…His successes, failures, by experts
From Uche Usim, Abuja
President Bola Ahmed Tinubu, last Friday, suspended the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, in a move reminiscent of Sanusi Lamido Sanusi’s ouster as the apex bank’s governor in 2014.
The President said Emefiele’s forced break from work was to allow for a thorough probe and a system reset of the CBN; even as he directed the Deputy Governor, Operations, Mr. Folashodun Shonubi, to take charge in the meantime.
Emefiele was subsequently arrested by officials of the Department of State Services (DSS) for undisclosed infractions.
Already, tongues are wagging over the legality and illegality in the President unilaterally suspending him, rather than securing two-thirds votes of the Senate; especially as a court of competent jurisdiction had ruled against the federal government toeing this path after the Sanusi episode.
Again, a high court had earlier rejected a motion ex parte by the DSS to arrest and detain Emefiele.
However, Emefiele’s suspension, from the lens of experts, was a development foretold; especially when juxtaposed with the utterances of the new President, who criticized several of his monetary policies in his inaugural address on May 29.
Former President Muhammadu Buhari, in his eight-year tenure, fought to defend the naira.
It became a tall order after the global oil crisis of 2016 jolted Nigeria and, to insulate the naira from a wide-margin devaluation, multiple exchange rates were introduced, which does not sit well with the incumbent President.
So, the CBN, on Emefiele’s watch, sold dollars at various rates to individuals and businesses to moderate demand, diffuse pressure on the naira and conserve reserves.
But experts note that Emefiele’s biggest gaffe was straying into the political space to be listed as one of the presidential contestants in the 2023 elections.
According to them, this singular action portrayed Emefiele as a corporate rascal who tainted the sanctity, integrity and independence of the CBN.
It was also a breach of the rules for the leader of the monetary policy wing to be a card-carrying member of a political party while in office.
Nonetheless, there are varied opinions as to how he ran the CBN in his nine-year stay.
For many, Emefiele did well in certain sections of the monetary policy ecosystem and also performed poorly in others.
Prof. Uche Uwaleke, Nigeria’s first professor of the capital markets, told Daily Sun that Emefiele’s suspension, though long foretold, will mark the end of a turbulent era.
“Godwin Emefiele will be remembered for implementing big ideas such as the Anchor Borrower’s Programme, the RT200, the eNaira and a raft of interventions, which helped to stimulate the economy during periods of economic recession.
“To be fair, Emefiele, to a large extent, succeeded in ensuring financial sector stability, going by the prudential ratios. His forex demand management policies, especially the 41 items not qualified for forex, promoted import substitution, conserved external reserves and ensured relative stability in exchange rates. It would be unfair to blame him for the current high inflation rate since most of the causative factors are beyond the control of the CBN.
“On the flip side, he will also be remembered for the currency redesign exercise, which didn’t go down well with Nigerians, and the CBN Ways and Means, which grew astronomically during his tenure.
“His greatest mis-step was his attempt to join the list of presidential candidates. All said, I think he deserves some rest now,” he said.
In his submission, Dr. Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), said Emefiele’s suspension was not a surprise as many saw it coming, judging from the comments of Tinubu in his inaugural speech.
In a telephone conversation with Daily Sun, Yusuf said Emefiele recorded some achievements but they were dwarfed by his failures.
“Let me start with the upside. He was committed to development finance, though some think he overdid it. They believe he was encroaching into the DMBs’ space, which CBN wasn’t designed to do.
“With respect to MSMEs and players in the manufacturing space, he did well in supporting them. For example, the Real Sector Support Facility helped many companies to stay afloat, especially after the COVID-19 pandemic. Dangote acknowledged it. Many were supported with loans through banks with nine years tenor and a single-digit interest rate.
“No bank went under and saw depositors lose money like the Savannah Bank episode many years ago, where people lost money. He assisted banks and they didn’t go under.
“But for his failures, foreign exchange was poorly managed. He made it transactional. There was a proliferation of rent-seekers, where commissioned agents were making more money than entrepreneurs. It was a major issue. Multiplicity of FX regulations created lack of liquidity, FDI dropped in 2022 to less than $500 million. It was a major setback in our ability to attract investors and those bringing in goods were at a loss.
“There was a challenge with the naira redesign policy. The worst ever. The crises it created were many. It was set out to mop up cash and targeted politicians. It was a huge crisis,” he said.
He also spoke about the Ways and Means advances, which ballooned to about N23 trillion on Emefiele’s watch, describing it as reckless both on his part and former President Buhari.
He noted that Emefiele’s suspension showed that Tinubu’s administration was at variance with the policy stance of the CBN under Emefiele.
He said: “President Tinubu was very clear in his inaugural speech about his resentment of some current CBN policies such as the multiple exchange rate and the naira redesign policy.
“The President also hinted at a house-cleaning plan for the CBN. It is impractical to reform the apex bank and review some of its major policies with Emefiele remaining on the seat as governor.”
Yusuf also said that the shocking involvement of the CBN governor in partisan politics damaged the credibility of the regulator and the reputation of the governor himself.
Another financial expert, Okechukwu Unegbu, said the suspension of Emefiele was in order as it would impact positively on the capital market and the foreign exchange market, where he maintained multiple exchange rates.
“His undoing was that he ignored the counsel of old and experienced bankers; he was so sure of his programmes and policies,” he said.
He, however, explained that the suspension did not mean that Emefiele had been sacked, as the President could only sack him through the National Assembly.
He applauded Tinubu for the economic decisions he had taken since he assumed office and urged him not to rush.
He also lauded the choice of Shonubi as acting CBN governor, saying “he is an experienced banker and a good public finance specialist who will competently hold the fort until the issues around Emefiele are resolved or a substantive governor is appointed for the apex bank.
In December 2022, the Centre for Financial Surveillance and Illicit Transaction Tracking Group (CFSITT) raised the alarm of unpalatable consequences, including a possible blacklisting, if Emefiele was arraigned by the DSS over terrorism allegations.
The body added that the suspension of Nigeria from the group, if it happens, will be disgraceful as Nigeria was earlier suspended in 2017 over lack of a legal framework and autonomy.