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The continued mutation of the CBN under Emefiele 11 Mar 2022

Mr. Godwin Emefiele became the governor of the Central Bank of Nigeria (CBN) in June 2014. Months later, the government that appointed him was defeated at the poll by the opposition candidate General Muhammadu Buhari. The ensuing inquiry by the Buhari administration into the financing of the re-election campaign of the former President, Goodluck Jonathan, found that funds inappropriately disbursed by the CBN were funnelled into his electioneering, thus raising the concern that Emefiele’s days in office were numbered.

Replacing Emefiele for the malfeasance he superintended was not cut and dried. The now governing party, APC, fought very hard to win the 2015 presidential election but it soon became apparent that it was unprepared to govern. Sacking the CBN governor when President Buhari had struggled for five months to form his cabinet was impractical. Emefiele was also shielded by the CBN Act, which prescribes the Central Bank as an independent institution of the State, and a fixed term of five years – renewable for maximum two terms – for its governor.

And in a system that was already steeped in cynicism, removing a CBN governor that had tried to help the former President to win election would be half-witted. It was pragmatic to leave such a governor in office to serve the new government that blackmailed its way into office and broke the record in campaign spending by an opposition party. Such a central bank can be an appendage of the fiscal authority and serve the vested interest of the cabal that controls the lever of power, thus surrendering its policy independence.

But such a reserve bank is an aberration in the modern time. Nevertheless, the CBN began to maintain the policy dictates of the government. As the Buhari administration struggled to have a grip on fiscal management and started to amass debt, monetary financing of the government by the CBN began to mount. The CBN also started to increase its intervention funds for various industries. Such funds that are supposed to stimulate industries suffering from risk aversion by commercial banks, have now become the dominant means of financing for innumerable sectors of the economy, with the collateral effect of distorting the credit market.

As a result of the scale and scope of CBN’s intervention funds, largely disbursed opaquely and on preferential basis, its vice-like grip on the forex market and monetary financing, the apex bank is being seen as the “only game in town.” This notion itself is now proving to be mistaken. Keen, pliant and unabashed, Emefiele – not the CBN – might have been the only game in town. As such, the latest mutation of the bank is that while its governor remains in office, some members of the political establishment and their private sector cronies are canvassing for him to become a candidate in the 2023 presidential election. Emefiele has not publicly denounced the campaign, as he ought to immediately do; neither has the President offered his powerful denunciation as a matter of duty, to ensure that State institutions are properly led.

Is Emefiele being played, is he a ‘player’, or are both true? What is not in doubt is that a central bank whose leadership generates this type of questions would be ineffective in delivering its core mandates. Therefore, the CBN has been an abject failure in the last eight years. In this period, inflation increased from 8 percent and has hovered in the double digits. In spite of the trillions of naira it allocated for financial interventions with the aim of facilitating import substitution and strengthening the local currency, the value of the naira has plummeted by 167.4 percent in the official forex market. GDP growth rate has averaged below 2 percent. The summation of the disastrous economic mismanagement is that poverty and unemployment have dramatically increased.

This sordid reality dismisses any notion that without the role that the CBN has played – especially with its intervention funds – the statistics would have been grimmer. This argument, which cannot be proved, is simply not good enough.

I had observed that the most atypical of the CBN governors was set to become the longest serving governor following the confirmation of Emefiele’s reappointment in 2019, exemplifying the capture of State institutions by the worst elements. Unprecedentedly, he is set to serve three presidents, as his second term will outlast Buhari in office. But if Emefiele truly wants to run as Buhari’s successor, he should resign immediately, as a sign of respect for the institution he is leading.

However, fixing the damage to the CBN as an institution should not simply be up to Emefiele. Civil society organisations (CSOs) and the media should be vociferous in sounding the alarm on his alleged presidential ambition. And by not already denouncing the ambition as an unfounded rumour, thus fuelling speculation about the leadership of an institution that must be transparent to make positive economic impacts, a valid case for his removal from office can be made.

In the scenario that Emefiele does remain in office, there should be concerted efforts to get him to begin to respect the CBN as an independent and professional institution. The buck for CBN’s abject failures during his tenure stops at his desk. But among the horde of professional staff of the institution should not be wanting a whistleblower on the failure of leadership at the bank. Also, the National Assembly, which has the responsibility for confirming the appointment of the members of CBN’s Board of Governors, should ensure public accountability at the reserve bank.