President Bola Ahmed Tinubu on June 9 suspended the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Ifeanyi Emefiele. His ouster and subsequent arrest by the Department of State Services (DSS) where he is currently being interrogated on multiple allegations came exactly a year before his second and final tenure would have run its full course. It appeared his cup was full and his removal perhaps overdue.
According to letter of his suspension, which came from the Office of the Secretary to the Government of the Federation (SGF), “the suspension is sequel to the ongoing investigation of his office and the planned reforms in the financial sector of the economy.” Emefiele was replaced by Mr. Folashodun Adebisi Shonubi as the CBN governor in acting capacity pending the conclusion of Emefiele’s investigation. Until his appointment, Shonubi was the Deputy Governor incharge of the Operations Directorate of the CBN. Expectedly, reactions have trailed the unceremonious exit of Emefiele. Most people expressed no surprise on the development because his tenure was enmeshed in many controversies not expected from a topmost banker of the nation.
Some of the allegations against Emefiele include his role in the Naira Redesign Policy, the free-wheeling loans to the federal government under the Buhari presidency through Ways and Means advances. Also, on his watch, the economy reportedly witnessed a ruinous regime of multiple exchange rates, resulting in a deliberate scheme of arbitrage and unbridled abuse. Perhaps his greatest undoing was his dabbling into politics and declaring his ambition for the presidency on the platform of the ruling All Progressives Congress (APC).
Section 9 of the CBN Act 2007 makes it clear that a CBN Governor cannot choose to run for elective office while still holding to his office. Also, sections 11(3) of the Act specifically requires the CBN Governor to give “at least three months notice in writing to the President” of his intention to run for elective office. Emefiele, not unaware of these provisions that he sworn on oath to uphold, embarked on his failed quixotic presidential bid. He was quoted as saying that “anybody who does not like” his political ambition to become president, “should go and have hypertension.” That statement alone would have caused his downfall.
Despite the weighty allegations, Emefiele is presumed innocent until proven guilty. Therefore, we call for a thorough investigation into the affairs of the apex bank under Emefiele. It should be devoid of political witch-hunt or vendetta. The DSS must restrict itself to the investigations alone and leave his possible prosecution for the relevant government’s agencies to handle. Nothing less will do. However, it is not deniable that on Emefiele’s watch, the CBN came under a blanket of suspicion. The partisan and de-professionalisation of the leadership of the apex bank became dishearteningly glaring during Emefiele’s tenure. This is a strong indication of failure. The naira redesign policy redesign, even though a core function of any Central Bank, was badly implementated. It literally plunged the economy into chaos, grounded businesses. It led to severe shortage of cash and long queues at banks’ premises, and attacks on banks’ staff and destruction of banks’ property across the country. Coming at an election season, the currency redesign policy came at a wrong time. According to the National Bureau of Statistics (NBS), the economy contracted by between N10trillion and N15 trillion in the Q1 2023. Nigeria’s GDP lost over $18million per month. The GDP stood at N198trillion in 2022 before the redesign policy. This had great negative impact on the economy because most sectors in Nigeria are cash-based.
Under Emefiele, bank borrowing rate from the CBN reached all-time high of 260 per cent to N21.87trillion. Through Ways and Means, the CBN gave the federal government total lending facility of N22.7trillion. This is beyond approved limits under the CBN Act, even against the advice of experts, including the International Monetary Fund (IMF). Sadly, Emefiele allowed himself to be a willing tool in the hands of Buhari administration, against the overall interest of the economy. Under Emefiele, the economy witnessed soaring inflation, high debt burden, high interest rate, business shutdowns, foreign exchange scarcity and other monetary policy somersaults.
Besides, it is to his legacy as CBN Governor that the economy experienced two recessions in 2016 and 2020 due to external and domestic shocks. Consequently, Nigeria’s debt-to-GDP ratio declined from 11 per cent in 2014 to 38 per cent in 2022. Naira depreciated from N197/$ in 2015 to N750/$ in the parallel market before his sack. No surprise, the Stock Exchange market capitalisation has been on the rebound since Emefiele’s ouster, rising by over four per cent, the highest in 15 years since 2008, an indication that investors welcome his suspension.
Altogether, there are lessons to learn from Emefiele’s exit, one of which is the need for the CBN governor to be alive to its duties. No doubt, Emefiele compromised his mandate. Beyond that, this is the time to chart a new course for the economy, with the CBN playing its pristine roles in accordance with the enabling Act. The convergence of the exchange rate is imperative as its seamless implementation will lead to improvement in liquidity in the foreign currency market and will likely increase trading activities for the banks. The regulation of the Deposit Money Banks was weak under Emefiele’s watch. Overall, Nigeria’s financial services industry needs a thorough overhaul. This should go beyond cleaning the CBN’s Augean stable, as other government’s agencies in filthy state, equally need urgent cleansing.