Emefiele’s Policies Failed To Lift Economy, Financial Experts Say
The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, was appointed to the position by former President Goodluck Jonathan, in June 2014 after his predecessor Lamido Sanusi Lamido, was suspended from office a few months before the end of his single-term tenure.
Emefiele, the only two-term CBN governor in the last 30 years, was eventually retained for the eight years of the immediate past President Muhammadu Buhari’s administration, making him the longest-serving CBN boss in recent history.
Buhari renewed his tenure in 2019, and he has barely seven months to the end of his second tenure before the newly sworn-in President Bola Tinubu suspended him from office last weekend.
In a statement suspending the CBN boss, the government stated that the suspension was a sequel to the ongoing investigation of his office and the planned reforms in the financial sector of the economy, and directed him to immediately hand over the affairs of his office to the Deputy Governor (Operations Directorate), Folashodun Shonubi, who will act as the CBN governor pending the conclusion of the investigation and the reforms.
His removal has generated a lot of controversies with much of public opinion largely tilted against his monetary policies during his tenure. Many believe that the past administration should not have renewed his tenure, describing the apex bank under his watch as a disaster.
Against this background, InsideBusinessNG opens a close view into the policies and initiatives of the embattled monetary policy henchman of Buhari’s administration whom the former president patronized till the moments of his eight-year tortuous tenure of widespread pains and penury.
Emefiele’s Controversial Intervention Policies
Emefiele’s first tenure witnessed the crash of the Naira against the Dollar leading to deafening calls from various quarters for his removal. The value of the local currency crashed from about N180 to the Dollar in 2015, to about N500 per Dollar during the three years of economic recession between 2016 and 2018.
Consequently, Emefiele introduced capital control mechanisms to stem the Naira’s fall against the general market consensus to float the currency and allow the forces of demand and supply to determine the real value of the Naira. He consequently created room for foreign exchange divergence or multiple windows, against the general view that the apex bank should rather promote forex convergence.
In the sweeping pace of capital controls, Emefiele banned 41 import items from accessing foreign exchange at the government’s official window, the Investors and Exporters (I&E) window exclusively meant for investors and exporters.
With the restriction of access to foreign exchange from the Nigerian market for 41 items that can be produced in Nigeria, Emefiele intended the combination of the restriction on 41 items along with other measures imposed by the fiscal and monetary authorities would enable the recovery of Nigeria’s economy out of recession.
He also introduced the Anchor Borrowers’ Programme, a development finance intervention scheme, to ensure that Nigeria emerged from being a net importer of rice to becoming a major producer of rice, supplying key markets in neighboring countries.
According to him, as of October 2018, a total number of 862,069 farmers cultivating about 835,239 hectares, across 16 different commodities, had benefited from the programme, which CBN claimed generated 2,502,675 jobs across the country.
The CBN’s Anchor Borrowers’ Programme culminated in the nebulous rice pyramid in 2022 which was widely celebrated by the government but made no positive impact on the supply and price of the commodity as the price shot up across local markets.
The Anchor Borrowers’ Programme is one of several intervention programmes created by Emefiele’s CBN which gulped over N2 trillion.
The embattled CBN governor initiated several radical initiatives at ensuring financial inclusion, credit allocation, inflation fight, exchange rate stabilization, etc. However, most of these policies have been hotly criticized by analysts who insist that the policies were driven, not by general economic interest, but by personal selfish interest.
Emefiele’s Monetary Policies and Criticisms
Under Emefiele, Nigeria has operated a multiple exchange rate system which created room for arbitrage and corruption that enriched privileged elites while draining the country’s scarce foreign exchange. It was against this background that President Tinubu, in his inauguration speech, hinted at promoting policies to unify the multiple exchange rates.
The CBN’s management of the currency also raised the defense to the level of art using a constant draw down from lean foreign reserves.
Despite public outcry against Emefiele’s unorthodox monetary policies, Buhari opposed calls to float the naira in obvious support of Emefiele in spite weakening of the local currency after a crash in oil prices hammered crude earnings.
Emefiele’s tenure was characterized by an unprecedented rise in Nigeria’s headline inflation from 8 per cent when Emefiele first assumed office as governor in 2014 to as high as 22.4 per cent as of April 2023, according to NBS data. The collapse in the value of the local currency has been remarkable for the economy under Emefiele’s watch. It was also under his watch that the CBN violated its law by giving the government more loans than the law permitted thereby stoking the inflation he was trying to rein in.
The CBN’s loans to the government otherwise known as ‘Ways and Means’ jumped from N790 billion in May 2015 to N23.7 trillion in 2022. Between 2021 and 2022, the CBN’s loans to the government went from N17.5 trillion to N22 trillion which means some N4.5 trillion was added in 2022 alone, exceeding five per cent of public revenue, according to the CBN Act.
Emefiele’s Foray Into Politics
Emefiele’s failed foray into politics endeared him to no one, except his underground army of praise singers urging him to run for the presidency which pitted him against Tinubu in the battle for who represents the ruling APC. Though he fell out of the race, even then the damage had been done as there was no love lost between him and the former Lagos State governor, Tinubu, who during his campaign accused Emefiele of trying to scuttle his chances of winning the elections by initiating a controversial naira redesign policy that mopped up cash in the system which Emefiele believed, will whittle down money influence on the elections.
Local lenders were subjected to about the highest Cash Reserve Ratios (CRR) in the world at an effective rate of around 40 percent, thereby limiting the capacity of banks to do business with customers’ deposits.
Emefiele was also accused of running CBN with an increasing lack of transparency failing to publish its financial results.
Divergent Views Greet Emefiele’s Suspension
Divergent views have greeted the suspension of the CBN boss, with several financial markets analysts insisting that his policies alone could not have lifted the economy without complementary fiscal policies.
Reno Omokri, a political and social critic said that President Tinubu’s suspension of the CBN governor is not in good taste, describing it as a vindictive act intended “to punish Mr. Emefiele for the patriotic Naira redesign policy, which was meant, among other things, to reduce the impact of money on the #NigerianElections2023.”
Writing on his Twitter handle @ renoomokri, the former presidential aide to former President Goodluck Jonathan noted that the new president has started but “he should not mar the progress he has made by this act of seeming vengeance. The country needs unity and stability after a fractious election. Now is the time for appeasement, not punishment. It is hoped that the President will reconsider his actions for the nation’s greater good.”
However, former Senator Shehu Sani upheld Emefiele’s suspension as commendable and urged that “the housecleaning of the CBN can only be done by engaging a team of auditors from OUTSIDE of the CBN.”
Also writing on his Twitter handle, @ShehuSani, the former Senator of the Federal Republic of Nigeria said “The eviction of Emefiele is commendable. The appointment of Shonubi as acting Governor is commendable. But the Housecleaning of the CBN can only be done by engaging a team of auditors from outside of the CBN.
“Only the auditors can professionally and thoroughly probe the apex bank and tell the country how the Bank was run under Buhari’s Emefiele. The CBN was operated as an ATM of the Cabal, a canteen and Cash Cow of the parasitic elites of the past administration,” Sani alleges.
Emefiele’s Policies Not Enough To Lift Economy
A pool of financial markets operators sampled by our correspondent said that much as Emefiele’s policies were far from being adjudged to be good, even the best policies of a central bank are not enough to lift the economy.
Tajudeen Olayinka, a dealing member of the Nigerian Exchange (NGX), said that Emefiele’s intervention policies could have been impactful if they were properly handled and honestly extended to relevant segments and operators.
In his view, much of the monetary interventions of Emefiele’s CBN were questionable, alleging that they were fraudulently advanced to unidentifiable persons and questionable characters.
He said “All the policies of Emefiele, be it Anchor Borrowers Programme, RT-200, and industry interventions, were not done in the interest of the masses. He did it all, not in the interest of the economy, but for his selfish interest. Those programmes were creating problems for the economy.
“Anchor Borrowers Programnme is a total fraud. The interventions were money down the drain; the beneficiaries are not paying back. The identities of the majority of the beneficiaries were questionable. Some of those he gave the so-called intervention facilities are bandits. You can’t even see them. They would use the money and procure guns and move to the forest. That is the area the authorities have used to capture him. It was discovered that he was using those interventions to sponsor terrorism,” Olayinka alleges.
Continuing, he said “On the monetary policy side, Emefiele was a total failure. He didn’t do well at all. Some of the things he did were unacceptable to normal human society. They are not good for the system,” Olayinka stressed.
When asked why successive governments retained him and allowed him to serve two tenures if he wasn’t good at the job, he replied that it was because they saw Emefiele as a pliable tool they could use to plunder the resources of the country.
Hear him: “He was seen as a cash cow. A CBN governor who could give the president over N23 trillion in ways & means, what do you expect? Even the president could not explain what he did with the ways & means credit from CBN,” the stockbroker concluded.
The Managing Director and Chief Executive Officer, of Compass Investments and Securities Limited, Sam Willie Ndata, said that CBN’s intervention programmes under Emefiele were questionable, insisting that they did not benefit the larger economy beyond his cronies.
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