Emefiele’s reappointment, Buhari’s masterstroke for the economy
By Chika Otuchikere
With the reappointment of Central Bank of Nigeria (CBN) governor, Mr. Godwin Emefiele, to hold sway in the country apex bank for another five years, President Muhammadu Buhari has scored a high point ahead of his own second term in office. By this reappointment, Emefiele has also earned himself the enviable scorecard as the first CBN governor to secure a two-term mandate since the country’s return to democratic rule in 1999. The reappointment is also a clear endorsement of all the governor’s monetary and fiscal policies which helped to drag the country out of the murky waters of economic recession and placed it on a stable path.
Emefiele first took up the Augean task as the country’s number one banker in 2014 at the twilight of the leadership of then President, Dr. Goodluck Jonathan. By 2015 when the Peoples Democratic Party government was ousted in the general elections, speculations were rife that the country’s new helmsman, Buhari would find a replacement for the CBN governor, which he was constitutionally empowered to do if he so wished. However, then too, there were predictions from financial and economic pundits that the economy was winding down into a recession, which, if not handled with tact and gumption, could plunge the country into a depression.
The advisers of the new government of President Muhammadu Buhari may have advised the president that it was not expedient to meddle with the current leadership of the office of the chief monetary officer, given his vast experience and expertise garnered from his track record in the private sector, particularly, the banking and academia. Buhari retained Emefiele and gave him a free hand to deploy his vast armory of knowhow to ensure that the economy did not take the nosedive into economic Armageddon. Thursday’s reappointment is a resounding verdict that the president’s 2015 decision paid off. It also proved that Mr. Emefiele had been on tract with his policies despite his detractors.
Barely one year after Emefiele was retained as CBN governor, the economy went into a recession and the blame game ensued over the cause and who to hold accountable. While the ruling party insisted that it was the fallout of the opposition PDP 16 years of misrule and corruption, the opposition PDP posited that the recession was the result of the president’s inaction in the first six month after he was elected during which time he failed to create a cabinet. The helmsman at the CBN, however, did not pander to the diatribes but went ahead the onerous task of devising programmes and policies that would navigate the ship of the economy away from the sneaky icebergs and prevent what economists feared most, a descent into depression.
Obviously, most of the decisions were very difficult ones to introduce and implement and so, were confronted by stiff oppositions. But like the rock of Gibraltar, the governor stood his ground and the policies began to impact the economy positively. And within a period of one year, the country staggered out of recession with its huge collateral especially the high inflation.
One of the major problems the new CBN helmsman had to confront was the free fall of the Naira. The currency continued to slide to the point that the fear was that it would fall as low as N1000 to $1 dollar. At a point, the naira was exchanging for over N500 to 1$ at the parallel market and professional bodies such as the Lagos Chamber of Commerce and Industry (LCCI), the Association of National Accountants of Nigeria (ANAN) and others were calling for a review of the country’s foreign exchange policy to arrest the falling naira. The CBN swung into action and commenced its policy of intervention in the foreign exchange market. Ever since the introduction of the weekly intervention, the country’s foreign exchange has remained stabilized. The stability of the foreign exchange market went a long way to return the country’s economy on the path of growth.
Another policy the CBN introduced which was heavily criticized was the restriction of forex placed on 41 items. These are items the CBN said the country has the capacity to produce locally. The policy turned out helping the local manufacturers of these items to become viable and contribute to the economy’s growth. The CBN governor speaking on the restriction at a forum said the policy restricting forex access to 41 items has helped to move the economy out of recession. According to him, there are new calls on the apex bank to increase the list of 41 items to cover more goods that can be produced locally.
His words, “As I have always emphasised, it is our collective duty to ensure that the potentials and prospects of the Nigerian economy is optimally realised. The ongoing economic recovery requires the joint efforts and wise counsel of everyone, if we must make giant strides forward. The CBN is more determined now than ever to remain at the forefront of the effort to ensure that the rebound is not overturned.
“Our research supports the conclusion that the combination of the restriction on 41 items along with other measures imposed by the fiscal and monetary authorities has helped to promote the recovery. Any attempt to reverse the course of this actions may have untold consequences on the growth trajectory of our economy particularly in our push to diversify and restructure our economy. In fact, recommendations are being made to the CBN that the list of 41 items be expanded to include other additional items that can be locally produced.”
These two measures; the forex intervention and the restriction on 41 items, played major roles to help get the country out of recession and stabilize the economy. But these were not all the policies that endeared the governor to President Buhari and gained him a reappointment. The CBN under Mr. Emefiele, also dabbled into fiscal policies by engaging seriously in the agricultural sector. The apex bank came up with the Anchors Borrowers Programme (ABP) aimed at breathing life into the country’s agriculture sector with particular priority on rice the production sector. At the last count the programme has helped to revamp rice production in many states in the country and considerably reduced the importation of foreign rice into the country’s very large market.
Other agriculture produce benefited from the programeas scarce funds were made available for the procurement of farming machinery, seedling and fertilizers, boosting the nation’s agriculture sector and contributing to address one of the President Buhari’s cardinal objectives, food security and employment.
The CBN, determined to bridge the wide financial system inclusiveness divide carried out a review of the National Microfinance Regulatory and Supervisory Framework policy. The objective of the reviewed policy was to “increase financial inclusion rate in the country, improve access to financial services for the active rural poor and pursue poverty eradication. Although, the policy has been fraught with hitches, the apex bank has not relented in creating initiatives to realize the ultimate goals of the policy. The CBN was able to convince members of the Bankers’ Committee, an umbrella body of banks’ Chief Executives, to partner with it to establish a National Microfinance Bank (NMFB) to deepen financial inclusion as well as provide easy access to credit and other financial services to Small and Medium Enterprises SMEs and tackle unemployment and rural to urban migration. Mr. Emefiele, captured the importance of the NMFB when he noted that it has also become necessary in view of the high and ‘outrageous’ interest rates charged by existing microfinance banks.
The CBN did not end the campaign at that. Knowing the most teething problem of existing MFBs which is high interest rate as well as inadmissibility of moveable collateral, the apex bank included in its policy for the National Microfinance Bank, the option of acceptance of moveable collateral. Part of the measure was the establishment of a National Collateral Registry. With this measure, SMEs can now register their moveable assets as collateral for loans from the NMFB. The other problem of the Microfinance Banks which the CBN has addressed is the location of MFB office in the areas where the prospective recipients of the loans are domiciled rather than the urban areas where the small business operators may not be able to assess.
Although it could be said that the CBN may not be totally satisfied with the performance of the Deposit Money Banks (DMB) with reference to the banks touching the lives of the nation’ banking public and making affordable loans available them as their interest rates continue to make the option of accessing loans unattractive, the apex has, however, stabilized the banking sector with policies aimed at instilling financial discipline through strict enforcement of regulations.
The reappointment of the CBN governor for another five years is believed to be mainly a result of his giant stride in his first five years in office, which President Buhari has endorsed by reappointing him for greater strides.
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