Godwin Emefiele and the task ahead

COVID-19 and Economic Diversification

By Abdulfatai Olamilekan

At the time Godwin Emefiele was appointed Governor of the Central Bank of Nigeria, the economy was in trouble, the Gross Domestic Product (GDP) had declined, and inflation was around 19 percent and unemployment rate at the flying speed of a rocket. The downward slide of international crude oil prices snowballed into foreign exchange crisis for the country, and bettors and speculators had unchecked reign attacking the Naira. The situation was further compounded with preparation for the 2015 general elections and its electoral campaign spending. This was the scenario when he became the governor.

Godwin Emefiele in the past five years at the helms of CBN has, no doubt, tried to assert the autonomy of the apex bank with some of his daring monetary policy initiatives. He treaded where even lion hearted men feared to walk. He dared currency speculators. He refused to devalue the Naira when virtually everyone saw it as the way out, rather he proffered a ‘home grown’ prescription. The promoters of currency devaluation wanted Nigeria to go the way of Egypt, Venezuela and Zimbabwe for them to continue prospering in their illicit trade. He suspended the 41 items he considered as drains on the scarce foreign reserves, and since then he lost his sleep. The attacks, local and abroad mounted unabated. Some international media and their local collaborators tagged his monetary policy initiatives a ‘toothpick alert’.

At the risk of being immodest, I did not foresee any reason why he should not be reengaged by the President considering how passionate he has piloted the affairs of the economy. The reappointment was not out of place in view of fresh breath given to the economy that slipped into recession shortly after him and the President assumed office. Aside, it is not out of place to see anyone coming new having worked with the President in the last four years on economic diversification of which he proved his mettle in revival of agriculture, the economic focus of President Buhari. He was blamed for the ills of the economy, but without a fault of his he was able to bring the economy out of recession.

But despite pressures and speculations by the rumour millers, and political ‘marabouts’ who coveted his position for their cronies, the President shocked them with the re-nomination of Emefiele.

There was temporary grave silence in the camp of the lobbyists and applause from those who would have not taken anything otherwise from the President. Barely 48 hours after the pronouncement, economic vampires struck with a ‘concocted wired audio tape discussion between the Governor and his aides’.

Also surprising, was the synergy and unity of purpose and speed never witnessed between the present federal executive and the outgoing 8th National Assembly, on Emefiele’s reappointment. He was confirmed with the speed of light, an approval that he has indeed worked for and his actions were indeed nationalistic.

As we all know, an audio recording surfaced on the social media posted by a notorious online medium and his co-travellers in mischief 48 hours after the President announced Emefiele’s reappointment, named: ‘Caught On Tape: How Central Bank Governor, Emefiele, Deputy Adamu, And Top Officials Discuss How To Cover Up N500bn Which They Stole From CBN’. The ‘expose’ turned out be a hoax and handiwork of the sworn enemies of Emefiele’s developmental policy initiatives. The video trended with the intention to scuttle the governor’s reappointment and dent his glorious career but the ‘travellers’ got another shocker at the speed with which the Red Chamber approved his reappointment, the first of such in the life of the 8th National Assembly and first of any government appointee of the present administration. The ravenous hawks are not relenting and have regrouped.

Probably what Emefiele’s traducers do not know about him was his disposition and pronouncement on assumption of office, the posture of a ‘stoically’ stubborn man who has come to leave a legacy of re-orientating our psyche about nationalism. He gave insight into what would be his mission with a 10-point agenda he unveiled on assumption of office. He pledged to use resources and energy at his disposal to build a resilient financial system that would serve the growth and development needs of Nigerians using development bank strategies as the fulcrum of his policy. Not only that, he committed himself to creating ‘a central bank that is professional, apolitical and people focused …’

The task ahead is, however, arduous, the burden of his reappointment, and epochal in our democratic journey, calls for more hard work and the journey ahead is, no doubt, going to be tortuous. His first term journey was rocky but able to redirect financing to agriculture through Anchor Borrowers’ Programme. This has indeed revolutionized rice production and saved the country huge import bills. And not only rice, significant local production of the suspended 41 items has begun to witness massive production and creating jobs.  Shortly before his reappointment he signified intervention in the revival of Palm oil, Cotton and textile production with the assurance to make cheap and sustainable credit available at single digit interest, all geared towards job and wealth creation.

The trilemma challenge usually faced by any monetary authority is the exchange rate stability, interest rate and inflation rate which in the last five years of Godwin Emefiele at the CBN, has been able to stabilize the exchange rate in the last three years and has also achieved success in bring down inflation which stood at over 18 percent in Q3 of 2018 to about 11.37 in Q2 of 2019. Taking on the third leg of the trilemma, the interest rate, was the reason he rallied round the hitherto unwilling deposit money banks’ chief executives to lend to SMEs and urged them to set aside 5 percent of their annual profit to finance MSMEs, which also include fashion, music and film production as well as information and communication technology (ICT).

Also, in the same vein was his ability to erect a tri-partite structure to enhance the financial inclusion strategy of the CBN, the NIRSAL, Bankers’ Committee and NIPOST to hoist a national microfinance bank in all the 774 local governments areas in the country to make cheap and sustainable credit at single digit rate available to the economic but active poor rural dwellers and get included in the financial inclusion net.

Godwin Emefiele in driving his vision and de-risking credit to MSMEs established Nigeria Incentive-based Risk Sharing System for Agriculture Lending (NIRSAL) and the National Collateral Registry to invigorate his development finance policies, and in particular to support farmers, entrepreneurs and small holder businesses.

The task ahead of his reappointment is to consolidate on these efforts. In achieving results he employed some unconventional policies (though heavily criticized) but proved potent needs for our peculiarity – the home grown policy of 41 suspended items, the Investors and Exporters’ Window among others, to bring the economy to full recovery. For the CBN to achieve this, the Governor in the Bank’s March 2019 Monetary Policy Committee (MPC) briefing, urged for synergy of purpose between the fiscal and monetary authority. In fact, the challenge is more on the fiscal side which needs to complement the monetary policy initiatives by providing critical infrastructure, particularly power to fire the economy and diversify the country’s revenue base from oil to non-oil products.

Mr. Emefiele therefore should see this next five years to rein-in the activities of rice smugglers as cried out by the Rice Farmers Association early in the year. He should call for support of relevant government agencies, particularly, the Nigeria Custom Service, Economic and Financial Crimes Commission (EFCC) to ensure that the activities of smuggling through the porous borders are stopped. As some analysts have advised, what the CBN needs to do in the next five years is to target inclusive growth having stabilized the foreign exchange market; and if it is able to achieve that, the challenge of double digits interest rate will ultimately be tackled.

On the new National Microfinance Bank, NIRSAL Bank, set to come on stream soon; the CBN should ensure it does not go the way of Community banks and the Peoples’ Bank of yester years. The apex bank should ensure that the credit being provided by the tripod institutions reach the economic active but poor rural farmers and artisans, the small businesses and entrepreneurs on sustainable bases, through which appetite for foreign imports would be addressed, jobs created and grow the economy.

As President Buhari is set for the inauguration of his second and final term (so also is Godwin Emefiele) he should in earnest unveil his ‘Next Level’ economic blueprint promised Nigerians to better their living condition with tested technocrats and bureaucrats with nationalistic fervor, while Godwin Emefiele should not rest on his oars nor allow himself to be distracted, neither should he be deceived that with his confirmation by the National Assembly the battle against him is over, the battle has just begun and it will get worse. I am advising him to rally round agencies of government that he thinks will help him drive his dream, step on toes (even if they need to be cut off) as history will judge him for his success or failure.

Abdulfatai Olamilekan writes from Minna, Niger State.

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