By EMEKA EJERE
The frosty relationship between the Nigeria Economic Summit Group (NESG) and the Central Bank of Nigeria (CBN), over stance on the latter’s economic interventions, is causing a wave of disaffection among members of the former’s board.
On Wednesday, chief executive officers (CEOS) of three prominent banks in the country resigned their membership of the board of the group in a move seen as a demonstration of solidarity to the CBN.
The CEOs, Kennedy Uzoka of the United Bank for Africa (UBA), Abubakar Suleiman of Sterling Bank and Adesola Adeduntan of First Bank Plc resigned in protest of the NESG’s position against recent CBN’s economic interventions to stabilise the financial system and fast-track economic recovery.
Business Hallmark gathered that the much-publicized and controversial attack on the apex bank did not go down well with the three directors, who were upset that they were not carried along before the press release was issued, hence their resignation.
More worrisome, observers say, is the resignation the CEO of Sterling Bank, where Asue Ighodalo, who is the chairman of the NESG board, also serves as chairman.
By this development, the NESG board is now left with Ighodalo and Niyi Yusuf (vice-chairman); Mrs. Onyeche Tifase (vice-chairman) and Laoye Jaiyeola (CEO).
The impact of COVID-19 on countries across the world resulted in a significant downturn in the global economy as countries of the world, including Nigeria were forced to impose lockdown measures in order to contain the spread of the pandemic.
The development resulted in depressed economic activity in the first half of the year. Except for China and Vietnam, advanced, emerging and frontier market economies, all experienced significant negative growth in the first half of 2020, while some are currently in a recession.
In response to the unfortunate events, central banks across the globe have embarked on measures aimed at stabilizing their respective economies by reducing lending rates, which declined to negative territory in several advanced economies, in addition to increasing the scale of their asset purchase programmes. The CBN was not an exception.
But the NESG had in a statement on Monday titled: “Matters of Urgent Attention” expressed concerns about how the CBN carried on the business of foreign exchange transactions, loan disbursements and price fixings without appropriate policy clarity.
It also said the distortions in the liquidity and interest rate management is causing a grave disadvantage to domestic investors and pensioners.
It said: “The group expresses serious concerns about how the CBN has carried on the business of foreign exchange transactions, loan disbursements (intervention funds) and price fixings without appropriate policy clarity.
“This can be subject to abuses, manipulations and significant market disruptions, reflective of a policy akin to crony capitalism. We therefore respectfully request the appropriate authorities to properly review this policy to restore credibility into our financial sector.”
The NESG had also urged the federal government to overhaul the management and support being given to the agricultural sector saying a huge gap exists between food production and requirement of Nigerians despite the huge sums disbursed by the CBN through the Anchor Borrowers’ Programme (ABP),.
“Evidently, the issues are beyond money and therefore, require a complete overhaul of the management of, and support for the Agriculture sector and all related sectors – with a view to getting more value for our investments”, NESG said.
The NESG also expressed severe concerns about certain provisions of the ‘repealed and re-enacted’ Bank and Other Financial Institutions Act 2020; recently passed by the National Assembly, and in the process of being transmitted to the President for assent.
The NESG said: “These are draconian, totalitarian and inimical to the development of a stable and transparently regulated financial sector. We respectfully request that the President should please withhold his assent until the Bill is properly reviewed, amended and is made fit for purpose.
“We also most respectfully request that our legislative houses should subject all Bills, in particular, such crucial bills, to the most efficient scrutiny necessary to assure compliance with the Nigerian Constitution, transparency, good governance and the best interest of the people of Nigeria.”
In response, the CBN had said its agricultural intervention programmes averted a major food crisis during the thick of the lockdown.
According to the CBN, 103, 189 beneficiaries of its development finance activities had received N59.12 billion through the NIRSAL Microfinance Bank as of August 2020.
The apex bank also refuted claims that its lending process did not have a proper framework, explaining that participating financial institutions carry out due diligence of applicants following which an additional assessment process is embarked upon by the CBN before disbursements are provided.
CBN director of Corporate Communications, Mr. Isaac Okoroafor in a statement said there are better ways for the NESG “to resusitate its brand other than through cheap popularity and tarnished attention using ambushed press statements made up of contrived allegations”.
“Although the bourgeoises atop the NESG may not feel the impact of the Bank’s development finance activities, many ordinary Nigerians, including smallholder farmers, households, and medium-scale entrepreneurs across the country know better.
Okorafor, among other clarifications, said, “As encapsulated in our most recent monthly economic report published on the Bank’s website, a total of N38.11 billion was disbursed as loans to 44,458 beneficiaries through the NIRSAL Microfinance Bank (NMFB). This number has risen to N59.12 billion; supporting to 103,189 beneficiaries as of August 2020.
“It is important for the NESG to note that our intervention programmes in the agricultural sector were a key contributor to the resilience of the agricultural sector during the crisis, as the sector experienced positive growth of 1.6 percent in the second quarter of the year despite the lockdown.
Responding to the criticism and demand by the group to review the recently enacted BOFIA Act, the chairman of The Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Uba Sani, challenged the competence of the group. He said that the group lack the moral right to comment on the amendment of the BOFIA Act, especially when the Act went through public hearing and received thirty-two (32) memoranda in support. He described NESG’s critique as ”a shock and disappointment”.
Also, frontline economist and managing consultant at BIC Consultancy Services, Dr. Boniface Chizea, described the move by the leadership of NESG as ill-advised and playing to the gallery.
“This ill-advised step can only muddied the water and if NESG does not seek immediate corrections this transgression will prove rather costly as it could jeopardize the effectiveness of the Group in its future endeavours, he cautioned.
Chizea, who was an active participant at the NESG for a long time, argued that the group has unlimited access even at the Presidency and should have asked for an appointment and engage in productive dialogue with the CBN if it is worried about any policy thrusts.
He said, “It (NESG) has all the access it wishes to have even at the Presidency. If it asked for an appointment to engage with the Governor of Central Bank; it must be granted.
“It could therefore engage in productive dialogue with the CBN if it is worried about any policy thrusts and all positions will be discussed for clarity, mutual understanding and adjustments as necessary as progress is made.
“It therefore offends established protocols for those at the helm of affairs at NESG today to play to the gallery as it has just done by making this public statement.”