies, what we must note is that the apex bank’s boss can not go beyond the direction of the administration’s vision and agenda. So, Emefiele is operating in a restrictive environment. He has tried his best managing fiscal and monetary aspects. He is indirectly in charge of the fiscal”, says Dr. Muhammad Abudu of the Department of Economics, Kogi State University.

On one score, such policies have helped the CBN to manage an economy in the thick of serious economic challenges such as economic recession/stagflation, the Covid-19 pandemic, interest rate issues, foreign exchange rates, external reserves, exchange rate, financial inclusion and the gap in the agricultural value chain.

Under his watch, the apex bank came up with many mediatory, interventionist measures to strengthen the weak and collapsing ramparts of the economy.

BH’s investigations point to 37 intervention funds targeted at stimulating the economy and addressing the issue of unemployment. Of these, about the most popular may be the Anchor Borrowers initiative to stimulate agricultural growth.

Emefiele’s Anchor Borrowers programme which should have stimulated agricultural revival to self sufficiency has however been somewhat negatively impacted upon by rising insecurity and herdsmen attacks on farms and agricultural settlements.

Emefiele himself expressed this concern lately when he called on those behind the insecurity to lay down their arms and embrace the programme.

Emefiele who stated this a fortnight ago in Uyo, the Akwa Ibom State capital while presenting a keynote address at the 2021 CBN Executives Seminar, noted that the United Nations’ Food and Agriculture organization had reported that at least 9.2 million people in Nigeria faced a food crisis between March and May 2021.

He expressed concern over severe disruptions to the agricultural value chain due to security challenges in the country and the COVID-19 health crisis, stressing that the segment of the Nigeria population facing a food crisis at the moment could increase if no urgent and resilient actions were implemented.

Inflation has proved to be one of the biggest headaches of the Central Bank governor.

The National Bureau of Statistics says the consumer price index, (CPI) which measures inflation increased by 17.75 per cent (year-on-year) in June 2021.

This is said to be 0.18 percentage points lower than the rate recorded in May 2021 (17.93) per cent.

This implies that prices continued to rise in June 2021 but at a slightly slower rise than it did in May 2021).

The corresponding twelve-month year-on-year average percentage change for the urban index was 16.51 per cent in June 2021.


This is higher than the 16.09 percent reported in May 2021, while the corresponding rural inflation rate in June 2021 was 15.36 percent compared to 14.94 percent recorded in May 2021.

Nigeria’s inflation rate has dropped to 17.38 percent in July from 17.75 in June 2021, according to the National Bureau of Statistics (NBS).

The latest inflation rate was contained in the ‘Consumer Price Index (CPI) Report for July’ released by the NBS last Tuesday. CPI measures the rate of change in the prices of goods and services in Nigeria.

Nigeria’s inflation rate showed that prices continued to rise in July 2021 at a slightly slower pace than the 17.75 percent recorded in June. The fall between both months was 0.37 percent or 37 basis points.

“This implies that prices continued to rise in July 2021 but at a slower rate than it did in June 2021,” NBS said.

On month-on-month basis, the Headline index increased by 1.06 per cent in June 2021. This is 0.05 percentage points higher than the rate recorded in May 2021 (1.01 per cent).

On a month-on-month basis, the urban index rose by 1.09 percent in June 2021, up by 0.05 points compared to the rate recorded in May 2021 (1.04 percent), while the rural index also rose by 1.02 per cent in June 2021, up by 0.04 percentage points over the rate that was recorded in May 2021 (0.98) per cent.

Increases were recorded in all COICOP divisions that yielded the Headline index.

The urban inflation rate increased by 18.35 per cent (year-on-year) in June 2021 from 18.51 per cent recorded in May 2021, while the rural inflation rate increased by 17.16 per cent in June 2021 from 17.36 per cent in May 2021.

Meanwhile, the composite food index rose by 21.83 per cent in June 2021 compared to 22.28 per cent in May 2021.

This implies that food prices continued to rise in June 2021 but at a slightly slower speed than it did in May 2021.

The average annual rate of change of the Food sub-index for the twelve-month period ending June 2021 over the previous twelve-month average was 19.72 per cent, 0.54 per cent points from the average annual rate of change recorded in May 2021 (19.18 per cent).

This rise in the food index was caused by increases in prices of Bread and cereals, Potatoes, Yam and other Tubers, Milk, Cheese and Eggs, Fish, Soft drinks, Vegetables, Oils and fats and Meat.

On month-on-month basis, the food sub-index increased by 1.11 per cent in June 2021, up by 0.06 per cent points from 1.05 per cent recorded.

The Core inflation, which excludes the prices of volatile agricultural produce stood at 13.09 percent in June 2021, down by 0.06 percent when compared with 13.15 per cent recorded in May 2021.

The highest increases were recorded in prices of Garments, Passenger travel by air and by road, Motor cars and Vehicle spare parts, Shoes and other footwear, Pharmaceutical products, Medical services, Hairdressing salons, and personal grooming establishments, Cleaning, repair and hire of clothing, Clothing materials, other articles of clothing and clothing accessories, Furniture and furnishing and Fuels and lubricants for personal transport equipment.


The average 12-month annual rate of change of the index was 11.75 per cent for the twelve-month period ending June 2021; this is 0.25 per cent points higher than 11.50 per cent recorded in May 2021

Despite the macroeconomic challenges facing the country, Emefiele has recorded some achievements according to Professor Hassan Saliu, former Dean, Social Sciences, University of Ilorin.

He said that under him, the economy has witnessed sizable growth in banks credit to private sector by 92.79 percent year-on-year to N32.64 billion in June 2021 from N16.93 billion in June 2014, when Emefiele became the governor of the CBN.

He mentioned the huge increase in banks credit growth through the policy of Loan to Deposit Ratio (LDR), which was introduced in September 2019 by the CBN under the leadership of Emefiele; as an example of success story, a policy he said has helped many small businesses.

The apex bank under Emefiele’s watch also started the Central Bank’s development finance initiatives, where the Bank granted N756.51 billion to 3,734,938 small holder farmers cultivating 4.6 million hectares of land, of which N120.24 billion was extended for the 2021 Wet Season to 627,051 farmers for 847,484 hectares of land, under the Anchor Borrowers’ Programme (ABP); for the Agribusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS), the sum of N121.57 billion was disbursed to 32,617 beneficiaries; and for the Targeted Credit Facility (TCF), N318.17 billion was released to 679,422 beneficiaries, comprising 572,189 households and 107,233 Small and Medium Scale Enterprises (SMEs).

Also, Under the National Youth Investment Fund (NYIF), the Bank released N3.0 billion to 7,057 beneficiaries, of which 4,411 were individuals and 2,646 SMEs. Under the Creative Industry Financing Initiative (CIFI), N3.22 billion was disbursed to 356 beneficiaries across movie production, movie distribution, software development, fashion, and IT verticals.

The CBN under the N1.0 trillion Real Sector Facility, released N923.41 billion to 251 real sector projects, of which 87 were in light manufacturing, 40 in agro based industry, 32 in services and 11 in mining.

On the N100 billion Healthcare Sector Intervention Facility (HSIF), N98.41 billion was disbursed for 103 health care projects, of which, 26 are pharmaceuticals and 77 are in the hospital services. Similarly, the sum of N232.54 million was disbursed to 5 beneficiaries under the CBN Healthcare Sector Research and Development Intervention (Grant) Scheme (HSRDIS) for the development of testing kits and devices for Covid-19 and Lassa Fever.

Under the National Mass Metering Programme (NMMP), N36.04 billion was disbursed to 17 Meter Asset Providers, to nine (9) DisCos, for the procurement and installation of 657,562 electricity meters. On the Nigerian Electricity Market Stabilization Facility – 2 (NEMSF-2), the CBN released N120.29 billion to 11 DisCos, to provide liquidity support and stimulate critical infrastructure investment needed to improve service delivery and collection efficiency.

On money market development, the net liquidity position and interest rates in the economy reflected the impact of the Bank’s liquidity management operations.

In collaboration with key financial institutions, the CBN has deployed several measures aimed at improving access to finance for SMEs in order to enable greater expansion of their operations. Some of these activities include enabling SMEs to leverage their movable assets to obtain capital from financial institutions, and the development of credit reporting agencies, which would encourage SMEs to maintain good credit ratings in order to obtain access to credit at relatively lower cost from financial institutions.

Consequently, the bank’s development finance interventions have created over seven million jobs according to information from the CBN’s corporate communications department.

Over 620,000 direct and indirect jobs were created in two years as a result of the Central Bank of Nigeria’s (CBN’s) intervention in the Cotton, Textile and Garment (CTG) sector.

Nigeria’s financial inclusion programme has recorded some progress. The EFInA Access to Financial Services in Nigeria 2020 survey indicated that, while more Nigerian adults are financially included, the National Financial Inclusion Strategy targets were yet to be met.

Emefiele has made a strong effort to promote monetary policy and exchange rate stability, says Murega Mungai, Trading Desk Manager at AZA, Nairobi, Kenya. AZA is Africa’s biggest non-bank currency broker, transacting more than $1bn annually.

Mungai said, “We saw this very early on with the introduction of the investors and exporters window which allowed investors to access foreign exchange at prevailing market rates. His policies have also focused on improving access to credit for MSMEs, intervention in the agricultural sector and other ways to diversify the economy and cushion it against a crash in oil prices.


However, Emefiele has come in for criticism for not communicating with the market, most notably after devaluing the naira’s official rate recently, says Mugai.

The bank’s unorthodox, as well as interventionist model that moves away from just ensuring price stability, drew the ire of analysts at different times.

Professor of Economics at Pan Atlantic University in Lagos, Bongo Adi, said: “Over the years, our experience here in Nigeria is that CBN governors have sometimes taken positions that rankled the government. But we haven’t experienced such under him. This has led to some labeling the CBN under him as the government’s piggy bank.

“The pro-socialist bent of Aso Rock appears to be backed by his monetary policy which they refer to as unconventional and find reasons in their enabling act to justify at each call,” adding that, “The Nigerian situation is a challenging one.”

It is easy to criticise Emefiele, though, says Adi. “The fact, however, is that the Nigerian situation is a challenging one. The market isn’t always to be trusted to work; the government needs to ‘improve the market outcome.’ But the experience is that the government can complicate the situation. Perhaps, sandwiching between the devil and the deep blue sea may not be a choice to be made, after all. It might be the only way.

Emefiele unveiled a five-year plan shortly after his reappointment for a second term in May, 2019. The plan targets double-digit growth in one of Africa’s largest economies.

The plan includes domestic macroeconomic and financial stability, fostering the development of a robust financial payment system infrastructure seen as increasing access to finance to all Nigerians, thus and raising the financial inclusion rate in the country.

He also pledged to continue working with Deposit Money Banks (DMBs) towards improving access to credit for smallholder farmers, MSMEs, as well as consumer credit and mortgage facilities.

The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr Muda Yusuf said: “Mr Emefiele has been very passionate about promoting self-reliance to reduce our import dependence and conserve foreign exchange. Some companies have taken advantage of this CBN funding window to fund real sector investments.

Dr Yusuf said the CBN boss has demonstrated exceptional commitment to development finance, providing long term funds to the real sector at single digit interest rate.

“But there has been a disproportionate emphasis on demand management strategy to protect reserves. It is desirable to see much greater focus on supply side strategies to boost forex inflows and stabilise the exchange rate. This could also improve the liquidity in the foreign exchange market,” he said

Some analysts are even more scathing in their criticism of the governor.

“He will be more remembered as the CBN governor that surrendered much of the bank’s independence and ran a monetary policy that had record negative impact on the Nigerian economy,” Tunde Ajileye, Partner, SBM Intelligence , was widely quoted by the media last year for this acerbic comment on Emefiele.

Losing independence

“Emefiele’s tenure has seen the erosion of the independence of the central bank. The bank has been shown to be funding the Nigerian budget to a degree that not only violates the Fiscal Responsibility Act but also potentially impairs its own balance sheet as an audio leaked to the press showed. Monetary policy under him has been a mix of conflicting signals and has left many stakeholders extremely befuddled many times,” says Ajileye.

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