Thursday, 19 May 2016


Godwin Emefiele, CBN Governor
Let us assume we do not like Mr. Godwin Emefiele, the governor of the Central Bank of Nigeria (CBN). Let us also assume that we believe every public officer in Nigeria deserves nothing but abuse, name-calling and scandalmongering. Let us then say that by default, We are happy that Mr. Emefiele has been under severe media attacks since President Muhammadu Buhari assumed office on May 29th, 2015. The simple conclusion we would have reached by now is that there is more to what we are reading. It would no longer matter if we like Mr. Emefiele or not. We would now be getting concerned that some people are hell bent on getting rid of the CBN governor. We would now be asking ourselves if there is something else behind the anti-Emefiele emotions.

In less than one year, Emefiele has come under attacks for so many things. He has been criticised for not devaluing the naira; for restricting Forex, FX, access to 41 imported items, including toothpicks and private jets; for making FX available to a “privileged few”; for making money available to the former National Security Adviser (NSA), Colonel Sambo Dasuki, based on a presidential directive; for secretly employing the children of the rich and the powerful; for flying private jets “used by Diezani Alison-Madueke”; for making FX available to the wife of the president; and so long a list we have virtually lost count. It is now appearing as one week, one accusation against the CBN governor. While we are not in a position to say if these allegations are true or not, we are getting worried as a Nigerian that these attacks are unending. Are they mere coincidences? Or orchestrated?

We do not hold any brief for the CBN governor. Indeed, we have never been his fan. It is nothing personal or ideological. Our problem with him from the beginning was the manner of his appointment by the former president, Dr. Goodluck Jonathan. Simply because Mallam Sanusi Lamido Sanusi (SLS) raised issues of accountability, Dr. Jonathan illegally removed him as governor of the CBN and appointed Mr. Emefiele to replace him. For that reason, we did not like the new governor. We thought he was a beneficiary of an unholy decision by the former president. We have therefore found it very difficult to warm up to Mr. Emefiele. We cannot deny that he had a great banking career, rising to the very top at Zenith Bank Plc, but that has never swayed us. As far as we are concerned, he benefitted from a dubious decision by Jonathan and he must pay for it.

Dr. Jonathan took a political decision in removing Sanusi. That is our ground of dissent. We never agreed with those who said because Emefiele is an accountant he should not be a CBN governor, or that only an economist should be appointed as CBN governor. That is absolute rubbish. In the first place, there are several examples of reserve bank governors across the world who did not major in Economics. But that is beside the issue. That someone is an accountant does not mean he knows nothing about economics. Apart from studying Economics up to university level, even if not as a major, Emefiele has had a 26-year banking career which we cannot easily dismiss. What do economists know that an Emefiele does not know, either in theory or practical? We don’t have to make a fetish of Economics.

Let us dissect some of the issues at stake. The first storm Emefiele ran into was the exchange rate. With crude oil prices crashing and FX reserves falling, the logical action was to allow the naira to depreciate in line with the new market realities. Unfortunately, some of these policy prescriptions are easier to make than to implement. Today, we are buying fuel at N145 (official price, bar scarcity). If the naira is devalued to N300 as many people want it, the pump price of petrol will move to at least N150 per litre (again, bar scarcity). If petrol is selling for N200 in the black market because of product scarcity, it follows then that even if you devalue the naira to N300, fuel could go for N600 per litre in times of scarcity. It is not as if we have found the solution to the multifarious problems facing us and that the CBN is the only thing holding us back. Our problems are rooted in historical structural and policy challenges that we are yet to address.

The bigger problem, however, is that some experts think they have the solution to the challenges Nigeria is experiencing. But things are not as easy as they appear. At no time in our history have we depended on imports as today. With a monthly bill of over $4 billion and FX revenue less than $1 billion, it would take magic to meet the need of everybody. If President Buhari fires Emefiele today and appoints somebody else, I still do not see the magic that will grow our FX reserves when crude oil prices are low and we cannot do anything about it. The notion that devaluing the naira will automatically attract FX inflow is also exaggerated. Emerging economies are taking a hit in the current global recession. It is not a Nigerian problem. Countries that have devalued are yet to start reporting an enormous flow of foreign investments. Some of these things are easier said than done.

The alleged secret employments by the CBN should be cause for worry, but the reports of “secrecy” and lack of regard for “federal character” have been denied by the Central Bank. This puts an analyst in a tight corner. Who should we believe? The CBN’s acting Director of Corporate Communications, Isaac Okorafor, was quoted in the press as saying:  “In the last two years, we have had cause to recruit specialists, and what the law says is that if we are going for that kind of recruitment we should apply for waiver, so that we can do targeted recruitment. The other issue is that there are states that are not well represented in the CBN, and in this case we focus on those states to recruit people of certain classes that we used to cover the shortfall in those states.” Okorafor’s explanation suggests that no law was broken in the process since waivers were duly secured.

However, if it is true that the necessary approvals were secured for the recruitment, the accusation will again fit perfectly into the conspiracy theory that there is more to the criticism of Emefiele than the eye can see. There seems to be a frantic search for evidence to nail him and remove him as CBN governor. An online medium recently wrote an editorial campaigning for the replacement of Emefiele with a serving or retired deputy governor. For someone who is yet to complete the second year of his five-year tenure, canvassing that he be replaced with a deputy governor is very curious. The impression you would get, even if you are not a fan of Emefiele, is that there is certainly a well-oiled campaign against him. This cannot be ordinary. It can’t be routine.

The irony surrounding Emefiele, however, is that he may still emerge the real winner at the end of the day. His position on the exchange rate has been well defended by President Buhari himself. The FX allocation ban, like every policy, is producing winners and losers. Just as there have been reports of factories closing down because of FX scarcity (which, it must be noted, was caused by falling oil prices and not the CBN), we also hear encouraging stories of the gradual development of the agricultural value chain. We read reports of the benefits being enjoyed by local farmers who are getting fully supported on different fronts, including access to cheap finance provided by the CBN through the Bank of Agriculture. It is early in the day to conclude that the policy has failed, especially when the alternatives offer no magical returns. (Vanguard)